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Large Corporate Understatement Penalty FAQs

Introduction

Revenue and Taxation Code (R&TC) Section 19138 was added by SBX1 28 (Stats. 2008, 1st Ex. Sess. 2007-2008, Ch. 1) and is effective December 19, 2008.

The penalty applies to corporations for taxable years beginning on or after January 1, 2003, where the corporation has an understatement of tax in excess of $1 million. The penalty is 20 percent of the entire amount of the understatement. The understatement is measured by the difference between the tax reported on the original return or shown on an amended return, filed on or before the extended due date, and the correct tax liability.

For the purpose of this penalty for taxable years 2003-2007, a taxpayer can file an amended return and pay the tax shown on the amended return by May 31, 2009, to treat the tax shown on this amended return as tax shown on the original return. This will increase the self-assessed tax base against which the understatement is measured to reduce the likelihood of incurring this penalty for these taxable years.

If you have any additional questions, you may call the Large Corporate Understatement Penalty Hotline at 916.845.3030.

General

  1. What is the large corporate understatement penalty?

    For each tax year beginning on or after January 1, 2003, a corporate taxpayer that has an understatement of tax in excess of $1 million is subject to a penalty equal to 20 percent of any understatement of tax. (R&TC Section 19138)

  2. What is an “understatement of tax?"

    An understatement of tax is the amount of tax resulting from an adjustment or self-assessment that exceeds the tax shown on the original return or an amended return filed on or before the extended due date of the return. For this purpose the term “tax” means tax after the application of business credits (e.g., 2007 Form 100, line 31) and does not include any penalty or interest. The amount of tax shown on certain amended returns filed on or before May 31, 2009, for tax years 2003-2007 only, will be treated as the amount of tax shown on the original return for the purpose of computing the understatement of tax amount.

  3. What tax years are subject to this penalty?

    This penalty applies to tax years beginning on or after January 1, 2003, for which the statute of limitations for assessment had not expired on December 19, 2008, the effective date of the act that added R&TC Section 19138.

  4. Who is subject to this penalty?

    Banks, corporations, and any other entity subject to tax under Part 11 of the R&TC (e.g., corporations, S corporations, and limited liability companies that elected to be treated as corporations).

  5. How is the penalty computed? What is the amount of the penalty?

    The amount of the penalty is 20 percent of the entire understatement amount when the understatement of tax exceeds $1 million. See the example under the “computation of the penalty” section.

  6. When will FTB assess this penalty?

    FTB will assess this penalty when an additional tax liability is formally assessed. For audit adjustments, this is when the additional tax liability on a Notice of Proposed Assessment (NPA) becomes final. For self-assessed amounts, such as amounts shown on amended returns, this is when the additional amount is assessed on FTB's records. The penalty will be included on the Notice of Tax Due (FTB 5947) with the total tax, interest, and any other applicable penalty or fee. This penalty will begin to accrue interest from the date of the assessment.

  7. Can I protest this penalty?

    No. You cannot protest this penalty. However, FTB may allow a claim for refund for amounts paid to satisfy the penalty if FTB did not properly compute the amount of the penalty. In addition, because the penalty is computed as a percentage of the understatement of tax, if a later action, such as an allowed refund claim, reduces the understatement, the penalty will be recomputed which may result in a refund. (R&TC Section 19138(d) and (e).)

  8. Is there any exception to this penalty?

    There is no reasonable cause exception to this penalty. However, the penalty will not be imposed if the understatement is attributable to either of the following:

    • A change in law that occurs after the earlier of the date the taxpayer files the return or the extended due date of the return, for the year the change is operative.
    • Reasonable reliance on a formal FTB Chief Counsel Ruling.

    Any other types of rulings from FTB will not provide a basis to avoid this penalty (i.e., an R&TC Section 25137 petition where the material facts have changed). Taxpayers can reduce the potential for a future penalty for tax years 2003-2007 by filing an amended return and paying the self-assessed tax amount shown on that return by May 31, 2009.

  9. I am currently under federal examination. Will the outcome of the examination affect the application or computation of the penalty?

    The penalty applies any time there is an increase in the total tax liability for the tax year and the understatement of tax (measured by reference to the amount of tax shown on the original return) exceeds $1 million. Changes include state and federal adjustments, regardless of when the examinations were started or completed.

  10. Will FTB provide the IRS with the amended return information filed under this section?

    Yes. FTB has a long-standing agreement with the IRS to share information. Any amended return filed under this section would be covered under the normal information sharing agreement.

  11. Can I use Tax Deposit amounts currently on account to pay the amount of tax shown on an amended return filed under R&TC Section 19138(b) for the 2003-2007 tax years?

    Yes. If you have made a tax deposit for the year at issue, we will automatically apply it to the self-assessed amount shown on the amended return.  If you have a tax deposit on file for a different tax year than the year at issue, file Form FTB 3581, Tax Deposit Refund and Transfer Request, before May 31, 2009. Note: This request must be accompanied by an amended return. (R&TC Section 19138(b))

  12. When is the last date I can file a claim for refund on the payment I submit with the amended return?

    The payment made in association with the amended return is not a tax deposit, so the normal statute of limitations for claiming a refund or credit applies. A claim for refund must be filed by the later of four years from the date of a timely filed return or one year from the date of the overpayment. (R&TC Section 19306.)

Computation of the penalty

  1. What is the tax shown on an amended return within the meaning of the “cure” provision under R&TC Section 19138(b) for tax years 2003-2007?

    The tax shown on an amended return is the total self-assessed tax on the amended return for the greatest amount of tax filed and paid on or before May 31, 2009.

  2. I filed a claim for refund of $800,000 for tax year 2005 last year and FTB has yet to make a final determination. My tax liability shown on the original 2005 return is $3,000,000. What is my penalty base under R&TC Section 19138(b) for 2005?

    Regardless of whether FTB has taken action on your claim for refund as of May 31, 2009, your penalty base for 2005 remains $3,000,000. For tax years 2003 through 2007, only an amended return with additional tax filed before May 31, 2009, will increase the penalty base, and no downward adjustments will be made to the penalty base as a result of any amended returns filed after the extended due date of the original return.

  3. FTB just completed an examination of my returns for tax years 2005 and 2006. FTB issued an NPA for $2,000,000 for 2005 and a Notice of Proposed Overpayment (NPO) for $1,800,000 for 2006. Both years are under protest now. What should I do to reduce the exposure to this new penalty?

    The large corporate understatement penalty applies to each tax year separately. In the above example, it doesn’t matter that the adjustments for the two years are related, or that there is an overpayment for the 2006 tax year. Thus, the R&TC Section 19138 penalty will apply when the understatement of tax for 2005 becomes final. Therefore, to reduce the exposure to this new penalty for 2005, you need to file an amended return (procedures to be provided later) and pay the $2,000,000 additional tax by May 31, 2009. Because both years are under protest, the $1,800,000 proposed overpayment is not available as of May 31, 2009, and therefore, cannot be used to satisfy the additional liability for the 2005 tax year.

  4. My 2005 return was adjusted due to the disallowance of the enterprise zone hiring credit in the amount of $2,000,000. The resulting additional tax due for 2005 is $500,000, and the remaining disallowance reduces the carryover amount claimed in subsequent years. Will I be subject to this new understatement penalty?

    If this $500,000 is the only understatement of tax for tax year 2005, you are not subject to the R&TC Section 19138 penalty for that year. The penalty threshold is measured only by the amount by which the correct amount of tax exceeds the tax shown on the original return (or amended return filed prior to the extended due date), but does not include any carryover adjustments. The $1,500,000 of additional enterprise zone hiring credit disallowance may impact subsequent tax years when computing the understatement of tax for those years, but it will not affect the computation of 2005 tax. Disallowance of Net Operating Losses (NOL) will be treated similarly.

  5. Example: How to compute the penalty.

    Corporation X files its original return for the 2008 tax year on October 15, 2009, reporting a total tax liability of $2,000,000.

    On July 1, 2010, FTB issues an NPA for additional tax of $800,000. When this assessment finalizes on September 1, 2010, X is not subject to the large corporate understatement penalty because the final tax amount of $2,800,000 exceeds the amount of tax shown on the original return ($2,000,000) by only $800,000, which is less than $1,000,000.

    On November 1, 2010, FTB issues a second NPA based on a final federal determination for the same tax year. The additional tax proposed on this second NPA is $700,000. Therefore, on January 2, 2011, when the second NPA finalizes, the correct tax amount for tax year 2008 is $3,500,000 ($2,000,000 + $800,000 + $700,000). Because the correct tax amount exceeds the amount of tax shown on the original return by more than $1,000,000, X is subject to the 20 percent large corporate understatement penalty under R&TC Section 19138. The amount of the penalty is $300,000, or 20 percent of the total understatement of $1,500,000 (correct tax of $3,500,000 minus tax shown on original return of $2,000,000).

    On March 1, 2011, X files a claim for refund for $600,000 for tax year 2008. FTB allows the claim for refund. At this point, the correct tax amount is $2,900,000 ($3,500,000 – $600,000), which is only $900,000 in excess of the tax shown on the original return, which is also less than the $1 million penalty threshold. Therefore, X is no longer subject to the large corporate understatement penalty under R&TC Section 19138, and FTB will cancel and refund the $300,000 penalty previously paid.

Combined report

  1. If a unitary group files a single group return using the combined reporting method, how do the unitary members compute the $1 million understatement of tax threshold?

    If two or more corporations are required to be included in a combined report under R&TC Section 25101, or are authorized to be included in a combined report under R&TC Section 25101.15, the $1 million threshold amount applies to the aggregate amount of the tax liability of all taxpayers that are required or authorized to be included in the combined report. (R&TC Section 19138(a)(2).)

    Tax Year ending 12/03 Combined Corp A Corp B Corp C
      30% 10% 19.985% .015%
             
    Amount of tax required to be shown on the return 1,500,050 500,000 999,250 800
    Less: Amount of tax shown on the return 2,400 800 800 800
    Understatement of tax 1,497,650 499,200 998,450 0
             
    Understatement of tax threshold 1,000,000      
    Does the aggregate understatement of tax for all taxpayers included in the combined report exceed the threshold? Yes      
  2. How is the penalty computed where a single group return is filed using the combined report method?

    The penalty for each taxpayer in the combined group is computed by determining each taxpayer’s understatement of tax, and then applying the 20 percent penalty to that amount. This is similar to the way the tax liability is computed when a single group return is filed using the combined report method. The penalty liabilities of the electing group members are then aggregated and reported on a group basis.

    Tax Year ending 12/03 Combined Corp A Corp B Corp C
      30% 10% 19.985% .015%
             
    Amount of tax required to be shown on the return 1,500,050 500,000 999,250 800
    Less: Amount of tax shown on the return 2,400 800 800 800
    Understatement of tax 1,497,650 499,200 998,450 0
             
    Understatement of tax threshold 1,000,000      
             
    Does the aggregate understatement of tax for all taxpayers included in the combined report exceed the threshold? Yes      
    Does the penalty apply?   Yes Yes Yes
             
    Large Corporate Understatement Penalty (20 percent) 299,530 99,840 199,690 0
  3. Upon examination, if FTB determines that additional members should be included in the combined reporting group or members should be excluded from the combined reporting group, which entities are subject to the penalty?

    The $1 million threshold applies to the aggregate amount of the tax liability of all taxpayer members that are required or authorized to be included in the combined report. (R&TC Section 19138(a) (2).) In the case of additional members required to be included in the combined reporting group, all taxpayer members of the revised combined reporting group (including those additional members) would be subject to the penalty if the $1 million threshold is met in the aggregate for all the taxpayer members that are required to be included in the combined report. In the case of taxpayers required to be excluded from the original combined reporting group, all remaining taxpayer members of the revised combined reporting group (excluding those taxpayers determined to not be a part of the original combined reporting group) would be subject to the penalty if the $1 million threshold is met in the aggregate for all the taxpayer members that are required to be included in the revised combined report. In addition, if taxpayers that are being excluded from the original combined reporting group are included in another combined reporting group or are required to file separately and the $1 million threshold is met (in the aggregate for the additional combined reporting group or separately for those taxpayers required to file separately), those excluded taxpayers would be subject to the penalty.

  4. If I have been granted a variation under R&TC Section 25137, am I protected from the penalty?

    No. A variation from the standard apportionment and allocation rules granted by the FTB under R&TC Section 25137 does not protect you from the large corporate understatement penalty if an understatement of tax occurs. There are two exceptions to the penalty described in General FAQ #8. A variation granted by FTB under R&TC Section 25137 does not meet either of these exceptions. Note: If the taxpayer was granted a variation for a particular year or set of years, and the facts are consistent with those facts relied upon in granting the variation, there should be no understatement of tax attributable to that variation. However, if the facts are different from those facts provided and relied upon in granting the petition, an understatement of tax may occur.

Amended returns and tax payments for the 2003 – 2007 tax years

  1. How can I increase the amount of tax treated as shown on the original return for the 2003 – 2007 tax years?

    For tax years beginning on or after January 1, 2003, and prior to January 1, 2008, if you file an amended return on or before May 31, 2009, that self-assesses additional tax, and you pay the tax shown on the amended return on or before May 31, 2009, then the tax shown on the amended return will be treated as the tax shown on the original return for purposes of computing this penalty for any subsequent adjustments to the tax for that tax year. The amount of additional tax that you self-assess on such an amended return will reduce, but not necessarily eliminate, the potential for subsequent assessment of the penalty.

  2. How should I file these amended returns?

    If you are filing an amended return by May 31, 2009, for a tax year beginning before January 1, 2008, write in red on top of the Form 100X “Amended under R&TC section 19138(b)”. You should prepare the amended return in the same manner as you would for any amended return, including providing a detailed explanation of any adjustment to taxable income or loss, or credit items, using the best information available at the time the return is filed. Supporting documentation should be retained and made available to FTB upon request. An amended return that does not satisfy this standard for completeness will not be treated as an amended return under R&TC section 19138(b). “Tax deposits” without a complete amended return will not serve to increase the base amount against which future understatements of tax are measured under R&TC section 19138.

  3. I am currently under federal examination, but I don’t know what adjustments the IRS will make. Can I just make a payment for the impacted year and file a "blank" amended return without an explanation of the adjustments to satisfy the requirements under R&TC section 19138(b) to increase the base amount against which future understatements of tax are measured?

    No. Any amended return without a detailed explanation of adjustments will not be accepted as an amended return that satisfies the requirements under R&TC section 19138(b) to increase the base amount against which future understatements of tax are measured. A blank amended return without an explanation of the adjustments or an amended return using an explanation similar to “protective adjustment to avoid R&TC section 19138 penalty” will not satisfy the requirements under R&TC section 19138(b). Upon receipt of incomplete amended returns, FTB will notify the taxpayer of the incomplete status of the amended return and allow the taxpayer an opportunity to perfect the amended return by providing a detailed explanation of the adjustments. If the taxpayer does not submit a complete amended return, FTB will treat the payment as a tax deposit and will not treat the taxpayer as having satisfied the requirements of R&TC section 19138(b) for purposes of increasing the tax base.

  4. What is the deadline to file these amended returns?

    The amended return and full payment of the amount of tax shown on the amended return must be mailed and paid on or before May 31, 2009. Because May 31, 2009 is a Sunday, amended returns for taxable years 2003-2007 may be filed and payments may be made on the next business day, June 1, 2009. (See Government Code section 6707.)

  5. How do I make the payment?

    If you are required to make payment by electronic funds transfer (EFT), then follow the normal process for making an EFT payment. If not, include your check or money order payable to the Franchise Tax Board with the amended return. Write the taxpayer's full name, tax account number, and the tax year on the check or money order. When making payments through EFT, please use the same code (02512) as for a “Notice of Proposed Assessment” or “NPA” payment type.

  6. When I filed my 2007 return, I designated the overpayment for 2007 to apply to the 2008 estimate payment. Can I re-designate that payment to satisfy the R&TC section 19138(b) requirement to pay the tax shown on an amended return for a pre-2008 taxable year?

    No. Based on R&TC section 19364 and Rev. Rul. 77-339, once that overpayment has been applied as a credit against estimated tax for the succeeding year, the payment cannot be claimed as a credit for other than the estimated tax year. However, if the 2008 return is filed and an overpayment is allowed prior to May 31, 2009, for the 2008 tax year, that overpayment can be claimed as a payment towards the amended return filed under R&TC section 19138(b) on or before May 31, 2009. To elect to apply this 2008 overpayment as a payment for a prior year, indicate at the bottom of side 1 of your 2008 original return “overpayment to be applied to TYE MM/DD/YY”.

  7. Where should I mail these amended returns?

    Franchise Tax Board
    PO Box 942857
    Sacramento, CA 94257-0500

  8. What if I don’t agree with, or have disputes pending on, the items adjusted on any of these amended returns? What should I do?

    After filing any amended return as described above, if you are not in full agreement with the adjustments, then you should file a claim for refund after May 31, 2009. If you do so, please write in red on top of the Form 100X “Claim filed after R&TC section 19138(b) amended return”. You should prepare the amended return in the same manner as you would for any amended return, including providing a detailed explanation of any adjustment to taxable income or loss, or credit items, using the best information available at the time the return is filed. Specify the grounds for filing the claim for refund. Supporting documentation should be retained and made available to FTB upon request.

  9. If the claim for refund is allowed in part or in full, what is the interest rate on the overpayment?

    The interest rate on the overpayment will be the same as the normal refund interest rate, which is based on R&TC section 19521 and IRC section 6621 and determined by the 13-week U.S. Treasury bill rate.

  10. Where should I mail my claim for refund?

    Franchise Tax Board
    PO Box 942857
    Sacramento, CA 94257-0502

  11. Can I mail both the amended return and claim for refund in the same package to the FTB?

    Yes, you can include both returns in the same package. Please make sure the signature date on the claim for refund is later than the signature date on the amended return that reports additional tax. FTB will process that amended return self-assessing additional tax before processing the claim for refund. You may use the mailing address specified under FAQ #28.

  12. I just received an NPA for a pre-2008 tax year. I agree with the assessment and plan to pay in full soon. Am I still subject to the penalty? Should I file an amended return to reflect the changes on the NPA to avoid the penalty?

    For the limited purpose of administering this penalty, FTB will agree to treat a taxpayer’s agreement with and payment of a final deficiency assessment on or before May 31, 2009, as a self-assessment and will not require the filing of a formal amended return showing only the previously agreed change where the taxpayer makes an election to treat that final deficiency assessment as a self-assessment of tax shown on an amended return. This election may be made on FTB 650. Please mail this election and submit the deficiency payment no later than May 31, 2009. If a taxpayer satisfies both of these requirements, then FTB will treat the election and payment as filing an amended return and paying the amount shown on that return for purposes of computing the base amount against which future understatements will be measured under R&TC section 19138.

  13. Where should I mail this election form to be released by FTB?

    Franchise Tax Board
    PO Box 942867
    Sacramento, CA 94267-2222

  14. I just received an NPA. I disagree with all of the adjustments and plan to protest soon. How can I avoid the penalty? Do I have to file an amended return and file a claim for refund later?

    Please follow the steps in FAQ # 33. In addition, you must provide the grounds for your dispute with the election form (FTB 650) to treat the election as a claim for refund.

  15. I just received an NPA, and I only want to self-assess a portion of the adjustments on the NPA. How can I avoid the penalty? Do I have to file an amended return or can I make the election on the FTB 650?

    The taxpayer must file an amended return to self-assess some, but not all, of the adjustments shown on the NPA. The taxpayer cannot make the election on the FTB 650 with respect to only a portion of the tax shown on an NPA.

  16. I received an NPA for a pre-2008 tax year and currently the NPA is under protest. Am I subject to the penalty when the notice finalizes? If I want to reduce my exposure to the penalty, do I have to file an amended return by May 31, 2009?

    If the $1 million threshold is met, the penalty will apply to the understatement of tax when the notice finalizes. If you wish to reduce your exposure to the penalty on the protested amount, you can elect to have the protested tax amount be treated as tax shown on an amended return by filing the election form (FTB 650). This form must be mailed and the deficiency payment remitted to FTB by May 31, 2009. FTB will treat the amount of tax on the NPA as the tax shown on an amended return.

    If you do not want FTB to treat all of the NPA adjustments as the adjustments shown on the amended return or you would like to include other adjustments not reflected on the NPA as the adjustments shown on the amended return, you CANNOT make the election on the FTB 650 but must instead file an amended return and pay the tax shown on the amended return by May 31, 2009, to avoid the penalty on the additional tax on the included adjustments. Any portion of the NPA adjustments NOT included in the amended return may be subject to this penalty if those adjustments are ultimately sustained, because those excluded adjustments would not increase the base amount shown on the original return.

  17. If I am currently under state or federal examination for a pre-2008 tax year, how can I reduce my exposure to the penalty?

    For federal audit activity, if FTB has not issued an NPA on the tax year for the applicable federal adjustments, you should consider filing an amended return that reflects the anticipated applicable federal adjustments and pay the tax shown on the amended return on or before May 31, 2009, in order to satisfy R&TC section 19138(b) to increase the base amount shown on the original return.

    If you are currently under state examination and you have not received an NPA, you should consider filing an amended return that reflects the anticipated adjustments and pay the tax shown on the amended return on or before May 31, 2009, in order to satisfy R&TC section 19138(b) to increase the base amount shown on the original return.

  18. I received an NPA for a pre-2008 tax year that is currently under protest. There is only one adjustment on the NPA, which resulted in additional tax of $3,000,000. If I want to reduce my exposure to the penalty with respect to a portion of the NPA adjustment, can I use the election form (FTB 650) and pay only $2,000,100?

    No, you cannot use the election form (FTB 650) to report only a portion of the NPA adjustment. If you make the election with respect to the protested NPA, we will treat it as a self-assessment of the full amount of proposed additional tax (i.e., as if the entire NPA adjustment was reported on an amended return). If you make a payment that is less than the full amount, the unpaid balance will become due and payable under R&TC section 19221. Only the amount that is both paid on or before May 31, 2009, and shown on an amended return or the election form (FTB 650) filed on or before May 31, 2009, will be treated as an amount "shown on an original return" for purposes of R&TC section 19138(b).

  19. After FTB initially assesses the large corporate understatement penalty, if the correct tax liability is subsequently reduced by an audit determination or a claim for refund that is allowed, will the penalty be reduced and refunded automatically, or do I have to file a separate claim for refund requesting that the penalty be reduced and refunded?

    Every time there is a new final tax liability for the tax year, FTB will recompute the penalty to determine the correct amount of the penalty, whether the penalty increases or decreases. As a result, FTB will send an additional bill for any increased penalty amount or will refund any reduced penalty amount. Taxpayers do not have to file a separate refund request for any reduced penalty. If you disagree with FTB's computation of the amount of the penalty, you can file a claim for refund under R&TC section 19138(e).

  20. If amended returns are filed under R&TC section 19138(b) that increase the tax shown on the original return, thereby creating an underpayment, does the underpayment of estimated tax penalty apply?

    No, even though the underpayment amount used in the computation of the estimated tax penalty is based on the amount shown as tax on an original return, the amount of tax shown on an amended return filed under R&TC section 19138(b) for tax years 2003-2007 will be treated as tax shown on the original return only for purposes of R&TC section 19138. Therefore, any underpayment created by an increase in self-assessed tax from an amended return will not be treated as an underpayment for purposes of computing the penalty under R&TC section 19142.

  21. Will a payment of only tax, and not interest, with an amended return or with the election form (FTB 650) satisfy the payment requirement under R&TC section 19138(b)?

    Yes. R&TC section 19138(b) provides that the taxpayer must file an amended return and pay the tax shown on the amended return on or before May 31, 2009. As the taxpayer is self-assessing and paying the tax shown on the amended return or election form (FTB 650), the requirements of R&TC section 19138(b) are satisfied and the base amount for measuring a future understatement will be increased by the amount of tax paid.

    Underpayment interest will be computed automatically by FTB when the amended return is processed and the taxpayer may receive a bill for any unpaid interest.

  22. I currently have a case in the Settlement Bureau involving one or more tax years of 2003-2007. Am I subject to the penalty? How can I reduce my exposure to the penalty?

    If your case will not be settled by May 31, 2009, and the $1 million threshold is met, the penalty will apply to the understatement of tax when the case is finalized. To reduce your exposure to the penalty you need to file an election form or amended return pursuant to the process described in FAQ #37.

    Similarly, if you do not settle your case, and the $1 million threshold is met, the penalty will apply to the understatement of tax when the assessment is finalized. To reduce your exposure to the penalty you need to file an election form or amended return pursuant to the process described in FAQ #37.

    If your case is settled and pending final approval, and the taxpayer signs a Settlement Agreement and pays the agreed settlement amount on or before May 31, 2009, the Settlement Agreement will serve as an amended return solely for purposes of computing the penalty, and the amount of tax paid pursuant to the Settlement Agreement will be treated as a self assessment of tax for purposes of the penalty. If the settlement does not receive all necessary approvals, the portion of the assessment not paid as part of the settlement may be subject to the penalty if adjustments associated with such amounts are ultimately sustained.

    Further questions about the interaction of the penalty and FTB's Settlement Program can be directed to:

    Patrick J. Bittner, Director
    Settlement Bureau, Mail Stop A270
    Franchise Tax Board
    P.O. Box 3070
    Rancho Cordova, CA 95741-3070
    Telephone: 916.845.5624
    Fax: 916.843.5408
    Email: Patrick.Bittner@ftb.ca.gov

    Cindy Rogers, Administrator III
    Settlement Bureau, Mail Stop A270
    Franchise Tax Board
    P.O. Box 3070
    Rancho Cordova, CA 95741-3070
    Telephone: 916.845.4891
    Fax: 916.845.4747