California OTA Reverses FTB’s Penalty for Dishonored Payment

The California Office of Tax Appeals (OTA) Sept. 10 issued a decision reversing the Franchise Tax Board’s (FTB’s) denial of taxpayer’s refund claim for the 2022 tax year. The dispute arose from a $103,200 electronic payment scheduled by taxpayer’s CPA that was rejected on Jan. 17, 2023, due to a hacking incident that caused the taxpayer to change their bank account. FTB imposed a dishonored payment penalty on taxpayer, plus accrued interest. The court found that the taxpayer acted reasonably by timely contacting their bank to request acceptance of the electronic payments from their new account and by making timely ...