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Bankruptcy

Issues Franchise Tax Board can help you with

Alternatives to bankruptcy

Contact Franchise Tax Board

Bankruptcy 916.845.4750
Bankruptcy fax 916.845.9799

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 discuss specific bankruptcy issues or release their tax information to you. For more information regarding obtaining and submitting power of attorney declarations, read our Power of Attorney (POA) information page.

Pre-Bankruptcy

You may request information regarding your client’s tax obligations, such as their balance due, filed tax ruturn, and non-filed tax returns before you file a bankruptcy petition. We need a FTB. 3520, Power of Attorney, from your client authorizing the disclosure of their tax information before we can release it to you. Fax your request for information and a completed FTB 3520, Power of Attorney to 916.845.9799.

Filing Requirements

By law, your client is required to file all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition If you are unsure of your client’s filing history, you may request Pre-Bankruptcy Information or call us at 916.845.4750. If you need forms, you may locate them on our Forms and Publications page. Bankruptcy Code Section ((1308 (a)

Notices from Franchise Tax Board

If your client is currently in bankruptcy, they may receive a tax due notice. This is not a demand for payment; it is for informational purposes only. Under California law we must notify your client anytime we assess a new liability. Your client may also receive a notice at least once a year if they have a delinquent tax balance. This annual notice is required under the California Taxpayer Bill of Rights.

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 at 916-845-4750 to determine your client’s refund status.

Dissolving a Corporation

Corporations are required to file the appropriate paperwork with the California Secretary of State to formally dissolve. Refer to FTB 1048, Guide to Dissolve, Surrender or Cancel a California Business Entity (FTB 1038). For further information, go to www.ss.ca.go or call the Secretary of State 916.657.5448.

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 completed tax return, along with a cover letter requesting the determination to:

Franchise Tax Board
Bankruptcy Section MS A340
PO Box 2952
Sacamento, CA 95812-2952

Call us to determine any amounts due before you distribute the estate or if your client receives a bill on an estate account that has been paid in full.

Liens

If your client owned real property as of the date of the bankruptcy filing and a tax lien was recorded prior, the lien may survive the bankruptcy process. The property will remain encumbered and liable for the applicable debt, even if the client receives a discharge of the debt. If this situation applies to your client and you want to resolve the issue or receive specific information, please contact us at 916.845.4750.

Litigation

If you are considering litigation over discharge disputes, claims issues, or other reasons, call us before you file with the court. It may be possible to resolve the issues without court intervention.

If we cannot resolve your issue and service is necessary and allowed by mail, send it to:

Franchise Tax Board
Chief Counsel
General Counsel Section MS A 260
PO Box 1720
Rancho Cordova, CA 95741-1720

If personal service is necessary, it is required at our central office located at 9646 Butterfield Way, Sacramento, CA 95827. In addition, please fax or mail a copy directly to the Bankruptcy Section at 916.845.9799, or mail a copy to:

Franchise Tax Board
Personal Bankruptcy MS A340
PO Box 2952
Sacramento, CA 95812-2952

Franchise Tax Board
Business Entity Bankruptcy MS A345
PO Box 2952
Sacramento, CA 95812-2952

Installment Agreements

If your client can not pay their taxes in full, your client may qualify for an installment agreement. Your client may consider this option prior to filing bankruptcy, or to pay non-dischargeable debts after bankruptcy. Refer to Tax Payments for Individuals or Tax Payments for Businesses, or contact us at 800.689.4776.
Installment Agreements during Bankruptcy:

A bankruptcy filing automatically cancels an existing installment agreement. Bankruptcy law protects your client’s assets from collection action, which prevents payments under an installment agreement during the bankruptcy process. After the completion of your client’s bankruptcy, we will send your client a balance due notice for any taxes that were not paid or discharged. At that time, they may qualify to establish an installment agreement with us.

If your client has incurred a new liability during bankruptcy and they are unable to pay, please call us at 916.845.4750.

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

Offer in Compromise

The Offer in Compromise program allows you to offer a lesser amount for payment of a non-disputed final tax liability. Refer to the Offer in Compromise (OIC), webpage for more information or contact us at 916.845.4787.