FTB Top Past Due 500 Tax List

The California Franchise Tax Board (FTB) issues notices to the top 500 delinquent individual and business tax payers in the state warning those taxpayers they could be published on the FTB’ s Top Past Due 500 List  or FTB 500 List.  Taxpayers who find themselves on the FTB 500 List not only have to cope with potential embarrassment from having their name published on a readily accessible public list but could also lose their driver’s license and state issued professional licenses such as Contractor’s license or a Law license.  This blog will discuss what a Taxpayer who finds themselves on the FTB 500 list should do.

The most obvious solution to the problem is to pay the entire tax owed.  However, for virtually every taxpayer in danger of being on the list, this may not be a feasible option.  In our experience as tax attorneys, most people would have paid their taxes off in full if it were feasible to do so.   

A Taxpayer can get themselves off the list by entering into an installment agreement or a hardship deferral.  The Taxpayer will continue to owe the tax balances (plus penalties and interest); however, with an installment agreement or a hardship deferral, their names will not appear on the FTB 500 list and perhaps more importantly, they will be able to keep their drivers licenses and professional licenses. Typically, the FTB will still file tax liens against taxpayers who set up installment agreements or have hardship deferrals. 

In order to set up payment plans, taxpayers need to bring themselves into compliance.  This means, among other things, getting all delinquent returns filed.  If a taxpayer defaulted on a previous payment plan, this may also mean paying off at least one or more balances in full.  Taxpayers should review and ensure they have adequate state income tax withholdings from their wages and, if applicable, make timely estimated state tax payments.

Additionally, taxpayers will have to prepare a full financial disclosure in order to establish a payment plan.  This involves completing a financial statement that reports assets, income sources, and expenses.  Bank statements, pay stubs, and other financial documents may need to be required as well. 

If you received a notice from the Franchise Tax Board threating to place you on the FTB 500 list, now is the best time to act.  You have quite a bit of work to do ahead of you if you want to keep your livelihood, but all hope is not lost. You can use the new year to put your old problems behind you.

At RJS LAW, we have decades of combined experience helping clients with FTB issues as well as tax issues with the IRS and other tax agencies.  If you received a notice from the Franchise Tax Board about potentially being on the FTB 500 list or if you have any other tax questions, please feel free to contact us at 619-595-1655 for a free consultation.  Start off the New Year right by working towards putting your old tax problems behind you!

FTB 500 list FAQ

I received a notice from the Franchise Tax Board concerning a Public Disclosure of Tax Delinquency.  What should I do?

If you are able to pay the balance off in full, that is perhaps the best thing.  Of course, most people that receive FTB notices threatening a public disclosure of tax delinquency, are not in a position to pay their FTB tax balance in full.  These people will need to submit a financial statement to the FTB and enter into some sort of payment plan.

What will happen if the Franchise Tax Board places me on the FTB 500 List?

People should try to avoid the FTB 500 list.  The consequences are more than having your name published on the FTB website.  The FTB will take away any state-issued licenses you have which includes your driver’s license and any professional license you may have such as a contractor’s license, law license, realtor’s license, or medical license.  The FTB will also pursue collection activities such as bank levies and wage garnishments.

How do I stay off the FTB 500 List?

If you are unable to pay your balances off in full, you can stay off the FTB 500 list and keep your state issued licenses by making payment arrangements with the Franchise Tax Board.  This entails preparing a financial statement for the Franchise Tax Board and providing financial documents such as bank statements.   

 I cannot afford to pay the FTB says I owe.  What should I do?

Most people who find themselves owing large sums in taxes are not able to pay the balance immediately.  The Franchise Tax Board recognizes this and understands this.  The Franchise Tax Board will take a financial statement from you and make payment arrangements based off your financial circumstances.  

 Will I lose my driver’s License?  Will I lose my professional license?

Individuals who find themselves on the FTB 500 list can lose state-issued licenses including driver’s licenses and professional licenses such as contractor’s licenses, law licenses, and medical licenses.  Fortunately, a person in danger of appearing on the FTB 500 list can keep their licenses if the make formal payment arrangements with the FTB.  

Written by Joseph Cole, Esq., LL.M.