How to Get Franchise Tax Board Abatement in 5 Steps

What Is Franchise Tax Board Abatement and How Can It Help You?

Franchise Tax Board abatement is a formal process that allows California taxpayers to reduce or eliminate penalties — and in some cases interest — assessed by the FTB for filing or paying taxes late.

Here’s a quick overview of your main relief options:

Relief Type	Who It’s For	Key Requirement
One-Time Penalty Abatement	Individual taxpayers only	Tax years starting on/after Jan. 1, 2022; never used this relief before
Reasonable Cause Abatement	Individuals and business entities	Must show ordinary care and prudence was exercised
Interest Abatement	Individuals and businesses	Must show FTB error or unreasonable delay caused the interest
Voluntary Administrative Termination	Domestic LLCs, corporations	Entity must have no assets and not be doing business

The most important things to know upfront:

You must have all required tax returns filed before requesting abatement
All outstanding tax balances must be paid in full — or covered by a current installment agreement
The one-time abatement is a lifetime benefit — it does not reset like the IRS equivalent
Business entities, trusts, and estates cannot use the one-time program — they must use reasonable cause

Getting hit with FTB penalties is stressful. A failure-to-file penalty can reach 25% of your unpaid tax balance, and a failure-to-pay penalty can stack on top of that. If you’re already behind, those numbers add up fast — and many taxpayers don’t realize relief is available.

The good news? California created a real path to penalty relief. Knowing which option fits your situation is the first step.

I’m Attorney Samuel Landis, Esq., LL.M. (Taxation), and over my 15+ years of tax controversy practice I’ve helped taxpayers navigate Franchise Tax Board abatement requests — from one-time penalty relief to complex reasonable cause claims for business entities. Let’s walk through exactly how to pursue relief, step by step.

Understanding the One-Time Franchise Tax Board Abatement

For decades, California was known for being much stricter than the IRS when it came to penalty relief. While the federal government offered “First-Time Abatements,” California required a showing of “Reasonable Cause” for every single request. That changed with the passage of Assembly Bill 194.

This legislation added Revenue and Taxation Code (R&TC) Section 19132.5, granting the FTB the authority to provide a One-Time Penalty Abatement. This program is designed to give compliant taxpayers a “mulligan” for a single slip-up. It is a powerful tool, but as we often tell our clients at Segal, Cohen & Landis, you only get one shot at it. If you have multiple years of penalties, you need to be strategic about which year you choose to wipe clean.

If you are facing significant state tax debt, consulting a California Franchise Tax Board Attorney can help you determine the best timing for your request.

Eligibility for One-Time Franchise Tax Board Abatement

To qualify for this specific type of Franchise Tax Board abatement, you must meet several strict criteria:

Individual Status: This program is only for individuals subject to Personal Income Tax Law. This includes those who file Form 540, 540NR, or 540 2EZ. Unfortunately, fiduciaries, estates, and trusts are excluded from this specific program.
Taxable Year: The abatement is only available for taxable years beginning on or after January 1, 2022.
Compliance: You must be compliant with all tax return filing requirements. You can’t have any missing returns on your record.
Payment: You must have paid (or be current on an installment agreement for) all taxes, penalties, and interest—excluding the specific penalties you are asking to have abated.
First-Time Applicant: You cannot have been previously granted a one-time abatement under R&TC 19132.5.

To formally request this, you’ll eventually need to look at FTB 2918 One-Time Penalty Abatement – Franchise Tax Board. For a deeper dive into how the FTB operates, check out Your Go-To Guide for the California Franchise Tax Board.

Qualified Penalties for Individual Relief

Not every penalty can be waived under the one-time program. It is specifically targeted at “timeliness” penalties. As of May 2026, the two primary penalties covered are:

Failure-to-File (RTC 19131): This is triggered when you don’t file your return by the due date.
Failure-to-Pay (RTC 19132): This occurs when you don’t pay the full amount of tax due by the original due date, even if you filed an extension.

An extension to file is not an extension to pay. If you find yourself in a situation where you owe the state a significant sum, our California State Tax Resolution Services can help you manage the balance and the associated penalties.

Step-by-Step Guide to Requesting Penalty Relief

Requesting Franchise Tax Board abatement isn’t just about asking nicely; it’s about following a specific administrative path. Here are the five steps we recommend:

Step 1: Verify Compliance

Before you even pick up the phone or log in, make sure your house is in order. The FTB will reject your request immediately if you have any unfiled returns from previous years.

Step 2: Pay Outstanding Liabilities

You generally need to pay the underlying tax and interest before the FTB will consider abating the penalty. If you can’t pay in full, you must have an active installment agreement and be current on your payments.

Step 3: Choose Abatement Type

Do you qualify for the “One-Time” relief, or do you need to argue “Reasonable Cause”? If you have a legitimate excuse (like a medical emergency or a natural disaster), you might save your “One-Time” relief for a future year and use the reasonable cause argument now.

Feature	One-Time Abatement	Reasonable Cause Abatement
Proof Needed	None (just compliance)	Extensive documentation of “Ordinary Care”
Frequency	Once in a lifetime	As often as you can prove cause
Eligible Entities	Individuals only	Individuals & Business Entities
Forms	FTB 2918	FTB 2917 (Indiv) or 2924 (Business)

Step 4: Submit Form 2918 or 2917

Once you’ve chosen your path, submit the appropriate paperwork. Be thorough. If you are filing for reasonable cause, include every piece of evidence you have—hospital records, death certificates, or proof of a natural disaster.

Step 5: Monitor Status

The FTB typically processes these requests within six weeks. You can monitor your status through your MyFTB account.

Filing a Claim for Refund Based on Reasonable Cause

If you don’t qualify for the one-time abatement (perhaps you are a business entity or you’ve already used your one-time relief), you must prove Reasonable Cause. This means showing that your failure to file or pay occurred despite the exercise of “ordinary business care and prudence.”

For businesses, this is done using Form 2924. For individuals, it’s Form 2917. Unlike the one-time abatement, this process requires a detailed statement of facts. If you’re used to dealing with the IRS, you’ll find our IRS Penalty Abatement Complete Guide helpful for comparison, but keep in mind that the FTB can be more rigorous in its review of “prudence.”

Methods for Submitting Your Request

The FTB offers several ways to submit your request for Franchise Tax Board abatement:

Online: This is the fastest method. Log into your MyFTB account and use the “Authenticated Chat” feature or send a secure message.
Phone: You can call the FTB at 800-689-4776. This is often the best way for individuals to request the one-time abatement.
Mail: You can mail Form 2918 (for one-time) or Form 2917/2924 (for reasonable cause) to the Franchise Tax Board, PO Box 942840, Sacramento, CA 94240-0040.

Reasonable Cause vs. Federal First-Time Abatement

It is a common misconception that California follows federal rules. The IRS offers a “First-Time Abatment” (FTA) that resets every four years. If you haven’t had a penalty in the last three years, the IRS will usually wipe your first penalty clean.

California’s one-time abatement is not an FTA. It is a “once-in-a-lifetime” benefit. Once you use it, it’s gone unless the legislature passes a new law. If you have a federal penalty as well, you should look into how to Reduce IRS Tax Penalties separately, as the processes do not overlap.

Interest Abatement and Other Relief Options

While penalties are often waived, interest is much harder to get rid of. To get an interest abatement, you generally have to use Form 3701.

Under FTB Notice 98-5, interest can only be abated if it was caused by an “unreasonable error or delay” by the FTB during a “ministerial or managerial act.” For example, if an FTB officer lost your file for six months, you shouldn’t have to pay the interest that accrued during that time.

Other niche relief options include:

Taxpayer Advocate Equity Relief: For cases where the law is technically followed but the result is grossly unfair.
E-pay Penalty Waiver: Using Form 4107 if you were penalized for not paying electronically.

If you are struggling with federal interest as well, see our guide on IRS Penalty Abatement.

Critical Deadlines and Statute of Limitations

Timing is everything in tax law. If you wait too long to ask for your money back, the “Statute of Limitations” will bar your claim.

For a Franchise Tax Board abatement claim for refund, you must file by the latest of these dates:

Four years after the original return due date.
Four years after the date the return was timely filed.
One year from the date of the overpayment (the date you paid the penalty).

Suspended Entities and Abatement

If you are a business entity that has been suspended or forfeited by the Secretary of State or the FTB, you have no legal standing to file a claim for refund. You must first “revive” your entity. This usually involves filing all past-due returns and paying all outstanding balances.

For entities that are truly finished, you might look into FTB Abatement and Voluntary Administrative Termination. This allows qualifying domestic LLCs and corporations with no assets to settle their accounts and terminate legally. If you are currently facing an California FTB Audit, resolving these status issues is a priority.

Frequently Asked Questions about Franchise Tax Board Abatement

Can business entities apply for the one-time penalty abatement?

No. The one-time penalty abatement under R&TC 19132.5 is strictly for individual taxpayers. Business entities (Corporations, LLCs, Partnerships), fiduciaries, estates, and trusts must use the Reasonable Cause path. Businesses should use Form 2924 to submit their claim.

What happens if my business is currently suspended or forfeited?

A suspended business cannot legally pursue a refund or abatement. You must undergo the “revivor” process with the Secretary of State and the FTB. Once your entity is back in “Good Standing,” you can then file your abatement request, provided you are still within the statute of limitations.

How long does the FTB take to process an abatement request?

In May 2026, the standard processing window remains approximately six weeks. However, if your case involves complex “Reasonable Cause” arguments or a large volume of documentation, it can take longer. You will receive a written notice of determination in the mail, and you can check your MyFTB account for updates.

Conclusion

Navigating Franchise Tax Board abatement can feel like walking through a minefield of forms and deadlines. Whether you are an individual looking to use your “once-in-a-lifetime” waiver or a business owner trying to prove reasonable cause for a late filing, the details matter.

At Segal, Cohen & Landis, we specialize in being the shield between you and the taxing authorities. With over 33 years of experience and 25,000+ satisfied clients, we know exactly how to present your case to the FTB to maximize your chances of relief. From Los Angeles to Sacramento and across the country, we provide the professional advocacy you need to resolve back taxes and audits.

If you’re ready to put your tax problems behind you, contact us today for expert California State Tax Resolution Services. We have locations in Los Angeles and major cities nationwide to serve you better. Don’t let penalties compound—let’s get to work on your abatement today.