First days in the life of a tax return
Once your clients' tax returns are in the mail, they join thousands of others that arrive at FTB by the truckload each day. Have you ever wondered exactly what happens to tax returns after they're dropped off at our door? In this brief tour of our processing system, follow the path taken by more than 15 million personal income tax returns, 1.2 million business entity returns, and millions of related documents and payments we receive each year. Keep in mind that e-filed returns get to skip the first two stops described below, and very efficiently enter the stream at the information validation stop.
First stop: Receiving
Each year, we process 30 million pieces of mail, most of it during filing season. Receiving staff open envelopes, sort the contents, and prepare each return and payment for further processing.
- We employ a full-time, year-round workforce of 115 employees, which is augmented by 900 -1,300 seasonal workers during filing season.
- Two shifts per day operate from late February through mid-May.
- For approximately two weeks after April 15 (or April 17 this year), the two shifts per day operate for seven days a week.
- PIT receipts reached an all-time high in April 2006: nearly $11.3 billion for the month, which is a 40 percent increase over April 2005.
Next stop: Information capture and banking
This is where all paper tax payments are cashiered, and where paper tax return information is keyed into our computer systems. In 2006, FTB received over 15 million tax returns, of which almost 9 million were electronically filed. Of the 6 million paper returns filed, 2.3 million were manually keyed, and 3.8 million were scannable returns processed through our high-speed scanners.
- During peak filing season (January through June), 250 temporary workers join 150 permanent, full-time workers.
- Two shifts operate per day during peak season.
- Each day in April, staff transcribes information from 120,000 tax returns, on average, and image-scans more than 100,000 documents.
- More than 9.6 million checks, totaling more than $29.5 billion were cashiered in 2006 (these amounts include estimate payments, and bank and corporation payments).
- Over $2.8 billion dollars were deposited on April 24, 2006 - the record for daily deposits.
One more stop: Information validation
The accuracy of return information is validated after it is keyed into our computer systems, or after we receive it electronically.
All personal income tax returns are "validated" (checked for mathematical errors or illogical entries). Electronically filed returns are validated at the time they are filed, and paper returns are validated after the information capture and banking area either manually keys the return data into our computer system, or processes the scannable returns through our high-speed scanners. If math, keying, or logic errors are present in tax returns, or payments made to FTB, they are referred to the information validation area.
Information validation staff members review the returns and payments, and correct any errors. If there is a change in the amount of tax owed, or refund due, the employee will issue a Return Information Notice (RIN) listing one or more codes that explain any changes made to the return. A RIN may be issued even when there is no change to the amount paid or owed (a "zero balance RIN"), so the taxpayer is notified that we changed certain information on the return.
Last stop: Data storage
At the end of this whirlwind processing journey, most tax returns are retired to our storage facility. The data storage area encompasses over 326,000 square feet of shelf space, and 190,000 square feet of floor space, for storing paper PIT and business entity returns. PIT returns and documents are generally held for four years, and business entity returns for five years. If an audit is opened, this retention period can increase by several years.
We are currently storing more than 107 million documents, including partnership returns, Homeowner and Renter Assistance claims, payment documents, and the paper PIT returns, and business entity returns we have received. The good news is that a steadily increasing percentage of e-filed documents means a steadily decreasing need for such vast amounts of storage space - another great reason to e-file.