California State Tax Enforcement Decision Checklist
Understanding FTB Enforcement Actions
The California Franchise Tax Board initiates enforcement when unfiled returns, unpaid tax balances, or unresolved audit adjustments remain unaddressed after standard notice periods.
Enforcement represents a formal shift from routine billing to active collection procedures authorized under California law.
Common Triggers for Enforcement
One or more years of unfiled California income tax returns can trigger an enforcement review.
Unresolved balances from prior notices often lead to escalated collection activity. Discovery of unreported income during audit procedures typically results in enforcement if the taxpayer does not respond within stated deadlines.
The FTB does not publish universal day-count thresholds that automatically trigger enforcement, as timing depends on the specific tax year, liability amount, and prior taxpayer response history.
Consequences of Non-Response
Ignoring an FTB enforcement notice leads to escalated collection tools that carry legal authority.
Financial institutions receive levy orders that freeze account funds for ten business days before remitting those funds to the FTB.
The FTB may issue an Earnings Withholding Order to your employer, requiring wage withholding until the debt is satisfied. Recording a Notice of State Tax Lien against real and personal property creates a public record that affects credit and property transactions.
Penalties and interest continue to accrue on unpaid balances throughout the enforcement process. Referral to the California Attorney General or civil court actions may follow for significant liabilities.
Initial Response Steps
Read the complete enforcement notice immediately upon receipt. Locate the notice date, tax years involved, total amount owed with penalties and interest, and any stated response deadline.
Check your personal records for proof of filing and payment for the affected tax years
- Gather prior-year tax returns that show the amounts you filed for each affected tax year.
- Review bank statements that demonstrate you made tax payments to the FTB during the
relevant periods.
- Collect any previous FTB correspondence that references these specific tax years or
balances.
- Determine whether your returns remain unfiled or whether the enforcement relates to
unpaid balances on returns you already submitted.
Calculate the amount you believe you owe independently and compare your calculation to the
FTB’s stated balance. Organize supporting documents by tax year, including W-2 forms, 1099 forms, receipts, and prior return copies.
Payment Plan Options
Personal installment agreements typically allow three to five years to repay balances under
$25,000 when the payment period does not exceed 60 months. Business installment agreements typically allow up to 12 months for balances under $25,000.
Setup fees differ between taxpayer types
- Personal agreements: $34 setup fee added to your balance
- Business agreements: $50 setup fee added to your balance
Processing an installment agreement application takes up to 90 days from submission.
Continue making payments during the application period to prevent additional penalties and collection actions.
Arranging a California FTB installment agreement may prevent or stop wage garnishment if you contact the FTB immediately upon receiving a garnishment notice. Payment plans do not automatically stop enforcement that has already been issued, but they provide an alternative to forced collection in many cases.
Protest and Appeal Rights
A Notice of Proposed Assessment allows 60 days from the notice date to file a protest disputing the proposed deficiency before it becomes a final assessment. Filing a protest gives you the opportunity for administrative review of the underlying tax calculation, though protests do not stop interest accrual.
Following a protest, the FTB issues a Notice of Action that allows 30 days to appeal to the Office of Tax Appeals. Appeal deadlines are strictly enforced, and missing them eliminates your opportunity to contest the assessment through administrative channels.
Collection Statute of Limitations
The FTB can collect unpaid tax liabilities for 20 years from the date the latest tax liability becomes due and payable for that tax year. Assessing collection cost recovery fees, lien fees, installment agreement fees, or final notices of proposed assessment resets the 20-year collection period because these constitute new liabilities.
The 20-year period is tolled during specific circumstances
- Bankruptcy proceedings under federal law suspend the collection period while the case
remains active.
- Approved installment agreements toll the statute while the payment plan remains in
effect.
- Military deployment to combat zones pauses the collection period for the duration of
active service.
- Pending litigation involving the tax liability suspends collection efforts until the case
concludes.
- Federally declared disasters affecting the taxpayer extend the collection deadline during
the disaster period.
California Revenue and Taxation Code Section 19255 establishes the collection period and specifies circumstances that suspend or extend it beyond the standard 20-year timeframe.
Bank Levy Procedures
When the FTB issues a bank levy, your financial institution freezes the levied amount immediately and holds those funds for ten business days before remitting them to the FTB. After the holding period ends, the bank transfers the funds to satisfy your tax debt.
The FTB does not specify a standard timeframe for releasing levies after you pay the balance in full. Contact the FTB directly at the number on your notice to confirm release procedures and verify payment processing.
Documentation Requirements
Document every communication with the FTB in writing by recording the date, time, representative name, and discussion topics for all phone conversations. Send important correspondence by certified mail with a return receipt requested to maintain proof of delivery.
Keep copies of all notices, letters, and documents you submit to the FTB. Create a timeline showing all enforcement steps and your responses to maintain a clear record of the case progression.
Critical Mistakes to Avoid
Missing stated response deadlines eliminates options for disputing assessments or requesting relief through administrative channels. Sending incomplete responses without your Social
Security Number, notice date, and affected tax years delays processing and may result in denial.
Assuming enforcement will resolve without active response leads to continued penalties, interest accrual, and additional collection actions. Failing to file unfiled returns during enforcement increases penalties and complicates resolution efforts significantly.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
We help with
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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