FTB Collections Process: A Guide for California Taxpayers
Introduction: The FTB Doesn’t Wait Around
If you’re behind on your California state taxes, there’s one agency you’ll hear from quickly: the Franchise Tax Board (FTB). While the IRS is known for its structured approach to collections, the FTB is known for being fast, automated, and aggressive.
Whether you owe a few thousand or a six-figure balance, the FTB has powerful tools to collect — including bank levies, wage garnishments, tax liens, and more. And if you’re in Orange County, they’re particularly active in high-income areas like Irvine, Newport Beach, and Santa Ana.
This guide explains every stage of the FTB collections process and how to protect yourself or your business before your income is affected.
π Quick Overview: FTB Collections Timeline
- Notice of Tax Due
- Demand for Payment
- Notice of Proposed Assessment (NPA)
- Final Notice Before Levy
- Collections Enforcement (levy, lien, garnishment)
Each stage escalates if you don’t respond — fast.
π Step-by-Step: How the FTB Collects Tax Debt
1. Notice of Tax Due
This is your first warning — you either filed a return with a balance or the FTB believes you owe from a prior year.
It includes:
- Amount due
- Due date
- Penalties and interest
What to do:
If you can’t pay, contact a tax professional
before it becomes a Demand for Payment.
2. Demand for Payment
If the balance remains unpaid, you’ll get a more aggressive Demand for Payment.
This notice often includes:
- Threats of levy or lien
- A specific deadline to pay or respond
- Language like “further action may be taken without additional notice”
Don’t ignore this. Once this notice is issued, you’re flagged for potential enforcement.
3. Notice of Proposed Assessment (NPA)
If the FTB determines you owe more than you reported, they’ll issue a Notice of Proposed Assessment. This is common if:
- You didn’t file a return
- You underreported income
- You triggered an audit
You have 60 days to protest.
π Learn what triggers a California FTB audit
4. Final Notice Before Levy
This is the final warning before bank levies, wage garnishments, or liens are issued.
If you ignore this, the next move is direct asset seizure.
π₯ FTB Enforcement Actions: What Happens If You Don’t Respond
πΈ Bank Levies
The FTB can seize funds directly from your checking or savings account without a court order. You may not find out until your account is frozen.
π Related:
π
What to Do If You Receive a Levy from the FTB
πΌ Wage Garnishments
Unlike the IRS, the FTB uses a fixed exemption formula — not a percentage. Many taxpayers find their take-home pay reduced dramatically.
π Wage Garnishment in California: Know Your Rights
π Tax Liens
The FTB may file a lien on balances as low as $100, which can ruin your credit, block financing, and make it difficult to sell or refinance property.
π How to Remove an FTB Tax Lien in California
π³ Intercepts
FTB can intercept:
- IRS refunds
- State lottery winnings
- State-issued vendor payments
- Unemployment or disability payments
β How to Stop the FTB Collections Process
β 1. Pay in Full (if possible)
Avoid future penalties, interest, and enforcement.
β 2. Request an Installment Agreement
This is a monthly payment plan negotiated with the FTB. Balances under $25,000 are often eligible for streamlined plans.
π Top Tax Relief Options for California Taxpayers
β 3. Apply for an Offer in Compromise
If you’re unable to pay in full and can prove it, you may qualify to settle your debt for less than you owe.
π California FTB Offer in Compromise vs IRS Offer
β 4. Request a Hardship Deferral
The FTB can temporarily pause collections if you qualify for hardship.
π How to Qualify for a California FTB Hardship Deferral
β 5. Pursue Penalty Abatement
If your debt includes penalties, and you had a valid reason for falling behind, you may be eligible to have penalties removed.
π Can You Get California Tax Penalties Removed?
π§ How Boulanger CPA Helps Orange County Clients
We help clients in Santa Ana, Anaheim, Irvine, Tustin, and beyond:
- Review FTB notices and transcripts
- Respond to aggressive collections
- Negotiate settlements or payment plans
- Stop wage garnishments and levies
- Resolve FTB and IRS debt concurrently
π Call us at
657-218-5700
π
www.orangecounty.cpa
Frequently Asked Questions
What triggers FTB collections in California?
FTB collections begin when a taxpayer fails to pay a state income tax balance or ignores a notice of assessment. The process may start with reminder letters and escalate to liens, levies, and wage garnishments.
Does the FTB send multiple notices before enforcing collection?
Yes. The FTB typically sends several notices, including a Notice of Tax Due, Final Notice Before Levy, and Demand for Payment. However, if these are ignored, collection action may proceed without further warning.
How does the FTB collect if I don’t respond?
The FTB may garnish wages, seize bank account funds, file tax liens, intercept state refunds, or revoke business licenses. These actions can happen quickly if you don’t respond or seek professional help.
How long does the FTB have to collect a tax debt?
In most cases, the FTB has 20 years from the date of assessment to collect. This period may be extended if you enter into a payment plan, file bankruptcy, or otherwise delay enforcement.
Can a CPA help stop or delay FTB collections?
Absolutely. A CPA can contact the FTB on your behalf, negotiate a payment plan, submit a hardship request, or pursue penalty relief or an Offer in Compromise if appropriate. Representation gives you options and time to protect your income.
ο»Ώπ£ About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
π Learn more at www.orangecounty.cpa or call (657) 218-5700.
Marc The CPA's Tax Blog
