Franchise Tax Board

Bankruptcy

New bankruptcy law affects state's taxes

In April 2005, President George W. Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Most provisions of the law, Senate Bill 256, go into effect Oct. 17, 2005. More than twenty tax provisions of the new law affect individual and business bankruptcies. Most of these can be found in Title VII, "Bankruptcy Tax Provisions". For more information, go to Senate Bill 256 or the Eastern District of California Review of the act.

Issues Franchise Tax Board can help you with

Alternatives to bankruptcy

Contact Franchise Tax Board

    
  • Bankruptcy
    		•                   (916) 845-4750
       
  • Bankruptcy fax
    		•    (916) 845-9799
       
  • Corporations: Chapter 7 or 11
    		•    (916) 845-4375

    Links to other information resources

    Franchise Tax Board publications

    Power of attorney

    We will need a power of attorney declaration from your client authorizing any disclosure before we can release their tax information to you.

    Fax the power of attorney declaration with your request to our bankruptcy staff at (916) 845-9799. For more information regarding obtaining and submitting power of attorney declarations, read our Power of Attorney Booklet, FTB 3520.

    Pre-bankruptcy

    You may request information regarding your clients' tax obligations, such as their balance due and what tax returns have or have not been filed, before filing a bankruptcy petition.

    Notices from Franchise Tax Board

    Under the California Taxpayers' Bill of Rights, we must notify your client any time we assess a new liability. Generally, we must also advise delinquent taxpayers of the status of their accounts annually.

    See the California Taxpayers' Bill of Rights, A Comprehensive Guide (FTB 4058C), for additional information.

    Refunds

    If your client expects a refund on a post-petition tax year, allow six to eight weeks after filing the tax return before inquiring about its status.

    If your client expects a refund on a pre-petition tax year, call us to determine its status.

    Dissolving a corporation and requesting tax clearance

    Assembly Bill 2341, signed September 29, 2006, eliminates the tax clearance certificate from the Franchise Tax Board. Corporations are still required to file the appropriate paperwork with the California Secretary of State. Please refer to our Publication, Guide to Dissolve, Surrender or Cancel a California Business Entity (FTB 1038), for further information. You may also contact the Secretary of State at (916) 657-5448 or visit their Website at www.ss.ca.gov.

    Estates

    When there is a requirement to file an estate fiduciary return and the estate is a corporation, file Form 100, California Corporation Income Tax Booklet. If the estate is an individual, file Form 541, California Fiduciary Income Tax Return.

    Mail the original return with payment of the tax to the address we specify on the tax form. To request a prompt determination of the tax, send a copy of the return, along with a letter requesting the determination to:

    Franchise Tax Board
    PO Box 1673
    Sacramento CA 95812-1673

    Note: Contact us to determine any amounts due to us before you distribute the estate. Also, contact us if we sent your clients a bill on an estate account that they already paid.

    Litigation

    In bankruptcies involving tax debt, sometimes there are situations where we disagree with your clients' position. Some of these situations may involve discharge disputes or claim issues. If you client is considering legal action, please call us before filing with the court. We will do everything reasonable to resolve any issues without court intervention. If we cannot resolve your issue and service is necessary and allowed by mail, send it to:

    Chief Counsel
    Franchise Tax Board
    c/o General Counsel Section
    PO Box 1720 MS: A-260
    Sacramento CA 95812-1720

    Note: If personal service is necessary, your client must serve a designated employee at our central office located at 9646 Butterfield Way, Sacramento, CA 95827. In addition, please fax or mail a copy directly to the bankruptcy group at (916) 845-9799 or:

    Individuals
    Franchise Tax Board
    PIT Bankruptcy MS: A-340
    PO Box 2952
    Sacramento CA 95812-2952

    Corporations
    Franchise Tax Board
    BE Bankruptcy MS: A-345
    PO Box 2952
    Sacramento CA 95812-2952

    Installment agreements

    If your clients have financial hardships and cannot pay their taxes in full, they may request monthly installment payments.

    For more information, get our Installment Agreement Booklet, FTB 3567BK. Or, to set up an electronic installment agreement, complete the on-line application at Request an installment agreement.

    Call our Installment Agreement Unit at (800) 689-4776 for more information.

    Offer in compromise

    Your client may submit an offer to pay a lesser amount than what is actually due to satisfy non-disputed final tax liabilities.

    For requirements, see:

    Call our Offer in Compromise Unit at (916) 845-4787 for more information.