Returning Erroneous FTB Passthrough Entity Refunds

By Nate Miller, CPA, MST

August 9, 2022

This past May, GC sent out information on the Passthrough Entity (PTE) Tax Election. We are now bringing you an important update regarding the 2022 PTE Payment Voucher Form 3893.

System-wide issues at the Franchise Tax Board may have caused prepayments to be misapplied to the 2021 tax year, creating erroneous refunds.

This is problematic because taxpayers must send a payment of either the lesser of $1,000 or 50% of the 2021 PTE Elective Tax by June 15, 2022, to allow the right to elect the PTE Elective Tax for 2022. If no payment is made, the taxpayer cannot make the 2022 election.

The Franchise Tax Board is allowing taxpayers to return any incorrect refunds to ensure access to their elective rights. There is no specific date by which you must return the refunds. However, we urge taxpayers to expeditiously return the refund and avoid problems with the 2022 PTE elections.

Determining how to return the funds will depend on how you received the erroneous refund

  • If the check is still in your possession, return it and mail a copy of the Form FTB 3893 Voucher with an explanation stating, “PTE Elective Tax Erroneous Refund.”

Franchise Tax Board
P.O. Box 2288
Rancho Cordova, CA 95741-2288

  • If you have already cashed the check or if the check has been electronically deposited, you will need to resubmit the 2022 PTE Elective Tax prepayment by sending the payment on Web Pay or mailing the FTB another check with a Form FTB 3893 Voucher and include the same explanation of “PTE Elective Tax Erroneous Refund.” Remember to include the “Entity ID” and “2022 tax year” in the memo line when making a check payment.
  • If you are subject to the mandatory e-pay requirements, Web Pay is the only way to return the refund.

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Grimbleby Coleman is always here to give our clients the most current tax news from trusted sources. Our team is here to serve you and will reply promptly. Email us or call (209) 527-4220 if you need advice or have questions about this article.