California FTB Notice Letter Template (AUD 1521)

AUD 1521 is a California FTB audit correspondence template. It’s the framework FTB auditors use to request information, documents, or explanations during an audit of your California income tax return. The ‘AUD’ prefix identifies it as originating from FTB’s Audit Division, as opposed to notices from Collections or Legal. When you receive an AUD 1521, it means your return has been selected for review.

The content of an AUD 1521 varies — it’s a template, meaning the auditor populates it with specifics. You might receive it asking for substantiation of a business deduction, documentation of income reported, or an explanation of a discrepancy between your California return and the information FTB received from third-party sources like your employer or 1099 payers.

An AUD 1521 is not an assessment. It’s a request for information. How you respond — completely, accurately, and on time — largely determines whether the audit expands, resolves favorably, or leads to a proposed assessment.

The documents FTB requests through AUD 1521 depend on what triggered the audit. Common requests include: receipts and invoices for business expenses deducted on Schedule C, mileage logs if you claimed vehicle deductions, bank statements to verify income, closing documents if you sold real property, and Form 1099s or W-2s if there’s an income discrepancy. FTB auditors also frequently request your federal return for the same year.

If you claimed California-specific deductions or credits — the California Earned Income Tax Credit, the Young Child Tax Credit, or the renter’s credit — the audit may target those specifically. Documentation for these credits includes proof of income, residency in California, and in some cases, age verification for dependents.

One thing auditors also request frequently: copies of prior-year returns and any amended returns you filed. If FTB is looking at a pattern across years, having consistent prior-year records is important. Missing documentation for prior years can make a routine one-year audit expand into a multi-year examination.

The AUD 1521 will state a response deadline on its face — typically 30 days from the notice date. This is a real deadline, not a suggestion. FTB auditors have caseload quotas and move cases along a set timeline. Missing the response date allows FTB to proceed to a proposed assessment based solely on the information it already has — which usually means disallowing the deductions or credits at issue and adding tax, penalty, and interest.

If you need more time, request an extension in writing before the deadline passes. Call the auditor listed on the notice and follow up in writing. Most FTB auditors will grant a 30-day extension on the first request, particularly if you explain what you’re gathering. Extensions beyond 30 days require stronger justification — a medical situation, documents held by a third party, or complex records.

Extensions don’t stop the clock on penalties if a proposed assessment was already in the pipeline. But they do prevent FTB from issuing that assessment while you’re actively working on a response. We manage audit timelines for clients and make sure extension requests are documented and confirmed in writing.

Ignoring AUD 1521 triggers a default outcome: FTB will issue a Notice of Proposed Assessment (FTB 5830) based on what it knows. That means FTB disallows whatever deductions or credits were under review and proposes additional tax plus a 20% accuracy-related penalty under California Revenue and Taxation Code Section 19164. On top of that, interest runs from the original return due date.

After FTB 5830 is issued, you have 60 days to file a written protest with FTB’s Protest Unit. That’s your last administrative remedy before paying or filing in Superior Court. But the protest process is harder and more formal than simply responding to the original AUD 1521 audit letter — you’re now arguing against a proposed assessment rather than submitting routine documentation.

We see clients who thought ignoring an AUD 1521 would make it go away. It never does. The proposed assessment that follows always includes penalties and interest that wouldn’t have applied if the audit had been addressed at the information-request stage. Responding early is almost always the better financial decision.

California’s standard statute of limitations for income tax audits is four years from the later of the return due date or the date the return was filed. That’s longer than the federal three-year window. If your California return was due April 15, 2021, FTB can generally audit it through April 15, 2025. If you filed late, the clock runs from the filing date.

There are important exceptions that extend or eliminate the statute. If you substantially underreported income — by more than 25% of gross income — the limitations period extends to six years under Revenue and Taxation Code Section 19057. If you filed a fraudulent return or didn’t file at all, there’s no statute of limitations. FTB can audit forever.

The AUD 1521 audit letter should reference the tax year under examination. If you receive an AUD 1521 for a year that appears outside the standard four-year window, don’t assume FTB has made an error — verify whether an exception applies before concluding the audit is time-barred. We check the statute question as a first step whenever a client brings in an audit notice.