Ruling Nº 2021-01 from the State of California, 2021

• Ruling Number: 2021-01
• Year: 2021
• Date: 04 June 2021
• Type of Document: FTB Notice

STATE OF CALIFORNIA

FRANCHISE TAX BOARD

Legal Division MS A260

PO Box 1720

Rancho Cordova, CA 95741-1720

chair Betty T. Yee| member Antonio Vazquez| member Keely Bosler

June 04, 2021

FTB Notice – 2021 – 01

SUBJECT: PROCEDURES TO PROVIDE ALTERNATIVE IDENTIFYING INFORMATION FOR

CERTAIN DEPENDENTS UNDER CALIFORNIA REVENUE AND TAXATION CODE SECTION

17054(d), RELATED TO CLAIMING DEPENDENT EXEMPTION CREDITS

PURPOSE:

This Notice prescribes the procedures for taxpayers to provide alternative identifying

information for dependents, who are ineligible to receive a social security number ("SSN")

and a federal individual taxpayer identification number ("ITIN"), to claim Dependent

Exemption Credits under California Revenue and Taxation Code ("RTC") section 17054(d).1

BACKGROUND:

The ITIN is a tax processing number issued by the Internal Revenue Service ("IRS") to

individuals who are required to have a U.S. taxpayer identification but who do not have, and

are not eligible to obtain, an SSN. The ITIN is issued regardless of immigration status

because both resident and nonresident aliens may have a federal filing or reporting

requirement under the IRC. The IRS requires ITIN applicants to show a federal tax purpose

for seeking the ITIN. (IRC section 6109(i).)2

The ITIN is also used to serve a state tax purpose because taxpayers who have a California

tax return filing requirement are required to provide either their SSN or ITIN to file their state

tax return. (RTC section 18624.) Taxpayers were also required to provide a dependent's SSN

or ITIN to claim certain credits in California like the Dependent Exemption Credit prior to the

passage of Assembly Bill 2247. (RTC section 17054(d)(2)(A).)

Effective for taxable years 2018 through 2025, the Tax Cuts and Jobs Act ("TCJA") changed

the federal dependent exemption deduction amounts to $0, effectively eliminating the

deduction at the federal level. (Pub.L. No. 115-97 (Dec. 22, 2017); IRC section151(d)(5).)

This federal law change has impacted taxpayers claiming dependents who reside in Canada

and Mexico because without the federal dependent exemption deduction, the IRS has

1 “Dependents” in this Notice refers to those who are a "dependent" as defined under

Internal Revenue Code ("IRC") section 152. (RTC section 17056.)

2 See https://www.irs.gov/individuals/international-taxpayers/individual-taxpayer-

identification-number-itin-reminders-for-tax-professionals