California Tax Payment Plan

California tax payment plan options

If you need tax relief in California, you have a tax resolution option. The state’s tax payment plan allows you to pay your back taxes over time, and it starts with an official application and approval from the State of California Franchise Tax Board.

Tax payment plans are available for both individual taxpayers and businesses. Plans for individuals typically last three to five years, while business plans usually last up to one year.

California installment agreement eligibility rules

Before you can apply for tax relief, ensure that you are current on all tax returns. You can’t apply for a payment plan until you’ve properly filed for any missing, incomplete or incorrect tax returns.

To qualify for a payment plan, individual and business taxpayers can’t have any of the following:

• A current installment agreement with the California FTB
• Tax levy
• Other debt collection orders

The FTB may request a financial statement, and it may issue a tax lien as part of a payment plan agreement.

While individuals and businesses have some similar eligibility requirements, there are differences as well.

Individual tax payment plans

Individuals must meet the following requirements, though some exceptions may apply:

• Debt cannot exceed $25,000.
• You must be able to pay the entire balance within 60 months.
• You do not have an outstanding wage garnishment.

Business tax payment plans

Businesses have the same tax debt threshold as individuals, but their repayment terms are significantly shorter.

• Tax debt must not exceed $25,000.
• The amount due must be paid off within 12 months.

Self-service payments are not available to all businesses, so you may have to call the FTB to inquire about your business’s eligibility.

Steps to apply for a California tax payment plan

You can apply for tax relief in California online, by phone or by submitting the FTB 3567 Installment Agreement Request form through the mail.

• Online. The California FTB accepts online applications, but only for newly-assessed tax debt. Check your tax letter for more details on whether you qualify.
• Mail. Complete and mail page three of FTB 3567, the Installment Agreement Request form.
• Phone. You can call a representative during business hours to ask questions and receive help with your application.

How to Apply for a California Tax Payment Plan

Regardless of how you apply, you should be prepared to provide the following:

• Personal information
• Requested payment amount
• Requested payment date (first through 28th)
• Banking information

If you have an existing installment agreement or a current wage garnishment, you must apply by phone. This includes an order to withhold, a continuous order to withhold and an earnings withholding order for taxes.

Approval process

Approval ultimately depends on your current finances and financial history.

The California FTB will check your compliance history to see if you’ve failed to file or pay your taxes in the past. It may also request additional financial documentation.

Individual taxpayers and businesses can generally expect to hear from the FTB within 90 days of applying. However, incomplete information or errors on your tax return can delay processing. Be sure to carefully review your application before submitting.

• Online applications. You can check the status of your request by visiting the FTB website and entering your confirmation number. The FTB recommends waiting at least two days after submitting an online application or 90 days after submitting a paper application.
• Mail and phone applications. For applications submitted by phone or post, you can call 800-852-5711 if you do not receive written notification within 30 days of the date your request was received. 

One of two things will happen after you apply.

• If the FTB accepts your request, you will receive a confirmation notice. This will confirm the payment amount, the monthly due date and the date your first payment is due. A $50 setup fee will be added to your balance.
• If the FTB rejects your request, you may respond with a written request for an independent administrative review. You must make this request within 30 days of the date on your rejection letter.

If you are approved, the FTB may conduct periodic reviews for those with tax debt above $25,000 or a payment plan lasting more than 60 months.

Provisional payment plan

If you’re ineligible for a traditional payment plan, you may receive approval for a personal provisional payment plan (PPP). This applies when you have not filed all back taxes and allows you to begin repayment while you complete the missing returns.

You must file your tax return within 30 days of the date on your letter. You also must agree to file all required returns and pay all liabilities in the future.

After your tax return has been filed and processed, the FTB will reassess your eligibility to see if you qualify for a formal payment plan agreement.

California tax payment plan costs and interest

In addition to interest, other costs and penalties may apply to your outstanding tax debt.

California Tax Payment Plan Fees and Penalties

Other fees may apply.

Making payments

The California FTB strongly recommends that taxpayers begin making monthly payments immediately, even while awaiting approval for a payment plan.

You can pay the taxes you owe in one of several ways.

• Bank account - Web Pay (free)
• Credit card (service fee)
• Payment plan (setup fee)
• Electronic funds withdrawal
• Check or money order

Use the amount you proposed on your application, and submit separate payments for each tax year when paying multiple tax returns.

How to Make a Tax Installment Payment

If you apply online, you must make your payments via recurring electronic fund transfer (EFT) payments.

This applies to those who:

• Are making an estimated tax or extension payment over $20,000
• File an original return with a tax liability over $80,000

Fiduciaries, estates and trusts are exempt.

Keep in mind that interest and late penalties will continue to accrue until your debt is fully repaid. A payment plan does not stop these charges.

Payment delay

You may be able to delay your payment if you experience financial hardship. This one-time payment extension gives you a 30-day delay to pay your balance in full. But remember, interest will continue to accumulate during this time.

You must submit a request by logging in to your MyFTB account.

State of California FTB Contacts

Modifying your plan

If you have trouble meeting your monthly payment obligations, you may qualify for a plan modification.

This can apply to several situations, including when you:

• Want to pay your plan in full.
• Want to change the amount you pay each month.
• Want to change your payment due date.
• Need to update your bank account information.
• Can no longer make your payments due to financial hardship.

To modify your plan, log in to MyFTB and select “Request or Manage Payment Plan” under “Service.”

Skipping a payment

You may also request to skip a payment.

To qualify, you must meet several requirements.

• You must be currently enrolled in an installment agreement.
• The proposed date must be within 30 days of the due date.
• You must submit your request within five days of the due date.

In the meantime, your plan will continue to accrue fees and penalties, as applicable.

To apply, log in to your MyFTB account or call 888-635-0494.

Plan cancellation

The FTB reserves the right to cancel your installment plan at any time if you break the terms and conditions. Because of this, it’s critical that you make all payments on time. If you fail to make a payment or your financial institution returns your payment, your plan may be canceled, and you may incur a dishonored payment penalty.

If you break the terms of your agreement, you’ll receive a notice of intent to terminate 30 days before the termination. The notice should include the reason the agreement was terminated.

Offer in compromise

If you’re not approved for a payment plan or you’re having trouble with an existing plan, you may be able to negotiate your tax debt.

An offer in compromise (OIC) enables you to make an offer to pay less than you owe on your tax debt to the FTB. The FTB can consider your offer and then choose whether to allow this tax forgiveness.

Eligibility requirements apply for an offer in compromise.

• You must be current on all tax returns.
• You must first attempt other payment options, such as a tax payment plan.
• You must agree to the total balance owed.
• You must agree to pay a lump sum; no payment plans are accepted.
• You cannot make a zero-dollar offer.
• Your offer cannot include previous payments.

You can apply online or by mail. The FTB will consider your income, assets, expenses and financial status before deciding.

How to Apply for an Offer in Compromise

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