California Tax Collection Attorney

The three agencies, and what each one collects

The FTB collects income tax, the CDTFA collects sales and use tax, and the EDD collects payroll tax, and a balance with one does not slow the other two down. The Franchise Tax Board collects personal and corporate income tax, which is why the first levy most people see is the FTB’s and the first search is for an FTB attorney. The CDTFA collects sales and use tax and holds your seller’s permit. The EDD collects the four payroll taxes: unemployment insurance, the employment training tax, disability insurance withholding and income tax withholding. The three share data but do not coordinate, so an FTB installment agreement does not pause a CDTFA levy, and each balance is resolved on its own track.

The notices that start collection

Collection starts when an assessment becomes final, and each agency announces that in a different piece of paper. The FTB proposes a balance in a Notice of Proposed Assessment (FTB 5830), and Revenue and Taxation Code section 19041 gives you 60 days to protest. If the protest fails or is never filed, the FTB sends a Notice of State Income Tax Due (FTB 4963), its demand for payment. The FTB does not send the layered warnings the IRS sends before a levy; the next document can be the Order to Withhold itself, with a Notice of State Tax Lien (FTB 4921) recorded the same month.

The CDTFA assesses through a Notice of Determination; under section 6561 you have 30 days from service to file a petition for redetermination, and without one the determination is final, due and payable under section 6565 with a 10 percent penalty added. The EDD assesses through a Notice of Assessment; Unemployment Insurance Code section 1222 gives you 30 days to file a petition for reassessment with the California Unemployment Insurance Appeals Board, with one additional 30 days for good cause, and without one the assessment is final and the Statement of Account that follows is the EDD’s running bill by quarter. Once a window closes, what remains is to pay and file a claim for refund, with collection continuing meanwhile.

What each agency can do to collect

All three agencies can levy a bank account and garnish wages without a court order, and each has one tool the others do not. The FTB’s bank levy is the Order to Withhold (FTB 2900), which takes up to the full balance from the account. Its wage garnishment is the Earnings Withholding Order for Taxes (FTB 2905) under Code of Civil Procedure section 706.070, which your employer has to honor until the balance is paid, capped by the disposable-earnings limits in section 706.050, and the FTB intercepts state refunds as well. Its own tool is the Top 500 list under Revenue and Taxation Code section 19195, delinquencies over $100,000: Business and Professions Code section 494.5 then requires licensing boards to suspend the license of anyone on the list and the Department of Motor Vehicles to suspend the driver’s license.

The CDTFA’s levy is the notice to withhold under Revenue and Taxation Code section 6702, served on banks and on your customers. Its own tool is the seller’s permit, which section 6070 lets it revoke after ten days’ notice and a hearing. It also reaches past the business: a buyer who does not hold back enough of the price to cover the seller’s tax is liable under sections 6811 and 6812, and when a corporation or LLC closes owing sales tax, section 6829 lets the CDTFA assess the officers, members and managers who controlled tax payments, if the failure was willful. The EDD levies and records liens the same way, and Unemployment Insurance Code section 1735 lets it assess any officer, major stockholder or other person in charge of the business who willfully failed to pay, with the same 30-day petition right.

How long each agency has to collect

The FTB has 20 years, and the CDTFA and the EDD have no single deadline because their liens can be renewed every ten years. Revenue and Taxation Code section 19255 stops the FTB from collecting 20 years after the liability became due and payable, twice the IRS’s ten, with extensions for periods such as bankruptcy. The CDTFA and the EDD work under the lien statute instead: a state tax lien lasts ten years under Government Code section 7172 and can be extended by recording a new notice before it expires, and each agency can levy within three years of the delinquency or ten years of its last recorded lien.

The resolution menu, agency by agency

Every agency will take an installment agreement, every agency has an offer in compromise program, and the standards differ. An FTB payment plan is requested on Form FTB 3567, with a financial statement (FTB 3561) for larger balances and business entities. The CDTFA sets up short plans routinely and longer ones after a financial review. The EDD uses the DE 927B Installment Agreement Request with a financial statement (DE 926B or DE 926C) and agrees to nothing unless current payroll deposits are on time.

An FTB offer in compromise, authorized by Revenue and Taxation Code section 19443 and filed on Form FTB 4905, is accepted when it is the most the FTB can expect to collect within a reasonable time. The CDTFA program under section 7093.6, filed on Form CDTFA-490, was written for closed businesses and for individuals assessed under section 6829; an operating business qualifies only where the tax was never collected from customers or came through successor liability. The EDD program, filed on Form DE 999A, is the narrowest: the liability has to be final and undisputed, you cannot still control the business, and the offer has to exceed what the EDD could collect on its own within four years. All three grant hardship status on a financial statement, though with the 20-year statute underneath it an FTB pause is breathing room rather than an ending. Penalty relief matters: the CDTFA relieves penalties for reasonable cause under section 6592 on Form CDTFA-735, the FTB abates for reasonable cause and grants individuals a one-time abatement under section 19132.5, and the EDD waives for good cause on written request. Our guide to Franchise Tax Board collections, our CDTFA collections page and the complete guide to CDTFA collections go deeper.

When you owe the IRS as well

A California balance usually has a federal twin, and the two have to be solved together because neither agency’s collectors will wait for the other. The FTB receives IRS audit results automatically, and Revenue and Taxation Code section 18622 requires you to report a federal change within six months, so an IRS assessment becomes an FTB one. When we build a plan or an offer with one agency, the payment to the other has to fit inside the financial statement, because the IRS counts a state tax payment as a necessary expense only within limits. The federal side is on our IRS collections attorney page, and the older California tax debt resolution page lists the state services.

What a California tax collection attorney does at each stage

The first week is about stopping the levy, the first month is about the financial statement, and the resolution takes one to twelve months depending on the program. In week one we file a power of attorney with each agency (FTB 3520, CDTFA-392 and DE 48), pull each account, and confirm which amounts are final and the FTB’s 20-year date for each year. If a levy is in place the release conversation starts the same week; releases run on hardship math, so the financial statement gets built first, and a bank generally holds funds under an Order to Withhold for about ten days before sending them. In our experience an FTB installment agreement takes a few weeks, CDTFA and EDD plans a month or two, and offers in compromise six to twelve months with the FTB and the CDTFA and longer with the EDD; collection does not stop while an offer is pending, so a plan usually runs alongside it. These are observations from our files, not commitments by the agencies.

What to gather before the first call

• Every notice from each agency, front and back, with its date.
• Three years of returns for each tax involved, including the DE 9 payroll returns.
• Three months of bank statements, business and personal.
• A current profit and loss statement and balance sheet, or pay stubs and a household budget.
• A list of assets and debts, with rough values for vehicles and real estate.
• For a closed business, the date it stopped and who signed returns and payments in each quarter.

Can the FTB levy my bank account without warning?

Yes, in the sense that matters. The FTB needs no court order and sends no separate final levy notice the way the IRS does. Once a Notice of State Income Tax Due goes unpaid, an Order to Withhold (FTB 2900) can go to your bank, which generally holds the funds about ten days.

How long does the FTB have to collect a tax debt?

Twenty years from the date the liability became due and payable, under Revenue and Taxation Code section 19255, twice the IRS’s ten, with extensions for periods such as bankruptcy. The CDTFA and the EDD have no equivalent cutoff, because a state tax lien can be renewed every ten years under Government Code section 7172.

Can I settle California tax debt for less than I owe?

Yes, and each agency has its own program: the FTB on Form FTB 4905, the CDTFA on Form CDTFA-490, and the EDD on Form DE 999A. The FTB looks for the most it can collect within a reasonable time, the CDTFA generally requires a closed business, and the EDD requires a final, undisputed liability.

Can the CDTFA or the EDD collect a closed business’s taxes from me personally?

Yes. Revenue and Taxation Code section 6829 lets the CDTFA assess officers, members and managers who controlled tax payments once the entity ends, and Unemployment Insurance Code section 1735 lets the EDD assess anyone in charge of the business. Both require a willful failure to pay, and both elements are contestable.