When did a timely federal revenue agent's report or other federal overassessment report count as a California claim for refund?

Plain-English summary

California Legal Ruling 386 held that a federal revenue agent's report or other federal overassessment report was not automatically a California refund claim.

The answer depended on who submitted it, whether the taxpayer clearly requested a refund, and whether the written material identified the specific grounds well enough for FTB to investigate.

Even when no claim existed, FTB said it could initiate a credit or refund if timely federal information clearly established a California overpayment.

Form was less important than content

The historical California statutes required a written claim filed by the taxpayer or an authorized representative and stating the specific grounds for the refund.

The ruling said no particular California form or penalties-of-perjury statement was required. A letter and federal report could be sufficient if they clearly expressed refund intent and focused FTB's attention on the exact basis of each ground.

An amended return or official FTB refund form was not the only acceptable vehicle under the rules discussed.

Taxpayer report plus refund request

When the taxpayer timely submitted the federal report with correspondence requesting a refund, the package constituted a claim if the federal report and other writing supplied specific grounds.

Usually the federal report itself would reveal the grounds, but FTB recognized that additional written detail sometimes might be necessary.

Informal claim and later perfection

If the taxpayer clearly sought a refund but did not provide enough detail, FTB treated the request as an informal claim.

The informal claim tolled the statute of limitations. To support an appeal or refund action, it had to be perfected by a later amendment that:

• referred back to the defective claim;
• clarified the original grounds; and
• did not add new grounds.

Without that substantiation, the ruling said the taxpayer could not appeal to the Board of Equalization or bring a refund action under the cited provisions.

Taxpayer report without refund request

A federal adjustment report submitted without an accompanying refund request did not establish clear intent.

The taxpayer might be seeking a refund, or might merely be satisfying a federal-change reporting obligation. Because the intent was ambiguous, the report alone was neither a formal nor an informal refund claim.

FTB nevertheless said it could act on the information and issue a credit, refund, proposed overassessment, or overpayment certification when appropriate.

Report submitted by the IRS

A report sent by the IRS did not constitute a claim because the historical statutes and regulations required filing by the taxpayer or the taxpayer's authorized representative.

As with a taxpayer-filed report lacking a request, timely IRS information could still lead FTB to initiate a credit or refund if it established a state overpayment.

What this means for you

Taxpayers and businesses

Do not assume that sending FTB a federal audit report preserves a California refund claim. State refund intent and each ground expressly in writing.

Accountants and tax attorneys

Identify the taxpayer or authorized representative as the filer, connect each federal adjustment to the California overpayment, and verify that every ground is raised before the limitations deadline.

Informal-claim situations

If an earlier writing showed clear refund intent but lacked detail, preserve it and make any later amendment refer to and clarify that original claim rather than introducing unrelated grounds.

Common questions

Q: Was an official FTB refund form required?

A: No under the historical ruling. A different written submission could qualify if it clearly requested a refund and stated specific grounds.

Q: Did a federal report by itself count as an informal claim?

A: No. Without a refund request, the taxpayer's intent was ambiguous.

Q: What made an incomplete request an informal claim?

A: Clear refund intent combined with inadequate specificity about the grounds.

Q: Could the taxpayer add new grounds when perfecting the informal claim?

A: No. The later filing had to clarify the original grounds rather than add new ones.

Q: Could FTB refund an overpayment when the IRS sent the report?

A: FTB said it could initiate a refund or credit, but the IRS-submitted report was not itself the taxpayer's claim.

Citations and references

• Former Cal. Rev. & Tax. Code §§ 18451, 19053, 19055, 19058, 19082, 25432, 26073, 26074, 26076, and 26102
• Former 18 Cal. Code Regs. § 19051-19062.9(b)(ii)(3)
• 325 U.S. 293 (1945)
• 314 U.S. 186 (1941)

The official HTML prints several federal reporter citations as Fed.2d, which did not parse in the citation check. Those strings remain preserved verbatim in the original source below.

Source

• Landing page: California FTB Legal Rulings
• Official HTML: Legal Ruling 386

Original ruling text

Home

Legal ruling 386

STATE OF CALIFORNIA
Franchise Tax Board - Legal Division

March 20, 1975

Claim for Refund - Sufficiency of Various Federal Reports

Advice has been requested whether, under the circumstances described below, certain timely filed reports of federal income tax overassessments, such as federal revenue agents' reports, constitute claims for refund under the Personal Income Tax Law and Bank and Corporation Tax Law.

(1) The taxpayer submits the federal report with correspondence requesting a refund.

(2) The taxpayer submits the federal report without any accompanying request for a refund.

(3) The Internal Revenue Service rather than the taxpayer submits the federal report.

As to form and content, the claim for refund requirements of the Personal Income Tax Law and Bank and Corporation Tax Law are broadly stated. The claim must be filed by the taxpayer (Revenue and Taxation Code Section 19053, 26073) or an authorized representative (Cal. Admin. Code, tit. 18, Reg. 19051-19062.9(b)(ii)(3)) and, in writing, must state the specific grounds upon which it is founded (Revenue and Taxation Code Sections 19055, 26074).

In contrast to federal provisions, neither the Revenue and Taxation Code nor the relevant regulations require that the claim be made under penalties of perjury or that a particular form be used. The fact that the taxpayer’s intent to seek a refund is expressed in some written form other than in an amended return or on a Franchise Tax Board claim for refund form has no bearing on the adequacy of the claim. In each case, the applicable test is whether the taxpayer has provided information in the claim which apprises the Franchise Tax Board of the exact basis of each ground on which the refund is claimed so that the facts relative to these grounds may be investigated and decisions made.(Appeals of A. Brigham and Zelletta M. Rose, and Lori, Ltd., Incorporated, A. Brigham and Zelletta M. Rose, Transferees, Cal. St. Bd. of Equal., August 1, 1966, CCH 203-361, P-H 48,417; Appeal of Clarence L. and A. Lois Morey, Cal. St. Bd. of Equal., August 3, 1965, CCH 202-914, P-H 58,385; Appeal of American Institute of Interior Designers, Cal. St. Bd. of Equal., August 3, 1965, CCH 202-917, P-H 13,368; see also Kuehn v. United States, 480 Fed.2d 1319 (1973); Herrington v. United States, 416 Fed.2d 1032 (1969); Angelus Milling Co. v. Commissioner, 325 U.S. 293, 89 Law.Ed. 1619, 65 Sup.Ct. 1162 (1945).)

A timely filed report of a federal income tax adjustment, such as a federal revenue agent's report, which is accompanied by a refund request will constitute a claim for refund if specific grounds are set forth which focus the Franchise Tax Board’s attention on the merits of the claim. Usually, the grounds for the refund will be apparent from information in the federal report, but it is conceivable that further written elaboration would be required to "perfect" the claim. If it is clear that the taxpayer seeks a refund, but that the refund request lacks sufficient specificity to apprise the Franchise Tax Board of the exact basis of the claim, the refund request is considered an "informal" claim for refund (see Clement v. United States, 472 Fed.2d 776 (1973); United States v. Kales, 314 U.S. 186, 86 Law.Ed. 132, 62 Sup.Ct. (1941)). Informal claims toll the statute of limitations. Unless the informal claim is substantiated by a later amendment which refers to the defective claim (Appeal of Clarence L. and A. Lois Morey,supra; Tobin v. Tomlinson, 310 Fed.2d 648 (1962), and which is limited to clarifying the original grounds rather than adding new ones (Bear Valley Mutual Water Company v. Riddell, 493 Fed.2d 948 (1974); Sappington v. United States, 408 Fed.2d 817 (1969)), the taxpayer cannot appeal to the Board of Equalization (Revenue and Taxation Code Sections 19058, 26076) or institute a legal action (Revenue and Taxation Code Sections 19082, 26102).

If a federal income tax adjustment is timely filed by the taxpayer without any accompanying explanation, the taxpayer’s intent is ambiguous. The taxpayer may be seeking a refund or simply may be complying with Section 18451 or 25432 of the Revenue and Taxation Code. In these cases, the federal report is not considered even an "informal" claim for refund.

Although the timely filed federal report, standing alone, does not constitute a formal or an informal claim for refund, the Franchise Tax Board has the authority to, and does, allow a credit, make a refund, issue a notice of proposed overassessment or certify an overpayment to the State Board of Control for approval of the refund if the federal information clearly establishes that such action is appropriate (Revenue and Taxation Code Sections 19053, 26073).

Since the pertinent Personal Income Tax Law and Bank and Corporation Tax Law sections and regulations require that the taxpayer or the taxpayer’s representative file the claim for refund, a report submitted by the Internal Revenue Service does not constitute a claim for refund.

As earlier discussed, however, if the information is submitted by the Internal Revenue Service within statutory periods and establishes that the taxpayer has made an overpayment of state taxes, the Franchise Tax Board is authorized to, and does, initiate a credit or refund.

Last updated: 09/24/2025