Khachatryan: Late Zero-Tax Returns Still Missed the Refund Period

Filing a missing return can correct the picture of what tax was due, yet leave a separate question about recovering money already collected. In Appeal of Khachatryan, 2026-OTA-525 (July 23, 2026), FTB recognized overpayments after receiving returns reporting zero tax. The Office of Tax Appeals nevertheless sustained the refund denials because the claims were late. The decisive distinction was between the return’s calculation and the time allowed to claim the money back.

Unanswered filing notices led to assessments and collection

FTB sent requests for 2015 and 2017 returns and a demand for the 2016 return. The notices asked the taxpayer to file, show the returns were already filed or explain why filing was unnecessary. Its nonfiler program had obtained information about licensing, a permit or employees. The introductory findings and first footnote appear in Khachatryan.

FTB received no responses and proposed assessments for the three years. Those assessments became final without protests. In April 2023, the taxpayer discussed the notices, estimated income and missing returns with FTB and said the returns would be filed. FTB held collection action until June 4, 2023. The returns were not filed by then, and collection followed. Khachatryan states the notice and collection history, including the notices that preceded the final assessments.

A combined collection had to be allocated among the years

The source identifies a September 15, 2023 payment of $28,629.45 obtained from a state tax lien on real property, allocated in part to these tax years. FTB received $5,972.58 for 2015 and $6,456.83 for 2016 on that date. Payments for 2017 occurred on August 13, 2021, September 8, 2023 and September 15, 2023, totaling $4,331.52. The source does not give the individual amounts of those three 2017 payments.

On November 12, 2024, FTB received the missing returns. Each reported zero California total tax. FTB treated them as refund claims and recognized overpayments of $5,665.58 for 2015, $6,436.83 for 2016 and $4,331.52 for 2017. Those recognized amounts differ from some of the collections; they should not be silently replaced with the larger figures. The history begins in Khachatryan and continues onto the next page.

The late filing failed each applicable period

The OTA applied Revenue and Taxation Code section 19306(a), which generally uses the latest of three periods: Four years from filing where a return was filed within the extended due date, four years from the original due date without extensions, or one year from the overpayment. The actual statutory framework and application appear in Khachatryan.

Because the returns were filed late, the four-year period measured from a timely filed return did not apply. The November 2024 claims also fell outside four years of the original due dates and more than a year after the identified payments. The opinion therefore found each claim untimely. Those claims were outside each period on the stated dates. Another claim requires its own payment and filing history.

The preparer explanation did not supply an exception

The taxpayer said he had no job or income during those years and believed returns were unnecessary. He said a CPA had filed returns for other years during the collection dispute, overlooked the years on appeal, and filed them once the omission was discovered. Those were his explanations, not a separate finding that every aspect of the returns or representation had been proved.

The OTA treated that account as a reasonable-cause argument. Applying Appeal of Benemi Partners, L.P., 2020-OTA-144P, it explained that reasonable cause or equitable unfairness did not suspend the refund statute, even where tax was alleged to have been wrongfully collected or not owed. Khachatryan gives the reasoning. Its fifth footnote identifies financial disability under section 19316 as an example of a statutory exception, but records that it was not argued and the facts did not suggest it applied. Any claim to a statutory exception requires its own legal and factual review.

The refund denial survived despite the recognized overpayments

The OTA sustained FTB’s actions. That outcome is stated in Khachatryan. Correcting the return and preserving a timely refund claim were different tasks. The temporary collection hold also belonged to the enforcement history; it did not supply a reason in this record to treat the November 2024 claims as timely.

For a current review, reconstruct each year separately: The return, assessments, actual collections or payments, refund claim and refund decision. Our guide to collections on unfiled returns develops that task. The penalty-relief guide concerns distinct correction and abatement questions, which should not be assumed to extend a refund period.