Cal. Rev. & Tax. Code Section 19043.5 was added by the California Legislature during the 2001-2002 legislative session. Under the prior law, if an adjustment proposed by the Franchise Tax Board (FTB) did not result in additional tax due, but only affected the amount of a tax credit that may be carried over to the next year, the FTB could issue a zero-balance notice of proposed assessment under Cal. Rev. & Tax. Code Section 19043. However, the taxpayer’s right to appeal a zero-balance notice of proposed assessment was not clear, because there was no dispute over the amount of tax due. Section 19043.5 was adopted to specifically address this issue.
(The remainder of this article can be accessed in the June 2006 edition of Lexis California Tax Practice Insights.)