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Owe the FTB $25,000 or Less?

Want a Payment Arrangement?

Try Doing it Yourself.

By Robert S. Schriebman

This article is a companion piece to my recent article entitled Owe the IRS 50,000 or Less? Want a Payment Arrangement? Try Doing it Yourself. In the IRS article I wrote about the new “Fresh Start” initiative to establish an installment payment agreement with the IRS if the taxpayer owed $50,000 or less. You do not need a CPA or lawyer to negotiate a payment arrangement. You can do it yourself by calling an IRS toll-free number.

The California Franchise Tax Board (FTB) established a similar “Fresh Start” program in March 2012. If you owe the FTB $25,000 or less you can “do it yourself” by either calling a toll-free number or going online. The FTB refers to this process as establishing a “provisional payment plan.” You can establish a 60-month payment plan at www.ftb.ca/gov/online/eIA/Apply_Online.asp or by calling (800) 689-4776.

Most people owe the IRS about three times more than they owe the FTB. Even though the IRS limits are $50,000 or less, most people who owe the FTB as much as $25,000 owe the IRS more than $50,000. This means the FTB limits are effectively more generous than those of the IRS. With the IRS you can get up to 72 months to pay, but with the FTB the maximum time for an agreement is 60 months.

If you owe the FTB more than $25,000 you should call the toll-free number and request a financial statement form FTB 3567. This form is also available online in case you want to fill it out in advance of your call. After you have completed the financial statement, call the toll-free number and negotiate your own provisional payment plan.

The payment arrangement with the FTB must be made by electronic funds withdrawal. You must be current on your filings and payments in the future. There will be a $34 charge for this streamlined payment agreement, and this fee will be added to your balance due.

The FTB also has a unique feature that is not available with IRS installment agreements. The feature is called “skip month.” If for any reason you can not make your installment payment under your agreement, you can call the FTB and so inform them in advance of the due date of your payment. The FTB will allow you to skip one month without declaring your payment agreement in default. The number to call is (916) 845-0494.

Businesses owing the FTB may also establish an installment payment agreement over the phone, but it is more complicated and more documents are required. For more information go to the FTB website at www.ftb.ca.gov/online/installments_bus.shtml.

For more information you may write the FTB at:

Franchise Tax Board
P.O. Box 942867
Sacramento, CA 94267-0011