In response to the COVID-19 crisis, the California Franchise Tax Board (“FTB”) has followed the IRS’ lead and given taxpayers penalty-free extensions to July 15, 2020 to file and pay their California tax obligations for 2019 and for the first two quarters of 2020. Additionally, taxpayers who have installment payment agreements with the FTB can request to skip up to three months of installment payments. In the usual course, skipping an FTB installment agreement payment triggers the FTB to take forced collection actions such as filing a lien or imposing a levy against the taxpayer. However, if the FTB grants the taxpayer’s request, then the taxpayer’s skipped payment will be treated as allowable. Consequently, the taxpayer can skip that installment payment without the risk of exposure to defaulting the installment agreement and without the risk of exposure to triggering FTB forced collection actions.
The tax relief of skipping an FTB installment payment is a deferral only. It does not constitute forgiveness of the skipped payment. Moreover, interest will continue to run on the skipped payment. Further, taxpayers need to contact the FTB to request a skipped payment to help ensure that skipping the payment will not expose the taxpayer to the risk of defaulting the installment agreement.
For more information on FTB installment agreements, please contact me at: email@example.com or 310-550-6200.