TAX DEBT RELIEF OPTIONS – California FTB, EDD, SBOE and dtfa

M&M Financial has been successfully resolving back tax liabilities for small businesses and individuals in California since 2008 and nationwide since 2005.We deal with the IRS and State taxing authorities for you, so you do not have to!  

If you or your business owes back-taxes to – 

• California Franchise Tax Board, 
• California Employment Development Department, 
• California State Board of Equalization, or 
• California Department of Tax and Fee Administration

You have come to the right place.  

Below is some information that will help you start resolving your state tax liabilities.  If you have questions and would like to talk to a licensed Tax Resolution Specialist, please do not hesitate to call us at 866-487-5624.

PAYMENT PLANS TO RESOLVE Franchise Tax Board TAXES

FTB Individual Installment Agreements

To be eligible for an Installment Agreement to satisfy a Personal or Individual tax liability owed to the CA-FTB, you must be compliant with your current tax obligations.  This means that all required tax returns must be filed, and all current tax payments must be made timely.

Once you are eligible for an Installment Agreement there are specific guidelines determined by the amount you owe.  

• If your tax liability is less than $25,000 you should qualify for a 60-month payment plan. 
• However, if your tax liability is more than $10,000OR you cannot pay your tax within a 36-month timeframe, you will be required to complete financial statement forms to confirm your financial hardship and need for extended terms.  
• CA-FTB will file a tax lien against you to secure their position. 
• And, your Installment Agreement may be reviewed periodically.   

Quick Tip:  You may be able to set up your payment plan online or by calling the CA-FTB directly.  

Contact Us, We Can Help You

FTB Business Installment Agreements

It is more difficult to set up an Installment Agreement for an outstanding Business tax liability with the CA-FTB.  To be eligible for a monthly payment plan, a business must also be compliant with all current tax obligations.

• Required tax returns must be filed
• Current tax must be paid timely

In our experience, a monthly payment isn’t the FTB’s first choice to resolve a back-tax debt.  Since the FTB’s desired solution is a lump-sum full payment, be prepared to complete financial statement forms outlining the business income, expenses and assets.  

Generally speaking, the CA-FTB sets the payment terms based on a business’s ability to pay.  Meaning, if your business can afford to pay your tax debt in 12 months, the state will not allow a 36 month payment plan.  Other variables, such as tax compliance history, may also play a part in how friendly the state may be.  
As always, remember current tax compliance is a must.

REDUCE YOUR FTB TAX DEBT

Offer in Compromise – The CA-FTB does have an Offer in Compromise that allows struggling individuals and businesses that qualify settle their tax liabilities for a lesser amount.  In most cases, the OIC works better for individuals rather than operating businesses.  Below are the forms you will need to start preparing your Offer in Compromise.  

• CA-FTB Offer In Compromise for Individuals
• CA-FTB Offer In Compromise for Businesses

Penalty Relief – In certain cases, the CA-FTB may be willing to abate penalties if it is your first offense or if you had an unavoidable hardship that the state considers Reasonable Cause.    

PAYMENT PLANS TO RESOLVE State Board of Equalization TAXES

SBOE Installment Payment Agreement Plans

One of the best options for a business to satisfy a Sales tax liability with the California State Board of Equalization (CA-BOE) is through an Installment Payment Agreement.  It’s best to be proactive and contact the state directly to request your monthly payment plan.  

Your business must be compliant with its current tax obligations to be eligible.  The CA-BOE prefers Payment Agreements to be 6 months or less but it is possible to get up to 12 months for an active business and 24 months for accounts that are closed.  

The Collections Manual states that you no financial documentation is required if the tax debt is less than $10,000 and is paid inside of 12 months.  If you get into a payment plan to satisfy a Sales tax debt it’s important to not default.  It is very unlikely the CA-BOE will allow a second payment plan.  

REDUCE YOUR SBOE TAX DEBT

CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION

We talk to a lot of potential clients that want to settle their outstanding CA sales tax liability with an Offer in Compromise.  The CA-BOE has an Offer program with very strict rules that typically don’t work for operating businesses.  Additionally, the CA-BOE typically does not abate penalties assessed to a Sales tax liability.  

PAYMENT PLANS TO RESOLVE Employment development department TAXES

Employment Development Department Installment Agreements

California Employment Development Department has a lot of rules governing Installment Agreement options.  We recommend reading the Employer’s Bill of Rights.  

The EDD essentially allow either Short-Term Installment Agreements or Long-Term Installment Agreements.  Both types of payment plans require your business to be in current tax compliance.

Short-Term Installment Agreements are easier to get into, usually do not require financial documentation and need to be paid in full within 12 months.  

Long-Term Installment Agreements will allow extended terms beyond 12 moths but will require both business and personal financial statement forms to be completed.A business requesting a Long-Term Installment Agreement will also be required to submit Form DE 204 establishing who is personally responsible for the business.  

REDUCE YOUR EDD TAX DEBT

Offer in Compromise

The EDD Offer in Compromise is a viable option to resolve a liability stemming from Unemployment & Payroll Withholding Tax, but the business must be closed and no longer operating.  Therefore, the Offer will need to be completed on an individual basis by the Responsible Person for the former business.  Be prepared to offer the state at least as much as can be collected over the next 4 years.

If there are assets remaining from the closed business or if you have the ability of generating future income to pay the tax back, you may not be eligible for the Offer in Compromise.  If you are considering submitting an Offer In Compromise to the CA-EDD you should start by reviewing the DE 631C Offer in Compromise Information Sheet and DE 999A Offer in Compromise Application before doing so.

Penalty Relief

Penalty Abatement is a possibility, if you can show that your business experienced a hardship that fits within the EDD’s definition of “Good Cause”.  Be advised that lack of cash flow is not considered “Good Cause´ by the EDD.  

Start the request process with the DE 231J Waiver of Penalty Policy Information Sheet.It clearly defines many of the reasons that the CA-EDD will be willing to consider granting penalty relief.  

CALIFORNIA TAX RESOLUTION CASE EXAMPLES

The California taxing authorities have some flexibility when it comes to back tax liabilities.  Each case varies based on factors such as your compliance history, type of tax owed and total amount past due.   Click below to see some case examples in your state negotiated by M&M.



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