Ignoring for the moment tax controversy work with the California FTB—e.g., audits, protests and settlements—how can one go about obtaining advice from FTB on planning and policy issues? A number of options come to mind. 

Chief Counsel Ruling
One can ask the FTB Legal Division for a “Chief Counsel Ruling” under Revenue and Taxation Code section 21012. This is the only binding legal advice available from the FTB with respect to a specific issue. These are taxpayer-specific rulings furnished by the FTB in response to requests made by taxpayers. As long as the facts represented by the taxpayer in the ruling request have not (materially?) changed and the law has not (materially?) changed, the ruling is binding upon the FTB.

Think of this as FTB’s version of an IRS private letter ruling. They are not easy to get, for the reasons explained in FTB Notice 2009-08 that sets forth the guidelines for requesting one. For example, only one was issued in 2021; none in 2022 or 2023; and one so far in 2024. Because of the limitations, I have only obtained one in my career. However, a positive feature of the process is that if one makes a request and it appears a ruling will not be favorable, the request can be withdrawn.

Ask a Legal Expert
Available on the FTB’s website this feature states “our legal staff can give informal answers to basic legal questions about taxes the Franchise Tax Board administers.”

When one makes a request, you will receive a standard response to the effect that “if the question is within the scope of our protest, you should receive a full response within approximately 2-3 weeks.” If not within the program, you should be notified within three business days. This is not formal written advice within the meaning of Section 21012 (i.e., a Chief Counsel Ruling).

A Simple Phone Call
You can call someone at the FTB and see if they will talk to you, informally, of course, about your issue. The odds of success likely depend upon whether 1) you are calling someone with whom you have a working relationship with; 2) you are calling someone knowledgeable on the subject of your question; and 3) you have done your homework before calling so you are being professional and not wasting FTB’s time.

The FTB’s website has various phone numbers, including for the Legal Division, at ftb.ca.gov/tax-pros/law/legal-division-staff-directory.html. 

Take a Meeting
I have done this on many occasions with FTB legal, and they are generally very open about considering such requests. But, to the points above, be sure you have done your homework and are being professional.

Interested Parties Meetings
While not technically a way to obtain advice from FTB, “Interested Parties Meetings” (IPMs) can help ferret out the FTB’s position on a particular issue. The FTB typically schedules IPMs when it’s considering promulgating a formal regulation or amending an existing regulation under the California Administrative Procedure Act (APA).

However, IPMs are outside the formal regulatory structure under the APA and are informal meetings for FTB staff to solicit public input on how or whether to proceed with a regulation project. Not only can members of the public speak and react to FTB’s proposals, but staff will also often make comments on their current thinking of the issue.

Sometimes the process is a long one. For example, in June 2021, the FTB held its sixth IPM on proposed changes to its existing Regulation Section 25136-2 market-based sourcing rules for sales of other than tangible personal property. Typically, IPMs lead to FTB formally amending its regulations, but sometimes not. For example, in 2008, FTB held an IPM on amending its Regulation Section 25137-11 trucking regulation following an administrative decision in Appeal of Swift Transportation, but concluded after the IPM there did not appear to be a need for changing the regulation and no changes were made. 

Do a Little Reading
While also not technically a way to obtain advice, manuals are available online and provide insight into the FTB’s thinking on particular issues. In my experience auditors tend to follow them, but they are not authoritative and cannot be cited to support a position by either an auditor or a taxpayer. They are often fairly substantive, e.g., the Multistate Audit Technique Manual. On the other hand, some are a bit thin on content, e.g., the FTB’s Collection Procedures Manual. Also, be careful to look for the date they were last updated. But overall, they remain a great tool for practitioners.