This advice applies to anyone dealing with tax debt from the state of California’s Franchise Tax Board (FTB). You have several options in dealing with them, so we’re going to focus on the pros and cons of filing a Hardship Status with the California FTB.
Hardship Status with the California FTB is basically a payment plan for $0. It is a filing statement that basically says that you are unable to pay. It is a financial statement which you file with the FTB, demonstrating your lack of financial resources.
Hardship Status is similar to the Currently Not Collectible status with the IRS. It differs from other arrangements because there is no recognized payment arrangement in the foreseeable future.
If you are in this situation, you might have even looked into an Offer in Compromise through the California FTB. If you are a good candidate for an Offer In Compromise, that will typically be a better option for you in the long run, rather than entering into Hardship Status. It is better to get a debt reduced, and have a payment plan to clear it, than it is to just leave the full balance hanging.
However, if you are not qualified for an Offer in Compromise, and do not make enough money to be in a payment plan, Hardship Status might be your best option.
You submit a financial statement, which is also known as the FTB 3561C form.
If you have already submitted a 433F or 433A to the IRS (Collection Information Statement for an IOC) in the last 12 months, the FTB will accept that in lieu of their own FTB 3561C form.
Most Hardship Status filings are for a year but in some cases may be as short as 6 months. Once time runs out, you have to try to renew it again.
FTB tax debts from California also don’t expire as easily as they do for the IRS. California has a 20-year collection statute, beyond which they often find ways to extend that 20 years.
If you would like help from our expert attorneys with your California tax debts us a call at (888) 515-4829 or click here and fill out our intake form.
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