California FTB Notice Preliminary Request for Information (PRI) Letter (AUD 1528)

The AUD 1528 is the California FTB’s Preliminary Request for Information letter — the first formal step in a California state income tax audit. The FTB’s audit division sends this letter when they’ve selected your return for examination and want specific documents and records before the audit begins in earnest. It typically requests items like bank statements, business records, income documentation, and explanations for specific deductions or income items shown on your return.

The ‘AUD’ prefix means it originated from the FTB’s Audit Division, not their collections or processing branches. This is significant because it indicates the FTB has decided to examine your return in detail, not just flag a simple mismatch. The scope listed in the AUD 1528 tells you which tax years are under review and what specific areas they’re focused on — which gives you insight into what triggered the audit.

The AUD 1528 isn’t optional. You’re required to respond, and the information you provide shapes the entire audit trajectory. What you send — and what you don’t send — sets the tone for the FTB auditor’s conclusions. We treat the AUD 1528 response as one of the most strategically important documents in any state audit.

The AUD 1528 specifies a response deadline — typically 30 days from the date of the letter, though it can vary. The deadline is firm: missing it gives the FTB grounds to proceed with the audit based on available information, which means they may disallow deductions or adjust income without the benefit of your documentation. Under Revenue and Taxation Code Section 19057, the FTB can also extend the statute of limitations on assessment in certain circumstances, which could put additional years at risk.

If 30 days isn’t enough time to gather the requested documents — especially for complex business returns, multi-year audits, or situations where you need to contact third parties for records — you can request an extension. Extensions are generally granted for the first request if you contact the auditor before the deadline and explain the reason. Second extensions are less routinely approved. Get the extension in writing, specifying the new deadline.

One important timing consideration: if you file a California Power of Attorney (FTB Form 3520) for a representative, the response can come from them rather than you. The auditor will direct future correspondence to the representative once the POA is on file. Getting representation in place quickly after receiving the AUD 1528 is important — your representative can request the extension and buy time to review your records properly.

The AUD 1528 specifically lists the records the FTB wants, so start there. Common requests include bank statements for all accounts (personal and business) for the audit year, federal tax returns, W-2s and 1099s, profit and loss statements for self-employment income, receipts and records supporting deductions claimed (like business expenses, charitable contributions, or home office deductions), and documentation of any large non-recurring items like asset sales or inheritance.

Don’t send originals — send copies and keep the originals. Organize your response by the categories listed in the AUD 1528, so the auditor can easily match your documents to their questions. Include a cover letter that summarizes what you’re sending and references each item number from the AUD 1528. A disorganized response slows down the audit and can lead auditors to question whether you have good records overall.

Be careful about over-disclosure. Send exactly what’s requested, not everything in your file cabinet. Volunteering documents beyond the scope of the AUD 1528 can open new audit issues the FTB wasn’t originally focused on. We review the AUD 1528 carefully to identify the specific scope and then help clients organize responses that address each point completely without expanding the audit’s reach.

After reviewing your AUD 1528 response, the FTB auditor follows up with their preliminary findings. If they identify issues — unreported income, disallowed deductions, credit adjustments — they’ll issue a Notice of Proposed Assessment (NPA). The NPA gives you a specific proposed tax, penalty, and interest amount and a 60-day window to agree, pay, or protest. Penalties on audit assessments typically include a 20% accuracy penalty under Revenue and Taxation Code Section 19164 if the FTB finds you were negligent or substantially understated income.

A good AUD 1528 response often prevents an NPA entirely. If your documentation clearly substantiates everything on your return, the auditor may close the audit with no changes. Audits that result in ‘no change’ decisions do happen — they’re the best possible outcome. Responding thoroughly with well-organized, complete documentation is your best chance of getting there.

If the FTB issues an NPA despite your response, you have protest rights. A formal protest under Revenue and Taxation Code Section 19041 preserves your right to contest the findings before the FTB and, if needed, appeal to the California Office of Tax Appeals. We handle both the AUD 1528 response and any resulting protest, keeping the entire process consistent and making sure the auditor’s proposed adjustments are challenged wherever the facts support it.

Most California FTB audits aren’t random. The AUD 1528 is usually triggered by a specific discrepancy or audit indicator — a deduction ratio that falls outside statistical norms for your income level, a mismatch between reported income and third-party information returns, a federal audit that California picked up through information sharing with the IRS (California receives federal audit results under IRC Section 6103(d)), or income items that appear unusual for your industry.

Common triggers include large Schedule C losses, home office deductions, high charitable contribution ratios, significant vehicle expense deductions, and unreported 1099 income. California also audits more aggressively when a taxpayer claims the nonresident or part-year resident status on their return — the FTB scrutinizes domicile changes carefully, especially moves out of California to no-income-tax states like Nevada or Texas.

Understanding why you were audited guides the response. If the AUD 1528 references your home office deduction, the auditor’s primary concern is substantiation — you need square footage records, photographs, and usage documentation. If it relates to self-employment income, they’re looking at whether all income was reported and whether expenses were legitimate. We analyze the scope of the AUD 1528 to determine the likely trigger and build a response that addresses the FTB’s core concern directly.