An FTB Notice of Proposed Assessment, or NPA, is how California's Franchise Tax Board tells you it intends to assess additional state income tax, penalties and interest. The most important item on it is the protest-by date: you generally have 60 days from the notice date to file a written protest before the proposed amount becomes final and due.
Protest-by date getting close? Call (415) 754-0115 to schedule a free consultation before the window closes, or reach us through our contact page.
Reading Your FTB Notice of Proposed Assessment
An NPA explains the proposed change, the tax year, the additional tax, any penalties and the interest computed so far. It also describes how to protest and where to send it. Understanding why the notice was issued shapes the response.
Common reasons the FTB issues an NPA
- An FTB audit that disallowed deductions, changed residency status or adjusted income.
- A federal change, such as an IRS audit adjustment, that the FTB learned about and carried over to the California return. Federal changes generally need to be reported to the FTB within six months after they become final.
- A missing return, where the FTB estimated income from wage and payment reports after a demand to file went unanswered.
The protest-by date
The notice prints the last day to protest. That date controls everything else, and it does not move because a letter arrived late or sat unopened. If the 60 days pass without a protest, the assessment generally becomes final and the FTB starts collection.
It also helps to check the notice against your own records before deciding anything. Useful checks include whether the tax year is right, whether payments and withholding the FTB already received are credited, and whether any federal change it relies on matches the final IRS figures. Errors of this kind are sometimes resolved by correspondence. When the disagreement is about residency, the sale of property, or business income, the protest usually needs a fuller explanation and documents such as leases, closing statements or bookkeeping records.
Protest or Pay: Two Different Roads
A taxpayer who disagrees with the NPA usually has two main ways to contest it, and the choice affects cash flow, interest and later appeal rights.
Filing a protest
A protest asks the FTB to reconsider before the tax is assessed. No payment is required to protest, although interest continues to accrue on any amount that is ultimately owed.
What a protest usually contains
- The taxpayer's name, identification number and the tax year involved
- Each item in dispute and the reason the FTB's position is wrong
- Supporting documents, legal authority where relevant, and a signature
- A request for an oral hearing, if the taxpayer wants one
Protests built around the specific adjustments, rather than general objections, are easier for the FTB to evaluate.
Paying and claiming a refund
Some taxpayers prefer to pay the proposed amount, which stops further interest, and then file a claim for refund. If the claim is denied, the taxpayer can appeal to the Office of Tax Appeals or, in some cases, go to superior court. This path requires the money up front but changes the procedural route.
What Happens After a Protest
The FTB reviews the protest, may request more documents, and may hold a hearing. It then issues a Notice of Action that affirms, modifies or withdraws the proposed assessment. If the taxpayer still disagrees, an appeal to California's Office of Tax Appeals, an independent agency, can generally be filed within 30 days of the Notice of Action date. The Office of Tax Appeals hears cases from individuals and businesses and offers procedures for smaller cases. Our article on the FTB audit process in California covers the earlier audit stage that often leads to these notices.
If the Protest Window Has Already Closed
Missing the protest-by date narrows the choices but does not end them. Once the assessment is final, the balance becomes due and FTB collection notices follow. Options at that stage can include:
- Paying and filing a claim for refund within the limitations period, which can reopen the dispute.
- Filing a correct original return, where the NPA was based on estimated income from a missing return.
- Setting up an installment agreement or exploring hardship and settlement programs. Our guide on California tax debt relief with the FTB outlines them.
How a Tax Attorney Helps With an NPA
The Somal Law Firm in Pleasanton handles state and federal tax disputes, audits and appeals for individuals and small businesses in the Tri-Valley, Alameda and Contra Costa Counties. With an NPA, we review the notice and the underlying audit or federal change, identify which adjustments can be contested, prepare the protest, and follow the matter through the Notice of Action and any appeal. When an IRS change is behind the notice, the federal side is reviewed too, since the two often move together. See our practice areas for the full scope of our tax work.
Frequently asked questions
Can I get more time to protest an NPA?
The 60-day protest period is set by statute. Taxpayers can request extra time to submit documents after a timely protest is filed, but the protest itself needs to be on time.
Does a protest stop FTB collection?
A proposed assessment under timely protest is not yet final, so the FTB generally does not collect it while the protest is pending. Interest continues to accrue.
What if the IRS later reverses its adjustment?
If an NPA followed a federal change that is later reduced or reversed, the taxpayer can generally provide that result to the FTB to correct the state assessment.
Is an NPA the same as a bill?
No. An NPA is a proposal. It becomes a bill only once it is final, after the protest period or the appeal process ends.
When you contact us, we will read the notice with you, check the deadlines and explain whether a protest, payment or another path fits your circumstances. Call (415) 754-0115 to schedule your free consultation, or use our contact page to send the details.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.