California FTB Attorney

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The FTB Notice Sequence

What FTB Notices Actually Mean

The Franchise Tax Board does not move the same way the IRS does. FTB notices have shorter response windows, fewer pre-collection procedural protections, and stricter appeals deadlines. The notices most often misread by taxpayers:

• Demand for Tax Return — FTB believes you had a filing obligation and you did not file. Estimated assessments at the top marginal rate follow if you ignore it. Response window is typically 30 days.
• Notice of Proposed Assessment (NPA) — FTB’s formal proposal to assess additional tax after examination. You have 60 days to file a written protest under R&TC §19041. After that, the assessment becomes final and your administrative options narrow significantly.
• Notice of State Income Tax Due — the final bill. From here, collection actions can begin: wage garnishment, bank levy, lien filing.
• FTB 4734D / Order to Withhold — wage garnishment notice. California allows FTB to take up to 25% of disposable earnings without going to court.
• FTB Notice of Tax Lien — filed with the county recorder. Damages credit, complicates real-estate transactions, attaches to all real and personal property.

The FTB’s collection authority under R&TC §19262 is broad. Once an assessment becomes final, FTB does not need court approval to issue levies. Acting within the protest and appeal windows is how you preserve options.

Appeals

The FTB Appeals Path

California’s appeals structure looks like this:

1. Internal protest to FTB within 60 days of the NPA. The FTB Protest Section reviews the issues and either sustains, modifies, or withdraws the proposed assessment. Many cases resolve here.
2. Appeal to the Office of Tax Appeals (OTA) if the protest is denied. OTA is an independent state agency that hears tax appeals de novo. Appeals are decided by three-member panels. Filing deadline is 30 days after the FTB’s Notice of Action.
3. California Superior Court via a “pay-and-claim” refund suit if you disagree with the OTA’s decision. The tax must be paid in full before suit; a claim for refund must be filed and denied.

Each level has different evidence standards and different forums. Cases that look weak in protest often play differently at OTA, where independent administrative law judges give more weight to legal arguments than examiners typically do. We move cases through the levels strategically based on what kind of issue is in dispute.

Resolution Programs

Offers in Compromise, Installments, and Hardship

When the assessment is final and the question is how to resolve it, FTB has several programs:

• FTB Offer in Compromise (R&TC §19443) — settle the liability for less than the full amount when collection in full is not feasible. The FTB version is similar to the IRS program but distinct: California uses its own reasonable collection potential calculation and applies stricter dissipated-asset rules.
• Installment Agreement — structured monthly payments. For balances under $25,000, FTB generally approves a 60-month plan administratively. Larger balances require financial disclosure (Form FTB 3567 or equivalent).
• Currently Not Collectible status — FTB will pause active collections if you can demonstrate that levy or garnishment would create economic hardship. Interest continues to accrue, but collection actions stop.
• Innocent spouse relief (R&TC §18534) — California’s equivalent to IRC §6015. Available when one spouse should not be held liable for a joint-filing assessment based on the other spouse’s unreported income or improper positions.

Which path makes sense depends on what you can document about ability to pay, the strength of any remaining legal arguments, and what you need to protect on the asset side. The right choice for one taxpayer is the wrong one for another.

Residency

FTB Residency Audits — A Different Animal

Residency audits deserve their own discussion. The FTB has the most aggressive residency enforcement in the country, and once they open an audit, they pull a wide net of records — credit card statements, cell phone records, doctor’s appointments, gym check-ins, club memberships, voter registrations, vehicle registrations, and bank account activity.

Under R&TC §17014, residency turns on two prongs: physical presence (the closest-connection facts) and domicile (the legal concept of permanent home). California taxes residents on worldwide income — so if FTB establishes you were a California resident, every dollar earned anywhere becomes potentially taxable here.

The defense work focuses on building the closest-connection record: where the family actually lives, where the children attend school, where the taxpayer banks, where they vote, where they spend time. We’ve handled cases where the taxpayer believed they had cleanly broken California residency only to learn FTB was using their car registration, golf club membership, or a child’s continued enrollment at a California school as evidence to the contrary. The work is documentation-heavy and benefits from being done before the audit opens — but most clients call us after the audit has started, and we handle them from there.