California’s 20-Year Collection Rule Explained
Introduction: Yes — the FTB Has a Deadline (But It’s Long)
If you owe back taxes to the Franchise Tax Board (FTB), you might assume that debt will follow you forever.
But under California law, the FTB’s right to collect does eventually expire — usually after 20 years.
That’s good news — but there’s a catch: The clock can reset, pause, or extend if you’re not careful.
This guide explains how California’s 20-year collection statute works, what can restart the clock, and how Orange County taxpayers can reduce risk, avoid resets, and possibly discharge old debt.
🧠 What Is the 20-Year Rule?
California Revenue & Taxation Code § 19255 limits the time the FTB can collect an outstanding balance to 20 years from the date of final assessment.
✅ Key Points:
- The 20-year clock starts when the FTB makes a final assessment, not when the return was due
- After 20 years, the liability is “uncollectible by law” and must be removed from your account
- But… the clock can restart or pause under certain conditions
⏳ What Starts the 20-Year Clock?
The clock begins on the assessment date — the day the FTB finalizes what you owe.
This could be:
- The date your return was processed
- The date of a Notice of Proposed Assessment
- The date the FTB files a Substitute Return
You can verify your assessment dates by requesting your FTB account transcript or working with a CPA.
🔁 What Pauses or Extends the Clock?
Several actions can pause or restart the 20-year window. These include:
| Action | Effect on Collection Period |
|---|---|
| Filing bankruptcy | Pauses the clock during proceedings |
| Entering an Installment Agreement | Pauses or tolls the clock |
| Leaving the U.S. for 6+ months | Pauses the clock |
| FTB lawsuit or court judgment | Resets clock if new judgment is filed |
| Voluntary payment after expiration | May reactivate collection under certain conditions |
🔒 What Resets the 20-Year Clock Entirely?
In rare cases, the FTB may obtain a civil judgment in court, which gives them an additional 10–20 years to collect.
This is uncommon, but not impossible — especially for large balances or high-income taxpayers who ignore the debt.
⚠️ Don’t Count on the Clock Without Confirmation
We regularly hear:
“I think it’s been 20 years… so it should just go away.”
Wrong.
You need to:
- Verify the assessment date
- Check for tolling events (e.g., past agreements, bankruptcy filings)
- Confirm no new collection activity restarted the clock
🧾 Example Scenario
A taxpayer had an unpaid balance from 2004. In 2010, they entered an Installment Agreement, then defaulted. In 2017, the FTB filed a lien.
The clock:
- Started in 2004
- Was paused during the Installment Agreement (2010–2013)
- May have been reset or extended by lien or legal filing
💡 In cases like this, the 20-year expiration could now fall after 2030 — not 2024.
✅ How to Check Your FTB Collection Timeline
- Request your account transcript from the FTB
- Identify the date of assessment
- Look for any:
- Installment Agreements
- Bankruptcy filings
- Collection holds
- Lawsuits or judgments
- Calculate remaining collection period
✅ What to Do If You’re Close to the 20-Year Mark
✔️ Option 1: Stay Quiet, Stay Compliant
Don’t trigger a tolling event. Let the clock expire and confirm discharge.
✔️ Option 2: File a Hardship Deferral
If you can’t pay, a hardship deferral may buy you time without resetting the clock.
👉 FTB Hardship Deferral vs IRS Currently Not Collectible
✔️ Option 3: Settle (If the Clock Is Years Away)
If you're still 5–10 years out and can’t afford full payment, consider:
- Offer in Compromise
- Installment Agreement
🧭 How Boulanger CPA Helps Orange County Taxpayers
We help taxpayers in Irvine, Santa Ana, Anaheim, Fullerton, and throughout Orange County:
- Calculate your FTB collection expiration
- Prevent restarts or tolling events
- Negotiate Installment Agreements or settlements if needed
- Defend against FTB liens or levies as the deadline nears
📞 Call
657-218-5700
🌐
www.orangecounty.cpa
Frequently Asked Questions
Does the FTB really have a 20-year collection limit?
Yes. By law, most California tax debts must be collected within 20 years of assessment.
What can pause the 20-year clock?
Installment Agreements, bankruptcies, and out-of-state moves over 6 months.
Can a CPA help verify my expiration date?
Absolutely. We review FTB transcripts and calculate timeline with precision.
If I’m close to the deadline, should I settle or wait?
That depends. If you’re within 2–3 years, you may be better off riding out the clock — with the right strategy.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, based in Orange County, California.
With over a decade of experience helping individuals and businesses resolve serious IRS and State tax issues, Marc specializes in tax resolution strategies including Offers in Compromise, wage garnishment relief, and back tax compliance.
He is licensed as a Certified Public Accountant in both California and Oklahoma, and has a proven track record of helping clients settle complex tax debts and regain financial stability.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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