FTB Penalty Relief – How to Request a Waiver or Abatement in California

The FTB Charges Heavy Penalties—But You Might Not Have to Pay Them

If you received a notice from the California Franchise Tax Board (FTB) assessing penalties for late filing, underpayment, or noncompliance, you may qualify for penalty relief—but only if you know how to request it.

The FTB does not automatically remove penalties, and it does not offer the same “first-time abatement” program that the IRS does. However, California law does allow taxpayers to request penalty waivers based on reasonable cause, FTB errors, or administrative relief.

This post explains the most common California tax penalties, what qualifies for relief, and how to formally request a waiver or abatement.

Common FTB Penalties You May Be Facing

• Late Filing Penalty – 5% of unpaid tax, plus 0.5% per month (up to 25%)
• Late Payment Penalty – 5% of tax due + 0.5% per month late
• Estimated Tax Penalty – Charged if you underpay quarterly estimates
• Demand to File Penalty – Up to 25% of tax due if you ignore a demand notice
• Accuracy-Related Penalty – For negligence or substantial understatement

These penalties can be applied individually—or stacked.

Related: Facing Back Taxes? Here’s How Orange County Residents Can Get Relief

When the FTB Will Consider Penalty Relief

1. Reasonable Cause

You may qualify if you can show that your failure to file or pay was due to circumstances beyond your control, such as:

• Serious illness, injury, or death in the family
• Natural disaster (fire, flood, earthquake)
• Records lost due to theft or catastrophe
• Incorrect written advice from the FTB or a licensed tax professional

Note: Forgetting, misunderstanding the rules, or cash flow problems usually don’t qualify.

2. FTB Error

If the penalty was applied due to a miscalculation or incorrect data on the FTB’s part, you may request a correction and refund.

3. Administrative Relief (Discretionary Waiver)

Although rare, the FTB may consider relief if:

• You’ve had a clean compliance history
• The penalty was caused by unusual FTB processing delays or actions

This is similar to the IRS “first-time abatement,” but not automatic or guaranteed.

How to Request FTB Penalty Relief

Step 1: Gather Your Documentation

Prepare written explanations and evidence that show:

• When and how the issue occurred
• What steps you took to comply
• Why your circumstances meet the “reasonable cause” standard

Step 2: Complete FTB Form 2917

Use the FTB Reasonable Cause – Individual and Fiduciary Claim for Refund form to submit your penalty abatement request.

You can also:

• Submit a written request with your notice
• Include an explanation in your amended return or protest letter if appealing

If you’re unsure how to retrieve the right historical information, Tax Transcripts – Why They Matter can help you understand the data behind your penalties.

Step 3: Submit via Mail or MyFTB

You can upload your documents using your MyFTB account or mail to the address on your notice.

Expect a written response in 8–12 weeks.

What If Your Request Is Denied?

You may still:

• File a formal protest or appeal
• Request an audit reconsideration if the penalty was assessed as part of a broader issue
• Use penalty relief to support an Offer in Compromise or payment plan negotiation

If your balance is connected to an audit, What Happens After an IRS Audit Assessment? explains how to challenge it. You also use penalty relief to support an IRS Offer in Compromise – How to Settle for Less Than You Owe or Installment Agreement request.

We Help Orange County Taxpayers Reduce or Eliminate FTB Penalties

At Boulanger CPA and Consulting PC, we help California taxpayers:

• Request FTB penalty relief with strong supporting documentation
• Draft reasonable cause letters that get attention
• Protest unfair penalty assessments
• Resolve related issues like tax debt and audits

Call (657) 218-5700 or schedule a consult at www.orangecounty.cpa

Frequently Asked Questions

📣 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.

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.