{"id":6827,"date":"2026-09-19T08:23:44","date_gmt":"2026-09-19T08:23:44","guid":{"rendered":"https:\/\/thelawyerworld.com\/blog\/?p=6827"},"modified":"2026-09-19T08:23:48","modified_gmt":"2026-09-19T08:23:48","slug":"two-tax-collectors-two-clocks-what-happens-after-an-ftb-or-irs-notice-lands-in-san-diego","status":"publish","type":"post","link":"https:\/\/thelawyerworld.com\/blog\/two-tax-collectors-two-clocks-what-happens-after-an-ftb-or-irs-notice-lands-in-san-diego\/","title":{"rendered":"Two Tax Collectors, Two Clocks: What Happens After An FTB Or IRS Notice Lands In San Diego"},"content":{"rendered":"\n

A California taxpayer who falls behind is being chased by two separate agencies for the same year’s income and the two of them are working to different calendars. The IRS has been limited to ten years since the 1990 amendments to section 6502 of the Internal Revenue Code. The Franchise Tax Board had no time limit at all until July 1, 2006, when Revenue and Taxation Code section 19255 gave it twenty and because that clock has been running for only twenty years and a couple of months, a California income tax balance has not yet been extinguished by the passage of time in the history of the state. That difference and what starts each clock over, is most of what a person needs to understand before agreeing to anything with either agency.<\/p>\n\n\n\n

The IRS Clock Runs Ten Years And An Active Payment Plan Does Not Stop It<\/strong><\/h2>\n\n\n\n

Section 6502 gives the IRS ten years from the date a tax was assessed to collect it by levy or by suit. The IRS calls the end of that period the CSED and when it is reached the balance is written off and any federal lien is released. It is not ten calendar years in practice, because several things suspend it: an offer in compromise while it is pending plus thirty days, a collection due process hearing from the request through the determination, a bankruptcy for as long as it runs plus six months under section 6503(h) and time spent outside the country.<\/p>\n\n\n\n

An installment agreement is the one that people get wrong in the taxpayer’s favor. The request suspends the clock while it is pending, but once the agreement has been approved and payments are being made, the ten years keep running underneath it. A federal payment plan that will not clear the balance before the CSED arrives is worth entering, because whatever is left on that date is gone. The IRS knows this and calls the arrangement a partial payment installment agreement.<\/p>\n\n\n\n

The FTB Clock Runs Twenty Years And A Payment Plan Stretches It<\/strong><\/h2>\n\n\n\n

Section 19255 works differently at every step. The twenty years run from the date the latest liability for a tax year became due and payable and the FTB’s own guidance is candid about what “latest” means: if a collection cost recovery fee, a lien fee or an installment agreement fee is assessed on an old balance, the date of that fee becomes the new start of the twenty years. The example the FTB gives on it’s statute of limitations page is a $20,000 liability from 2000 on which a collection cost fee was assessed in 2008, which moved the expiry from 2020 to 2028.<\/p>\n\n\n\n

The clock is also suspended, rather than merely not stopped, while a bankruptcy is open, while a taxpayer is in an approved payment plan, during military service in a combat zone and during child support collection plus sixty days. So the same installment agreement that was harmless on the federal side, because the CSED kept running, extends the state side, because the twenty years stop counting for as long as the plan is in place. Anyone who has an old California balance and is being offered a payment plan on it should have both expiry dates worked out first and that is exactly the piece of work a firm that defends San Diego County taxpayers in Franchise Tax Board and IRS collection cases<\/a> would be doing before advising on the plan: pulling the IRS account transcripts to reconstruct the CSED with it’s tolling events and getting the FTB’s due-and-payable history to see whether a fee assessment has restarted the twenty years. That firm’s San Diego page describes one such case in which an expired federal balance was excluded from the final payment, which came to about $30,000 the client would otherwise have paid on a debt the IRS could no longer collect.<\/p>\n\n\n\n

What The FTB Can Do Without Going To Court<\/strong><\/h2>\n\n\n\n

The FTB does not need a judgment. It can record a state tax lien, send an order to withhold to a bank so that funds are frozen and remitted, send an earnings withholding order to an employer for up to twenty-five percent of disposable wages until the balance is cleared and take state and federal refunds and lottery winnings by intercept. A business entity that does not pay or file can have it’s status suspended, which strips it of the right to sue, defend or contract in it’s own name.<\/p>\n\n\n\n

Driver’s license suspension is narrower than the collection firms’ websites suggest. It is tied to the FTB’s Top 500 delinquent taxpayer list, which is limited to balances over $100,000 and a taxpayer who has been notified of inclusion can avoid it by getting into a payment plan and staying current. For a balance of $14,000 the license is not in play; the bank account is.<\/p>\n\n\n\n

The Door That Closes: FTB Payment Plan Rules<\/strong><\/h2>\n\n\n\n
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The FTB’s own online installment agreement has a short list of conditions and one of them explains why the timing after a notice matters more on the state side than on the federal side.<\/p>\n\n\n\n