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Call Kurtis: Why Didn't The State Catch the Fact I Overpaid Taxes?

SACRAMENTO (CBS13) — If you underpay on your taxes, you might expect the state to catch it and make sure you pay. But does the state pay attention if you overpay?

Rebecca Pinckard says she overpaid on her state taxes and is upset the state did not catch it.

When times got tough, Rebecca and Wayne Pinckard almost lost their family home of nearly fifty years.

"Everybody always used to come here to grandma's house," said Rebecca.

Fortunately for the Pinckards, in 2013 their lender agreed to a loan modification and forgave $48-thousand of mortgage debt.

"We signed off and thought everything was great," said Rebecca.

The state normally treats forgiven mortgage debt as income, so the Pinckards would end up owing the state nearly $4-thousand in taxes. Shortly after getting the bill, the couple set up a payment plan with the California Franchise Tax Board. But then, state Lawmakers retroactively suspended those taxes enacting the "Mortgage Forgiveness Debt Relief" Bill.

The Pinckards kept making payments after the law was passed on the debt they no longer owed.

"Before I made that first payment, they should've contacted me and they didn't," said Rebecca.

Rebecca says she discovered the oversight by accident when she was on the phone with a taxpayer-advocate making adjustments to their payment plan and was told about the law. Ultimately, the retired grandparents paid the Franchise Tax Board $28-hundred in taxes. They feel if the circumstances were reversed and they owed money, the state would've caught it.

The Franchise Tax Board's Daniel Tahara could not talk specifically about the Pinckard's case but says every single tax return goes through a validation process. We asked Tahara how often the Franchise Tax Board catches overpayments versus underpayments. He says the agency does not keep track of those figures.

He says they did publicize information about the law once it passed through the media and online advertisements. However, he admits, "It's possible that there are people who fell through the cracks."

He acknowledges they may not always catch these overpayments, especially when the laws are passed retroactively after taxes are filed. In addition, Tahara says if you overpaid on your taxes, you have four years from the filing to amend them and, "We would refund the money plus interest." Currently that interest rate is 3-percent.

The Pinckards ended up filing their amended paperwork and got a refund check from the FTB. Though, they are concerned for other Californians who might have fallen through the cracks and paid taxes they did not owe.

"This can be something big, bigger than me," said Rebecca.

The Franchise Tax Board says if you think you may have overpaid or have any questions you can live chat with the FTB through its website and you can even ask its legal department questions.

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