FTB Statute of Limitations: How Long California Has to Assess and Collect Tax

The Basic Four-Year Assessment Period

Under Revenue and Taxation Code (R&TC) section 19057, the Franchise Tax Board (FTB) must mail a notice of proposed deficiency assessment within four years after the return was filed. A return filed before its due date is treated as filed on the due date (R&TC § 19066).

For example, a 2023 individual return due April 15, 2024 and filed on March 1, 2024 is treated as filed on April 15, 2024, so the four-year period generally runs through April 15, 2028. A return filed later, for example in October 2024 during an extension period, starts the four years on the date it was actually filed.

Six Years for Large Omissions of Income

The period is six years if the taxpayer omits from gross income an amount greater than 25 percent of the gross income stated on the return (R&TC § 19058). For a trade or business, gross income for this purpose means gross receipts before subtracting the cost of sales or services. An amount that is adequately disclosed on the return or in an attached statement is not counted as omitted.

No Limit for Unfiled or Fraudulent Returns

If no return is filed, or if a false or fraudulent return is filed with intent to evade tax, the FTB may act at any time (R&TC § 19087). It may require a return, or it may estimate income from available information and propose an assessment.

Federal Changes Extend California’s Period

Taxpayers must report federal changes to the FTB within six months after the final federal determination (R&TC § 18622). If the change is reported on time, the FTB may assess within two years of the report or within the regular period, whichever ends later (R&TC § 19059). If it is reported late, the FTB has four years from the report (R&TC § 19060(b)). If a required report is never made, the FTB may assess at any time (R&TC § 19060(a)).

Bankruptcy

The assessment period is suspended while the FTB is barred by a bankruptcy case from mailing a notice of proposed deficiency assessment, and for 60 days afterward (R&TC § 19057(b)).

Refund Claims Have Their Own Deadlines

Time limits also run against taxpayers. Under the FTB’s claim instructions, a claim for refund generally must be filed by the latest of four years after the original due date of the return, four years after the date a timely return was filed, or one year after the date of the overpayment. A claim filed after that deadline can be lost even if the tax was overpaid.

The 20-Year Collection Period

Once tax is assessed and due, the FTB generally may not collect it after 20 years have passed from the date the latest liability for that tax year became due and payable (R&TC § 19255). The period is extended if a timely civil action is filed or a claim is filed in a probate proceeding. It is suspended during certain periods, including while the FTB is barred by a bankruptcy case and for six months afterward, while an installment agreement bars a levy, during combat-zone and disaster postponements, and during any other period when collection is suspended by law.

Because the period runs from the latest liability for the year, a later assessment for the same year can affect when collection for that year ends.

Practical Points

Keep a record of the date each return was filed, since that date usually starts the assessment period. Report federal changes on time. When reviewing an older balance, confirm the tax year, the date the latest liability for that year became due and payable, and any events that may have suspended the collection period.

The Bottom Line

Four years to assess and 20 years to collect are the starting points, not the whole story. Unfiled returns, large omissions, unreported federal changes, bankruptcy, and payment arrangements can all change the calculation for a particular year.