SACRAMENTO (CBS 5) – Just days before the tax-filing deadline, the California Franchise Tax Board dropped its campaign to get California homeowners not to deduct part of their property tax bill.

Last fall, the FTB started telling taxpayers and tax preparers that could only deduct the portion of their tax bill that was based on the assessed value. It would mean that taxpayers would lose the ability to deduct taxes that included Mello-Roos and school parcel taxes.

But, it turns out the board flipped the script. The state now says that homeowners may continue to count their entire property tax bill, as a deduction. This could mean thousands of taxpayers may have to amend their taxes.

Our Guide To Tax Filing Day

It may come as a stress to some taxpayers because they do not have much time to correct their returns if they did not deduct parcel taxes.

Some taxpayers were not even aware of the late notice. The FTB asked the IRS to look into its rule change last year. But, the IRS claimed they never received the letter, and by the time it was reviewed, it became last-minute. According to the FTB, it was encouraging taxpayers to abide by the new rules when they file their 2011 taxes.

Many people did follow the change. And those people can amend their taxes and possibly see a bigger refund.


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