What to Expect During an FTB Field Audit

Introduction: The FTB Just Scheduled a Field Audit — Now What?

If you’ve received a letter or phone call from the Franchise Tax Board (FTB) saying they’ll be coming to your business or requesting a meeting, you’re about to experience an FTB field audit — and how you respond can make or break the outcome.

Field audits are serious, time-consuming, and highly detailed — but they’re also winnable with the right preparation.

In this guide, we’ll walk you through exactly what to expect during an FTB field audit, how to prepare, what rights you have, and how Orange County businesses can reduce exposure.

📚 What Is an FTB Field Audit?

An FTB field audit is an in-person or remote investigation conducted by the Franchise Tax Board to verify the accuracy of your:

• California income tax returns (personal or business)
• Deductions, credits, or apportionment claims
• Residency, sourcing, and multi-state activity
• Business income and expenses

Unlike mail-based audits, field audits involve direct meetings (in person or virtual), document reviews, and often a visit to your business location or CPA’s office.

🔍 Why Was I Selected for a Field Audit?

Common triggers for field audits include:

• High or inconsistent deductions
• Large Schedule C losses
• Multi-state income or residency issues
• Real estate sales or 1031 exchanges
• Claimed business expenses with no clear income
• IRS audit referral
• Prior audit history or amended returns

👉 What Triggers a California FTB Audit?

🧾 What Happens After You Receive an Audit Notice?

You’ll typically receive a Notification of Audit Contact (Form FTB 1015A or 1015B) explaining:

• The audit year(s)
• The type of audit (income, residency, apportionment, etc.)
• The assigned auditor’s name and contact info
• A proposed meeting time
• A request for specific records

You’ll also receive Publication 1017, which outlines your rights.

👉 Received a Notice from the FTB? Here’s What It Means

📋 What Records Will the FTB Request?

The audit will start with a request for:

• Tax returns (federal and CA) for relevant years
• Bank and credit card statements
• General ledger and income/expense reports
• Receipts for deductions
• Proof of residency (driver’s license, voting records, home utility bills)
• Mileage logs, home office logs, business use percentages
• Sales records (especially for sole proprietors or small business owners)

📅 What to Expect During the Field Audit Itself

The FTB auditor will:

1. Schedule an initial meeting with you or your representative (can be in person or Zoom)
2. Review your documentation and ask questions about income, expenses, and records
3. Tour your business or home office (if relevant and permitted)
4. Issue an Information Document Request (IDR) with a detailed list of needed documentation
5. Prepare a preliminary report outlining proposed changes
6. Provide an opportunity to respond or challenge findings

💡 The entire process can take 3–9 months, depending on the case complexity and your cooperation.

🚩 Common Issues the FTB Targets in Field Audits

• Non-business deductions on business returns
• Commingling of business and personal expenses
• Home office claims without logs or exclusive-use proof
• Misclassified employees (contractor vs employee)
• Apportionment errors for multi-state businesses
• Underreported cash income

🛑 What Not to Do During an FTB Audit

• Don’t lie, guess, or overexplain — provide only what’s requested
• Don’t turn over original records unless required — give copies
• Don’t ignore deadlines — even short delays can raise red flags
• Don’t attend the audit meeting alone — have your CPA or representative present

✅ What to Do If You Disagree with the Results

If the auditor proposes changes:

• You’ll receive a Notice of Proposed Assessment (NPA)
• You’ll have 60 days to protest the audit findings
• If unresolved, the case may move to Office of Tax Appeals (OTA)

👉 What Happens If You Ignore FTB Notices

🧭 How Boulanger CPA Helps with FTB Field Audits

We help individuals and businesses across Orange County — including Irvine, Anaheim, Santa Ana, and Fullerton — by:

• Communicating directly with the auditor
• Preparing your books and documentation
• Attending audit meetings on your behalf
• Responding to IDRs and protest filings
• Minimizing audit exposure and closing the file quickly

📞 Call 657-218-5700
🌐 www.orangecounty.cpa

Frequently Asked Questions

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, based in Orange County, California.

With over a decade of experience helping individuals and businesses resolve serious IRS and State tax issues, Marc specializes in tax resolution strategies including Offers in Compromise, wage garnishment relief, and back tax compliance.

He is licensed as a Certified Public Accountant in both California and Oklahoma, and has a proven track record of helping clients settle complex tax debts and regain financial stability.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.