An FTB audit notice can create immediate financial exposure. Your first steps can affect the scope of the review and your ability to challenge proposed changes.
Step 1: Read the notice and confirm the legal timeline
You should identify the tax year under review and the specific issues listed, such as residency, income or deductions. Then confirm the deadlines that apply to you and to the FTB.
According to California Revenue and Taxation Code § 19057, the FTB generally must issue a proposed assessment within a statutory time period in many cases. Knowing that framework can help you evaluate whether the notice appears timely.
Calendar every response deadline listed in the letter, including any “protest by” date.
Step 2: Limit contact until you understand the scope
You may feel pressure to call the auditor right away. A quick call can introduce facts that expand the review beyond the listed issues. You can respond in writing first or route communication through an authorized representative after filing a power of attorney.
Step 3: Organize records around the questioned items
You should gather returns, bank statements, receipts and invoices tied only to the issues under review. Your goal is to match documents to each request, not to send your entire financial history. Use a structured response system:
- Create an index: Match each request to supporting documents.
- Separate by issue: Keep residency, income and deductions in distinct sections.
- Keep duplicates: Save copies of everything you submit.
A focused packet can reduce follow-up requests and keep the audit contained.
Step 4: Review your return before positions harden
Read the audited return line by line with the notice in hand. If you identify an error, you can discuss with a qualified tax professional whether an amended filing is appropriate in your situation.
Step 5: Respond on time and preserve proof
Answer each Information Document Request by the stated deadline. If you need more time, request an extension in writing before it expires. Keep proof of delivery for every submission.
When it may help to consult an attorney
If the audit involves multiple years, large adjustments or a residency dispute, early legal guidance may help you manage risk.