Frequently Asked Questions (FAQ)
Franchise Tax Board (FTB) provides taxpayers the opportunity to come forward voluntarily and enter into a Filing Compliance Agreement (FCA) if they have an unfulfilled filing requirement for past years, and an unpaid California tax liability.Qualified taxpayers eligible to enter into an FCA must voluntarily disclose, file, and make full payment to FTB for all years in which they failed to file a California return. Based upon a showing of reasonable cause, FTB will waive various penalties for which reasonable cause is a defense associated with the return filings identified in the agreement.
What Is The Difference Between the Voluntary Disclosure Program and an FCA?
The Voluntary Disclosure Program (VDP) is a statutory program under Revenue and Taxation Code Section 19191. VDP has very specific requirements and applies to a limited class of eligible applicants. It also has a limited look-back period of 6 years. An FCA is under FTB's authority to administer tax under Revenue and Taxation Code section 19501 et seq., and to abate penalties for reasonable cause under various provisions of the Revenue and Taxation Code. Unlike VDP, an FCA is not limited to a specific look-back period.
Who Is Eligible?
If you are in the class of taxpayers described in Revenue and Taxation Code section 19192, but have concluded that you are not eligible for VDP, you may apply to enter into an FCA.
How Do I Apply?
Send a letter requesting to enter into an FCA with FTB at the address provided below. The letter should include an explanation of why there is an unfulfilled filing requirement for past years and, an unpaid California tax liability. The letter should include detailed facts as to why your situation qualifies for a waiver of penalties under reasonable cause. You should also include the years for which you are seeking relief.
Mail the request and supporting documentation to:
Legal
Attn. Craig Scott
Franchise Tax Board
PO Box 1720
Rancho Cordova, CA. 95741-1720
If I Participate, What Penalties Will FTB Waive?
The determination to waive penalties will be made on a case-by-case basis and is limited to penalties for which reasonable cause is a defense. The most commonly waived penalties are the Failure to File penalty under Revenue and Taxation Code Section 19131, and the Failure to Pay Tax penalty under Revenue and Taxation Code Section 19132. However, FTB may also waive other penalties for which reasonable cause is a defense. FTB cannot waive underpayment of estimated tax or amnesty penalties for reasonable cause.
Can FTB Waive Interest?
No. There is no reasonable cause exception to the imposition of interest.
Can I Still Participate If I Received A Notice From FTB?
No.
What Happens If the FTB Accepts My Request to Enter into An FCA?
If we accept your request to enter into an FCA, you will enter into an Agreement with FTB for the years requested and approved. You must also submit the required tax returns and payment by the date specified in the Agreement.
When Must I Pay?
Full payment is usually due within 30 days from the date of the Agreement.
Can I Make Installment Payments?
Yes, if you meet the requirements for entering into an Installment Agreement with the FTB.
Can The Agreement Be Voided?
Yes. FTB considers all of the information you provided to make its determination not to impose penalties for which reasonable cause is a defense. If at any time the information is subsequently determined to be inaccurate or false, FTB retains the right to pursue all applicable penalties, and the Agreement shall be null and void.