The Franchise Tax Board runs its own criminal program, and it prosecutes people the IRS never touches. FTB special agents investigate California income tax evasion, refund fraud, and willful failure to file — and the cases go to county district attorneys or the California Attorney General. A federal matter that resolves quietly does not make the state side disappear; the FTB gets IRS data and works its own docket.
By Sam Brotman, JD, LLM, MBA · Last updated August 2026
Can the FTB bring criminal charges?
Yes. California’s Revenue and Taxation Code makes willful state tax evasion a crime, and §§ 19705 and 19706 are the provisions that matter. Section 19705 covers fraud — false returns, false statements, concealment — and is a felony carrying prison exposure and six-figure fine authority. Section 19706 covers willful failure to file or pay with intent to evade, chargeable with jail time and fines. Charging decisions sit with prosecutors, and California DAs bring these cases — particularly where the numbers are large, the pattern is long, or the taxpayer is visible.
How FTB criminal cases start
Three main roads: the IRS, the audit, and the data. The FTB receives federal adjustment information automatically, so a federal fraud finding or criminal case routinely spawns a state one. Residency and income audits escalate when examiners find concealment — unreported California-source income, sham residency claims, doctored records. And the FTB mines data aggressively: 1099s, K-1s, real estate records, licensing boards. Refund fraud — fabricated withholding or dependents — runs through its own enforcement track and is charged readily.
The residency angle nobody warns you about
An aggressive residency position is a civil dispute. A fabricated one is evidence. California residency cases turn on documentation — where you actually lived, worked, and kept your life. Taxpayers who backfill that record after the fact — altered leases, revised logs, convenient affidavits — convert a winnable civil audit into a criminal referral. If your residency position is under FTB examination, the line between advocacy and fabrication is the whole game; see our California residency audit page for how the civil side is fought properly.
Does the civil case stop while the criminal case runs?
No — assessments, penalties, and interest keep building, and the two tracks share a file. Like the CDTFA and EDD criminal programs, the FTB’s civil machinery does not pause for the criminal one. The audit positions, the protest, and the criminal defense have to be run as one strategy — a concession on the civil side can become an admission on the criminal side.
What to do if FTB investigators contact you
Identify yourself, take the card, say nothing else, and call counsel the same day. Do not explain, do not produce records without process, do not amend anything, and tell your representative immediately if an audit is open — the strategy changes the moment the file has criminal color. Conduct after contact is often the easiest thing to charge.
Tell us what is going on
Short version is fine. This conversation is privileged, and you will hear back from a person.
If you would rather talk it through, book a free 15-minute call or call us at (619) 378-3138. Related: criminal tax defense · FTB audit defense · voluntary disclosure.