Ca. Tax Lawyer 2016, VOLUME 25, NUMBER 2

Proposal to Amend Revenue and Taxation Code Section 19035 to Mandate That the Franchise Tax Board Provide All Notices Relating to Joint Tax Returns to Each Joint Filer1

By Robert S. Horwitz & Carolyn M. Lee2


Under current practice, many taxpayers do not receive notices regarding joint returns that they filed with their spouse or registered domestic partner. In most instances, the Franchise Tax Board sends only a single joint notice to a couple that filed a joint return. By statute, a single joint notice is required to be sent for a notice of proposed deficiency assessment, unless the Franchise Tax Board ("FTB") is notified by either spouse or registered domestic partner that separate residences have been established. In the case where the joint filers have declared separate residences, the FTB is required by statute to mail duplicate originals of the joint notice to each person in lieu of the single joint notice.3 This limited notice potentially reduces by 50 percent the number of taxpayers with actual notice of information pertaining to the filed return. Many California marital or registered unions are under strain, which impairs information (and mail) exchange between the partners. In addition, in the case of divorcing partners, issuing one joint notice may result in only one spouse being aware of a tax liability. The other spouse may agree to marital dissolution terms that do not provide for the payment of the liability. California’s statutory notice requirements do not address the reality of the personal lives the State’s joint filers.

By contrast, since enactment of the Internal Revenue Restructuring and Reform Act of 1998, the Internal Revenue Service ("IRS") is required to send any notice relating to a joint tax return separately to each spouse filing the return, whenever practicable.4 The IRS sends all notices of deficiency and other notices to each person who filed a joint income tax return, whether or not the individual taxpayers have notified the IRS that separate residences have been established. In this way, each joint-filing taxpayer is more likely to receive actual notice of information and issues pertaining to a filed tax return. Each taxpayer therefore has the opportunity to respond to the IRS, and to act to protect his or her interests as they relate to the tax return.

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