How Long Do You Have to File a Franchise Tax Board Tax Refund Suit?

Published by at

Question: How Long Do You Have to File a California Franchise Tax Board Income Tax Refund Suit?

Answer: Generally, if you have full paid the tax and filed a claim for refund (e.g., through an amended return), once the California FTB issues its denial (e.g., through a notice of action) or the Office of Tax Appeals (OTA) issues its decision, opinion or dismissal, you have 90 days to file the appeal.

The FTB’s provisions somewhat mirror the IRS’s, but the IRS’s provisions do not allow for a second chance following an OTA disposition. As explained in more detail in another blog post, here, “under the federal statute, 26 U.S.C. § 6532(a)(1), a taxpayer generally may not wait longer than 2 years from the issuance of the IRS’s disallowance of the administrative refund claim to bring suit.

“A taxpayer may file suit to recover ‘a tax claimed to be illegal,’ after the tax has been paid. (Cal. Const., art. XIII, § 32.)” Jensen v. Franchise Tax Bd., 178 Cal.App.4th 426, 100 Cal. Rptr. 3d 408 (Cal. App., 2009). Section 19382 of the Revenue and Taxation Code of California provides that the taxpayer may bring an action for a claim for refund after full payment and denial by the FTB. If a notice of action is received denying the claim for refund, you have 90 days to file the suit in superior court (Section 19384) or to file an appeal to the Office of Tax Appeals (as substituted in for the Board of Equalization in this section) (Section 19324). If the OTA issues a decision, opinion or dismissal, you have 90 days from that event to file a claim in superior court (Section 19384).

Section 19385 provides that the taxpayer may consider the claim disallowed if the FTB fails to mail notice of action on the refund claim within 6 months after the refund claim was filed. This mirrors part of 26 U.S.C. § 6532(a)(1) which provides for a 6 month wait before filing suit after the claim is filed.

The author of this post, Daniel W. Layton, is a former IRS trial attorney and ex-federal prosecutor in Los Angeles’s U.S. Attorney’s Office, Tax Division. He is the founder of a tax law firm in Orange County, California.

Posted 07/23/2019 by Daniel Layton.