The California Franchise Tax Board or FTB is increasing the number of tax audits it conducts due to increased information available through new systems, as well as information sharing with the IRS, Employment Development Department or EDD and other federal and state agencies. Annually, the FTB is up to more than 300,000 audits including desk, field and office audits. California FTB audits are on the rise. Allen Barron represents Californians, out-of-state tax filers and business clients within California and those with California tax liabilities across the nation and around the globe. We work to reduce your risks of an audit while keeping your tax exposure at an absolute minimum.
The implementation of new systems simply allows the FTB to collect more information and relate it to specific unique taxpayer identification numbers or social security numbers. So far in 2016, the agency has collected an additional $2.8 Billion in taxes by running a large portion of FTB returns through the new IT strategy.
How are they able to single you out of the 17 million business and individual tax returns filed in California each year? The new system allows the FTB to set up individual electronic “folders” for each taxpayer used internally by the FTB to aggregate information for each taxpayer gleaned from what used to be stored in separate systems across multiple agencies around the state. Some data the system is collecting has never been available electronically before, and this provides “exciting new opportunities to identify trends and audit targets” at the FTB.
Cathy Cleek, the CIO for the California FTB recently said the new systems provide a “360-degree view of the taxpayer.” The new system “found errors in people’s filings (the FTB) hadn’t found in years.” The integration with other government agencies allows the FTB to access more information about unique taxpayers and pursue tax collections from those they could not reach in the past. Work with a third party provided the FTB with access to bank account information associated with social security numbers. This allows the FTB to more easily identify associated bank accounts for holds or levies and for the money to be sent directly to the FTB.
If you are contacted about California FTB audits (field, desk or office) we invite you to call for a free consultation at 866-631-3470.