POAs & the FTB: Tips & Best Practices for Submitting a Power of Attorney.

• Author: Coffill, Eric J.

To represent another person or entity before the FTB, a Power of Attorney (POA) is required. The FTB has two standard POA forms that must be used: Form 3520-PIT for individuals (and estates and trusts), and Form 3520-BE for business entities or group nonresidents. Both forms are relatively straightforward and include specific line instructions. Additional instructions for each form can be found on FTB's website: ftb.ca.gov/forms/misc/3520-pit-instructiom.html

Yet for 2022, the FTB POA rejection rate is approximately 25 percent. (The positive news is the rejection rate is falling significantly; it was 60 percent in 2017). On average, this is a high-volume operation the FTB processes approximately 90,000 POAs each year. A rejection rate of 1 in 4 suggests practical difficulties in getting it right the first time.

Here are some helpful tips for having your POA submission accepted the first lime and for anticipating problems in using the POA.

Top 3 Tips

First, while paper POAs can still be submitted by mail, use the online submission in MyFTB. This avoids the dangers of lost or delayed mail and makes for faster processing by the FTB. You want your POA processed as fast as possible because if it's rejected, you want to know as soon as possible to correct the errors and resubmit.

Second, do not submit POAs at the last minute because a POA is only active once the FTB approves it and approval is not immediate. FTB aims for a turnaround time of 15 business days. Then, if the POA is rejected (which statistically happens in 1 of 4 cases), it must be resubmitted, so it will take another 15 business days for resubmission and (hopefully) approval.

Third, use the current FTB forms and follow the instructions. There is no substitute for following instructions. While this point may seem obvious, common reasons for rejection are the submitted POA is not completed correcdy or is incomplete.

The FTB has no tolerance for submissions that are incorrect, and if the required item is omitted or incorrect, expect the POA to be rejected. If submitting online and attaching the taxpayer's signed POA, the information entered online must match the POA form.

By Eric J. Coffill

Eric J. Coffill is the senior counsel at Eversheds Sutherland (US) LLP. You can reach him at ericcoffill@eversheds-sutherland.com.

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