California Franchise Tax Board Debt Forgiveness: A Guide to Fresh Start

The California Franchise Tax Board (FTB) offers a Fresh Start program, which can forgive up to 75% of your tax debt.

If you owe less than $10,000, you may be eligible for the program, which waives penalties and interest on your tax debt.

The FTB will consider your income, expenses, and other financial factors when determining your eligibility for the Fresh Start program.

To qualify, you must not have filed a tax return in the past three years, and you must not have any outstanding tax warrants.

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If you're struggling with California Franchise Tax Board (FTB) debt, you're not alone. Many people are eligible for tax debt forgiveness, but it's essential to understand the options available.

According to the current 2018 California tax law, residents who owe taxes to the FTB have 5 different options for dealing with tax debt.

You can consider an Offer In Compromise, which is the best option for FTB tax debt forgiveness. This is an agreement between you and the FTB to settle the tax debt for less than the amount owed.

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To qualify for an Offer In Compromise, you must show that you're barely making it financially. If at the end of the month you have no funds left based on the FTB financial statement and are not under 50, you have a good chance of qualifying.

However, it's crucial to note that the odds of getting an Offer In Compromise are slim, and many tax relief firms may mislead you. Make sure to consult a licensed tax attorney who handles tax issues specifically.

Here are the 5 options available for dealing with FTB tax debt:

It's worth noting that not every option offers CA FTB tax debt forgiveness, but they do provide a means of settling your tax debt.

The California Franchise Tax Board offers various programs and agreements to help residents manage their tax debt. You can request an Installment Agreement, which allows you to pay back taxes in installments.

To be eligible for an Installment Agreement, the amount owed must be less than $25,000. This can be done online, and you'll need to propose a monthly payment amount.

Making a request for a Penalty Abatement is also possible, but you'll need to provide good cause for your inability to file and pay on time. This is a form of tax debt forgiveness, but it's not a guarantee.

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The Fresh Start Initiative is a game-changer for taxpayers who owe back taxes to the IRS. It's a series of tax regulations designed to help those in need.

The program focuses on first-time tax debt and offers several benefits, including increasing the amount of tax debt needed to trigger a federal tax lien to $25,000 from the original $5,000.

Here are some of the benefits of the Fresh Start program:

To qualify for the Fresh Start program, you'll need to meet one of the following requirements:

Businesses can also benefit from the Fresh Start Initiative, especially if they owe less than $25,000 in back taxes.

The California Franchise Tax Board offers Installment Agreements to residents who owe back taxes, but it's not a form of tax forgiveness - you'll still pay the full amount with interest and penalties combined.

You can request an Installment Agreement online as long as the amount owed is less than $25,000.

In the online Installment Agreement request form, you'll need to provide a financial disclosure and propose a monthly payment amount.

It's worth noting that you can also request a Penalty Abatement from the Franchise Tax Board, which is a form of tax debt forgiveness, but you'll need to provide good cause for your inability to file and pay on time.

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If you're struggling to pay your California state taxes, you might be able to file for hardship with the CA FTB. The CA FTB collections department will place your account into a hardship status if you qualify, which means they won't try to collect the debt for a year.

To qualify, you'll need to prove that you can't or barely cover your basic living expenses based on reasonable expenses. The FTB will look at your expenses and determine if they're reasonable. You'll need to provide Form FTB 3561 and supporting documents to back up your claim.

You can resubmit for hardship before the expiration of the hardship, which is usually one year after the date of its approval. The FTB has 20 years to collect on a debt in most cases, so time is ticking while in hardship, but it's a long way to expire.

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You can mail in the Application with all the required documentation to the Franchise Tax Board Offer in Compromise Group.

Generally, it takes 2 to 4 weeks to receive an acknowledgment letter after submitting your Offer in Compromise.

The Franchise Tax Board will contact you once your account is assigned, and they'll explore options with you, such as making monthly payments or requiring a collateral agreement.

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Typically, the FTB makes a decision within 4 to 6 months of your account being assigned.

Collection actions won't automatically stop when you apply for an Offer in Compromise, but no new collection actions will be taken while your offer is being reviewed.

Penalties and interest will continue to accrue as prescribed by law.

If your offer is approved, all collection actions will stop, and state tax liens will be released.

The Franchise Tax Board is more likely to accept an Offer in Compromise if you're older, and they'll consider your income, expenses, assets, and potential future income in their determination.

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If you owe more than $20,000 to the CA FTB, it's strongly recommended to hire a tax professional to handle it for you.

An Offer In Compromise is the best option for CA FTB tax debt forgiveness, an agreement to settle the tax debt for less than the amount owed.

The CA FTB may accept an OIC if they believe it's the most they'll be able to collect, and they'll consider your income, expenses, assets, and potential future income in their determination.

We had one client who owed over $200,000 in CA FTB debt have their Offer accepted for $500, demonstrating the potential for significant debt forgiveness.

The CA FTB is more likely to accept an Offer In Compromise if you are older, so if you're nearing retirement age, this option may be worth exploring.

If you're unsure about your chances of getting California tax debt forgiveness, consult a licensed tax attorney who handles tax issues specifically. Many tax relief firms make promises they can't keep.

The odds of getting an Offer in Compromise from the California Franchise Tax Board (FTB) are slim, often much lower than getting one from the IRS. If you have both FTB and IRS debt, it's usually the IRS that will settle, not the FTB.

If you owe more than $20,000 to the FTB or IRS, it may be cheaper to put your case into a payment plan and pay someone to handle the larger debt. This is often the case when the FTB debt is relatively small.