How to Get FTB Penalties Waived or Abated in California

California’s Franchise Tax Board (FTB) doesn’t just collect unpaid state taxes — they pile on penalties and interest that can double the amount you owe.

But here’s what most taxpayers don’t know:

You may be able to get some or all of those FTB penalties removed — legally — if you qualify for penalty abatement.

Whether you're an individual who missed the filing deadline or a business facing payroll or entity tax penalties, this guide explains:

• When the FTB grants penalty relief
  
  
• How to request a waiver
  
  
• What “reasonable cause” means
  
  
• What to do if your request is denied
  

Common FTB Penalties That May Be Abated

For Individuals:

• Late filing penalty – 5% of the unpaid tax plus 0.5% for each month late
  
  
• Late payment penalty – 5% of the unpaid tax
  
  
• Estimated tax penalty – for underpayment of quarterly estimates
  
  

For Businesses:

• FTB 3522/3536 late payment penalty – for LLC and LP fees
  
  
• Entity status suspension penalty – $250+
  
  
• Failure to file business returns – up to 25% of tax due
  
  

In all cases, interest continues to accrue until the debt is paid or resolved.

FTB Penalty Abatement – When Is It Granted?

FTB penalty abatement is available if you can show reasonable cause — or if the penalty was imposed due to FTB error.

Valid reasons include:

• Serious illness, hospitalization, or disability
  
  
• Natural disaster or emergency (e.g., fire, flood, earthquake)
  
  
• Death or incapacitation of a close family member
  
  
• Theft or destruction of records
  
  
• Reliance on a tax professional who failed to file
  
  
• First-time noncompliance with otherwise clean history
  
  

The following are NOT considered reasonable cause:

• “I forgot”
  
  
• “I didn’t get the notice”
  
  
• “I didn’t have the money to pay”
  
  

How to Request Penalty Abatement from the FTB

Option 1: Write a Formal Request

Include:

• A clear statement requesting penalty abatement
  
  
• A timeline of events
  
  
• Copies of supporting documentation (medical records, death certificates, FEMA declarations, etc.)
  
  
• A signed declaration under penalty of perjury
  
  

Mail it to the address on your FTB notice or call 800-689-4776 for instructions.

Option 2: Use FTB Form 2917 (When Available)

As of now, the FTB does not have a standardized abatement form for all cases — but for certain penalty types, a form may be required.

Option 3: Call and Request by Phone

In some cases (especially for minor penalties), the FTB may waive penalties over the phone after reviewing your file.

Option 4: Appeal Through the Office of Tax Appeals (OTA)

If your request is denied, you may have the right to appeal depending on the type and amount of penalty.

CPA Tip: Use a Penalty Abatement Letter

We recommend submitting a formal, well-documented penalty abatement letter. This ensures:

• Proper review
  
  
• Clear explanation of your circumstances
  
  
• Establishes a paper trail in case you need to appeal
  
  

Need help writing one? Boulanger CPA can prepare and submit it for you.

Can You Get Interest Removed?

Unfortunately, no — California does not abate interest unless:

• The underlying penalty is removed, or
  
  
• The delay was caused by FTB error
  
  

What If You Can’t Pay the Full Amount?

If you qualify for penalty abatement but still owe taxes, consider:

• Installment Agreement
  
  
• Offer in Compromise (if your financials support it)
  
  
• Currently Not Collectible (if you have no disposable income)
  
  

These options may reduce future penalties and give you breathing room.

Get Help From a California FTB CPA

At Boulanger CPA, we help California taxpayers:

• Remove or reduce FTB penalties
  
  
• Draft compelling abatement letters
  
  
• Set up payment plans or settlements
  
  
• Appeal unfair penalties and assessments
  
  

Call 657-218-5700 or Schedule a Consultation

📣 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.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.