California Tax Payment Plans and Installment Agreements Explained
While the California Franchise Tax Board (FTB) encourages taxpayers to pay their tax liability in full — even if that means having to borrow money — it does allows taxpayers to set up an installment agreement to pay off their tax debt over time in certain circumstances.
California Installment Agreement Payment Plan Basics
Here are the basics of what you need to know about California FTB installment agreements.
Eligibility
In general, taxpayers are eligible for an FTB payment plan if they meet the following requirements:
- They do not owe more than $25,000 to the FTB.
- They have no outstanding tax returns.
- They are not currently in an installment agreement.
- They must demonstrate financial hardship if their tax liability exceeds $10,000 or they want their payment plan to last longer than 36 months.
Length
The length of an FTB installment agreement is generally 60 months for those who owe $10,000 or less or 36 months for those who owe more than $10,000.
Fee
If you are approved for an FTB installment agreement, the FTB will add a $34 fee to your balance.
Requirements
As part of the installment agreement, the taxpayer must agree to:
- Make all installment agreement payments timely
- File all future income tax returns on time, whether by the original due date or the extended due date if you filed a valid extension
- Make all future tax payments timely, including estimated tax payments
Tip: The California FTB gives taxpayers a one-time 30-day bill payment delay that can be set up here. If you are granted this one-time delay, you can skip a month’s payment on your installment agreement and not be considered in default on your agreement.
Downsides
Here are the downsides of a California FTB installment agreement:
- Installment Agreement Fee: California charges a $34 fee on all installment agreements.
- Penalty Accrual: Failure-to-pay penalties continue to accrue on your account even if you’re in an installment agreement.
- Interest Accrual: Interest continues to accrue on your account even if you’re in an installment agreement.
- Lien: An installment agreement does not prevent the state from filing a notice of state tax lien against you in state or county records until your liability is paid in full.
How to Get a California Installment Agreement
You have three options when it comes to getting a California FTB payment plan:
- Online
- By mail
- By phone
1. Online
You can enter into a California installment agreement online at ftb.ca.gov/pay/payment-plans/apply-online.asp.
Note that only installment agreements for newly assessed liabilities may be set up online.
2. By Mail
To request a California installment agreement by mail, complete FTM Form 3567 Installment Agreement Request and mail it to:
State of California
Franchise Tax Board
PO Box 2952
Sacramento, CA 95812-2952
Note that if you currently being levied by the FTB, you cannot request an installment agreement by mail. It is recommended that in this situation you make payment arrangements by phone (see below).
3. By Phone
To set up a California installment agreement over the phone, call 1-800-689-4776 between the hours of 8:00 AM to 5:00 PM on weekdays (except California state holidays).
Author:
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.
