How to Get Back Into Compliance with the FTB (Non-Filers Guide)

Introduction: The FTB Doesn’t Forget About Non-Filers

If you’ve missed filing one or more California tax returns, you’re not alone — but you are on the FTB’s radar.

The Franchise Tax Board (FTB) aggressively tracks non-filers using employer records, bank data, and IRS info. Even if you haven’t heard from them yet, it’s only a matter of time before you receive a Demand for Tax Return, a Notice of Proposed Assessment, or worse — a wage garnishment or bank levy.

In this guide, we’ll show you exactly how non-filers in Orange County can get back into compliance, reduce penalties, and avoid collection actions before they start.

🚨 Why Getting Back into Compliance Matters

California has one of the strictest state tax enforcement agencies in the U.S. The FTB has broad power to:

• File Substitute Returns on your behalf (inflating your income and tax liability)
• Issue levies or garnishments
• File tax liens (even if you don’t agree with the balance)
• Suspend your professional license or driver’s license under certain conditions

👉 FTB Collections Process: A Guide for California Taxpayers

📌 Who Is Considered a Non-Filer?

You may be considered a non-filer if:

• You earned income in California but didn’t file a return
• The FTB has received 1099s or W-2s in your name but no corresponding return
• You live out of state but have California-source income
• You received a Demand for Tax Return from the FTB

🧾 What Is a Demand for Tax Return?

A Demand for Tax Return (DFTR) is a notice from the FTB requiring you to file for a specific year. If you ignore it:

• The FTB may issue a Notice of Proposed Assessment (NPA)
• You lose the right to challenge the amount
• Collections can begin within weeks

👉 Received a Notice from the FTB? Here’s What It Means

📉 What Is a Substitute Return?

If you don’t respond to notices, the FTB may file a Substitute Return using income reported to them by third parties (W-2s, 1099s, etc.). But they do not include any deductions, credits, or expenses.

Example:

• You earned $85,000 in 2021 but also had $30,000 in business expenses
• The FTB files a substitute return showing $85,000 in taxable income
• You’re assessed a $10,000+ tax bill with no deductions

👉 You can still fix this — but only if you act quickly.

✅ Step-by-Step: How to Get Back Into Compliance

✅ 1. Request Your FTB and IRS Transcripts

Before you do anything, get a full picture of what the FTB thinks you owe and which years are missing.

• FTB account transcript
• IRS wage & income transcripts (form W-2, 1099, etc.)

Your CPA can request these on your behalf via Power of Attorney.

✅ 2. Identify the Years You Need to File

• Prioritize the years flagged by the FTB
• Generally, 6 years of returns is the benchmark for restoring full compliance
• If you’re self-employed, gather 1099s and all available expense records

✅ 3. Prepare and File Missing Returns

This is where most taxpayers fall short — they panic, delay, or guess. Don’t.

• Work with a CPA to file accurately
• Include deductions and credits to reduce the tax owed
• If you don’t have every record, reasonable estimates may be allowed (with proper support)

✅ 4. Respond to Open Notices

If you’ve received a DFTR, NPA, or Lien Notice:

• Respond with proof of filing
• If the FTB filed a substitute return, submit your actual return to reverse or reduce the assessment

✅ 5. Request Penalty Abatement (If Applicable)

Once filed, you can request penalty relief for:

• Late filing
• Late payment
• Underpayment (estimated tax)

👉 Can You Get California Tax Penalties Removed?

✅ 6. Set Up a Payment Plan (If Needed)

If you owe taxes, the FTB offers installment agreements, even for non-filers once they’re back in the system.

👉 Top Tax Relief Options for California Taxpayers

✅ 7. Stop Future Issues with Planning

After you’re back in compliance, we help ensure:

• You make estimated payments (if needed)
• You stay off the FTB’s radar going forward
• You protect your credit and income from enforcement

🧭 How Boulanger CPA Helps Orange County Non-Filers

We help taxpayers in Santa Ana, Irvine, Anaheim, Tustin, and beyond:

• Pull FTB and IRS transcripts
• Reconstruct income and expenses
• File multiple years of back tax returns
• Respond to enforcement notices
• Negotiate payment plans or relief options

Whether you’re one year behind or a decade deep, we can help you clean the slate and regain control.

📞 Call 657-218-5700
🌐 www.orangecounty.cpa

Frequently Asked Questions