"PFL benefits are reportable for federal purposes but not state tax purposes. The EDD will provide all claimants with a 1099G form and forward a copy of the 1099G to the IRS. PFL benefits are not taxable or reportable to the California State Franchise Tax Board."
http://www.edd.ca.gov/Disability/FAQ_Employers_Benefits.htm
You may want to contact the Franchise Tax Board for more information regarding the letter.
https://www.ftb.ca.gov/Bills_and_Notices/NTRC/Notice-of-Tax-Return-Change.shtml?WT.mc_id=HP_Slab_NTR...
