When an
results in additional tax, a Notice of Proposed Assessment (NPA) is issued.
A Notice of Proposed Assessment is issued to business entities on the basis of:
- Additional tax due based on an audit of an original or amended tax return.
- Internal Revenue Service information.
- Missing year tax returns.
If you received a Notice of Proposed Assessment, you have 60 days to protest it (Revenue and Taxation Code section 19041). Our FTB audit defense attorney page explains the protest and the appeal to the Office of Tax Appeals, and if the notice follows a move out of California, our California residency audit attorney page covers residency assessments.
Purpose of the Notice of Proposed Assessment
Key Takeaways
- Purpose of the Notice of Proposed Assessment
- Payment plans for businesses
The purpose of the
is to inform the business entity of the adjustment and to allow time to protest the assessment.
- Entities have 60 days to protest the validity of the Notice of Proposed Assessment.
- After 60 days, the Notice of Proposed Assessment becomes final; a Notice of Balance Due is then mailed stating that the tax, penalties, and interest assessed are considered due and payable 15 days from that notice date.
Usually the Franchise Tax Board generates a
Notice of Balance Due
(also known as the NPA final bill) within
30 days
after assessment protest period. The purpose of the
Notice of Balance Due
(Notice of Proposed Assessment final bill) is to inform the entity that the assessment is due and payable 15 days from the notice date.
Franchise Tax Board staff must ensure that this process has occurred
prior to taking collection actions
.
Payment plans for businesses
If a business cannot pay a Franchise Tax Board balance in full, it can ask for an installment agreement. As of October 2026, the Franchise Tax Board describes the business plan this way:
- A business may be able to apply online if it owes $25,000 or less, can pay the balance within 12 months, and has filed all of its tax returns. Online access is limited and is not open to every business.
- A business that does not qualify online can apply by phone at 800-689-4776. It may have to submit a financial statement, and a tax lien may be a condition of the agreement.
- The setup fee is $50, added to the balance. Approval can take up to 90 days, and the acceptance letter comes by mail.
- Interest and penalties keep running, so the business should keep paying while the request is processed.
If paying in full would cause real hardship, the Franchise Tax Board decides case by case whether to delay collection.
A payment plan is for a balance you owe. If the balance comes from a Notice of Proposed Assessment you disagree with, the protest comes first: you have 60 days from the notice to file it (Revenue and Taxation Code section 19041).
Have a Tax Question or Notice?
If you’re dealing with an IRS audit, collection action, California state tax matter, or any other tax issue, we can review your situation in a free 15-minute call.
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