A California FTB Notice of Proposed Assessment is a letter from the Franchise Tax Board telling you it believes you owe more tax than your return reported, and it starts a 60-day clock to file a written protest before the assessment becomes final. The notice lays out the additional tax, interest, and any penalties, along with the reasoning behind each adjustment. If you protest in time, collection is paused while the FTB reviews your case. If you don’t, the amount becomes legally owed and the state can move to collect it.
What the Notice Contains
Every NPA is required by law to include the reasons for the proposed deficiency and the computation showing how the FTB arrived at the higher amount. It also states the last day you can file a protest, though a missing deadline date on the notice itself does not invalidate it.1California Legislative Information. California Revenue and Taxation Code RTC 19034
The most important section is the explanation of adjustments. It typically breaks the increase down line by line: which income was added, which deductions or credits were denied, and why. Read this carefully. It tells you exactly what changed and gives you the specific basis for a targeted response. Common triggers include unreported income the IRS shared with the state, deductions that don’t match supporting records, mathematical errors, and federal audit adjustments flowing through to California because the state uses federal taxable income as its starting point.
Interest
Any proposed deficiency includes interest calculated from the original payment due date. California compounds this interest daily, not monthly or annually, so the balance grows faster than many taxpayers expect.2California Legislative Information. California Revenue and Taxation Code 19521 The rate tracks the federal underpayment rate under IRC Section 6621 and adjusts semiannually. Even if you plan to protest, you can make a voluntary payment to stop interest from accruing on the disputed amount while the protest is pending.3Franchise Tax Board. FTB 5821 Publication Protest Procedures
Penalties
The notice will also list any penalties, such as late-filing, accuracy-related, or underpayment-of-estimated-tax penalties. If you believe a penalty should be waived, you can request abatement based on reasonable cause using Form FTB 2917 for individuals or Form FTB 2924 for business entities.4Franchise Tax Board. Help With Penalties and Fees Reasonable cause generally means you exercised ordinary care but still couldn’t meet your obligation because of circumstances outside your control. You can request penalty abatement alongside or separately from a protest of the underlying tax.
How to File a Protest
You have 60 days from the date on the NPA, or until the “Protest By” date printed on the notice, to submit a written protest.3Franchise Tax Board. FTB 5821 Publication Protest Procedures There is no special FTB protest form. You write your protest as a standalone letter or use the online portal.
What to Include
Your protest should include your identification number, the tax years and amounts you’re disputing, and a copy of the NPA. For each item you disagree with, explain why on factual or legal grounds and attach supporting documents such as receipts, bank statements, federal audit reports, or employment records.5Franchise Tax Board. Disagree With an NPA (Protest) If you accept some adjustments and contest others, say which amounts you accept and which you’re disputing. Digital copies are fine as long as they’re legible and complete, and organizing documents chronologically helps the reviewer follow the timeline.
Online or by Mail
The fastest option is protesting through your MyFTB account. Log in, go to Account, then Proposed Assessments, select the NPA number, and follow the instructions. You can upload up to 10 documents in PDF or XLSX format, up to 10 MB total, and the system generates a confirmation page you should save.6Franchise Tax Board. Individual Protest – Submit Protest or Respond to a Filing Enforcement Proposed Assessment You can also mail a written protest to the FTB’s processing unit in Sacramento. If you mail it, make sure the envelope is postmarked before the deadline.
Getting Help
You can handle a protest yourself. If the disputed amount is large or the legal issues are complex, a tax attorney, CPA, or enrolled agent can represent you. To authorize someone to speak with the FTB on your behalf, file a power of attorney (FTB 3520-PIT for individuals). Professional representation in a tax dispute generally runs $400 to $1,000 per hour depending on complexity and experience.
What Happens After You File
The FTB will not take collection action before the Protest By date on your notice.3Franchise Tax Board. FTB 5821 Publication Protest Procedures Once you file a timely protest, the assessment stays unresolved while the FTB reviews your case, which can take several months. Interest continues to accrue on any amount ultimately determined to be owed, which is why a protective payment to cap interest is worth considering even when you’re confident the FTB is wrong.
The FTB may withdraw the assessment, reduce it, or uphold it. When review is complete, it issues a Notice of Action explaining the decision.
Appealing to the Office of Tax Appeals
If the FTB denies your protest in whole or in part, you have 30 days from the date of the Notice of Action to appeal to the Office of Tax Appeals, a separate state agency independent of the FTB.7California Legislative Information. California Revenue and Taxation Code 19045 Miss that window and the FTB’s decision becomes final, with tax, penalties, and interest due and payable.8Franchise Tax Board. FTB 985 Publication Audit, Protest, Appeals the Process
At the OTA, both sides submit briefs and supporting information, and you can request an oral hearing. After the OTA issues its written decision, either side may petition for rehearing within 30 days. If no rehearing petition is filed, the decision becomes final after 30 days.8Franchise Tax Board. FTB 985 Publication Audit, Protest, Appeals the Process If you miss the initial appeal window, one option remains: pay the balance and file a claim for refund, generally within one year of payment.
If You Don’t Respond
Ignore the NPA and let the 60-day protest period pass, and the proposed deficiency becomes final automatically.9California Legislative Information. California Revenue and Taxation Code 19042 The FTB then issues a Statement of Balance Due, and from that point the state can pursue collection through wage garnishments, bank levies, and state tax liens.10Franchise Tax Board. Taxpayer Dispute Process Notice of Proposed Assessment Even if you suspect the notice is right, reading the explanation of adjustments and checking the math costs nothing and sometimes reveals errors in your favor.
Check the Assessment Deadline
The FTB must mail the NPA within four years after you filed your return. If the notice arrived outside that window, the deficiency cannot be assessed or collected for that tax year.11Justia. California Revenue and Taxation Code 19057 Two exceptions matter. There is no time limit if you filed a fraudulent return or never filed at all. And if the IRS adjusts your federal return and you don’t notify the FTB within six months, the state gets two additional years beyond the normal deadline to assess. Reporting federal changes promptly to the FTB limits how long the state has to come back for more.