FTB Final Notice Before Levy and Lien: What to Do

The FTB Final Notice Before Levy and Lien is the final notice that the California Franchise Tax Board sends a taxpayer before it takes forced collection action to collect unpaid state back taxes from the taxpayer as well as impose a collection fee against the taxpayer.

(In case you don’t know, a levy is when the government takes your stuff and in particular your money — such as your wages or the money in your bank account — to satisfy your  tax debt.)

So the Final Notice Before Levy and Lien is the FTB giving you notice that it intends to take your stuff.

The Final Notice Before Levy and Lien typically isn’t the first notice the FTB sends you; typically, by this point, the FTB has already sent the taxpayer a Notice of State Income Tax Due and an Income Tax Due Notice.

Here is a redacted FTB Final Notice Before Levy and Lien that the Franchise Tax Board sent one of our clients.

FTB Final Notice Before Levy and Lien At a Glance

FTB Final Notice Before Levy and Lien Explained, Part by Part

Here is a full explanation of the Notice CP504, part by part.

Part 1: Heading Information

At the top of the Final Notice Before Levy and Lien, the FTB informs you of the following things:

• The date of the notice (in the redacted notice above, April 15, 2024)
• Your account number with the FTB (redacted in the notice above)
• Your total current balance with the FTB (in the redacted notice above, $20,325.54)
• The due date — when the FTB expects you to pay your balance in full (in the redacted notice above, April 30, 2024)

Part 2: Final Demand for Payment

In the first paragraph of the body of the notice, the FTB informs you in bold font that this notice serves as your final demand for payment.

They may have sent you other notices in the past, but this is it — if you don’t deal with your FTB debt now, the FTB will take forced collection activity against you.

However, one silver lining is that if you pay full payment of the stated balance within 15 days of the notice date, no further interest will accrue on your account.

Part 3: What the FTB Says Will Happen If You Don’t Pay

Next, the FTB tells you what will happen if you don’t pay your tax debt in full or otherwise deal with it within 30 days of the notice date, namely, that the FTB will take collection action against you without further notice.

Such collection actions include:

• Wage garnishment
• Bank and financial deposit levies
• Seizure and sale of real and personal property

In addition, the FTB may impose a collection fee against you as well as contact third parties the IRS believes may have information about your financial situation.

The FTB may also file a Notice of State Tax Lien against you.

Part 4: Installment Agreement

The FTB also informs you — briefly — that if you are unable to pay your balance in full, you may be eligible for an FTB installment agreement.

Part 5: What to Do If You Don’t Think You Owe

If you think you do not owe the amount the FTB claims you do on the Final Notice Before Levy and Lien, the FTB provides you with various phone numbers you can call to discuss your situation.

Part 6: How to Pay Your Balance

The right-hand side of the FTB Final Notice Before Lien and Levy is dominated by the box “How to Pay Your Balance,” in which the FTB provides you with your payment options:

• Electronic payment options at ftb.ca.gov (required for some taxpayers)
• Check or money orders made payable to the “Franchise Tax Board” and mailed to the address on the notice

Part 7: Account Balance Summary

At the bottom of the FTB Final Notice Before Levy and Lien, the FTB provides you with your account balance summary, indicating, by tax year:

• Your underlying tax liability
• Your penalty amount with the type(s) of penalties identified by the FTB penalty code(s) in the adjacent column
• The amount of interest that has accrued on your account
• The amount of FTB collection fees that have accrued on your account
• The amount of any payments you have made toward each tax year — note that this amount does not include California state income tax withholding since withholding amounts are included in the “adjustments” column
• The amount of any “adjustments” to the tax year (most commonly, state income tax withheld)
• Finally, your total combined balance for each year

When the FTB Sends the Final Notice Before Levy and Lien

The most common reason for the FTB sending you the Final Notice Before Levy and Lien is when the following things happened:

1. You filed a tax return for the year in question that indicated a balance due.
2. You did not pay the amount due indicated on the return in full.
3. The FTB previously sent you a Notice of State Income Tax Due and an Income Tax Due Notice and you responded to neither.

Another situation in which the FTB sends taxpayers a Final Notice Before Levy and Lien is if the FTB itself prepared a Missing Year Assessment (MYA) for a taxpayer and the tax was assessed based on this MYA.

Of course, the FTB is known to make mistakes, and it’s possible they are sending you the Final Notice Before Levy and Lien in error because they didn’t properly credit your account for payments you made for the tax year.

What You Should Do If You Receive a Final Notice Before Levy and Lien

Below are the steps you should take after you receive a Final Notice Before Levy and Lien.

Step 1: Check the Final Notice Before Levy and Lien for accuracy.

Don’t assume that the FTB did their math correctly — review the FTB’s numbers against your own.

Step 2: Correct any errors with the FTB.

If you do find an error in the FTB’s math, take it up with them by calling one of the phone numbers in the “What to Do If You Don’t Think You Owe” section.

Step 3: Seek Penalty Abatement.

For most of our clients with penalties on their account, we at least seek some sort of penalty relief for them.

Sometimes the FTB grants it; sometimes they don’t.

But it’s generally at least worth a shot.

Step 4: Pay the Balance Due OR Seek Tax Relief

Finally, you have to figure out what to do with the amount you owe the FTB after you’ve cleared up any disagreements with them concerning the amount as well as obtained any possible penalty relief for your account.

You can, of course, pay off your balance in full.  This will (obviously) stop future penalties and interest from accruing.

However, a better option — if you qualify for it — is an offer in compromise.  An offer in compromise is an agreement you make with the IRS in which the IRS agrees to accept a lower amount to satisfy your tax debt than you actually owe.

That said, not all taxpayers qualify for an offer in compromise, so there are other options, such as a temporary hardship placement called currently not collectible status as well as installment agreements for taxpayers who wish to pay their balance over time.

Step 5: Consider Filing for an Independent Administrative Review

Within 30 days of the date of your Final Notice Before Levy and Lien, you can request an Independent Administrative Review with the Executive and Advocates Services before the FTB levies you or file a Notice of State Tax Lien.

In order to request this review, you must submit a written request to the Executive and Advocate Services requesting this review within 30 days of your notice date.

You can submit your request by either fax at 916-843-6022 or via mail to:

Franchise Tax Board
Executive and Advocates Services MS A381
PO Box 157
Rancho Cordova, CA 95741-0157

Before your review, you or your tax professional should have a well-developed game plan in terms of how you want your case to go, i.e., what kind of tax relief option you want to pursue.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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