FTB Statute of Limitations California

Standard 4-Year Statute

The California FTB generally has four years from the date a return is filed (or the due date of the return, whichever is later) to audit the return and issue an assessment. This is one year longer than the IRS's standard three-year statute of limitations. For a calendar-year individual who files their 2022 California return on April 15, 2023, the FTB has until April 15, 2027 to audit that return and issue an assessment.

When the Statute Is Extended

The FTB's four-year statute is extended in several circumstances: (1) 25% understatement: If you omitted more than 25% of your gross income, the statute extends to six years. (2) Federal audit adjustments: If the IRS makes an adjustment to your federal return, the FTB has two years from the date it is notified of the federal change to issue a California assessment — even if the normal four-year window has closed. This is why KDA always files the California RAR disclosure after federal audit adjustments. (3) Amended returns: Filing an amended California return extends the statute by one year from the date the amended return is filed.

When There Is No Time Limit

The FTB has no statute of limitations in the following circumstances: (1) You never filed a California return for the year in question. (2) The FTB can prove fraud or intent to evade tax. (3) You filed a return that was false or fraudulent. This is why filing a California return — even if you cannot pay the tax — is always preferable to not filing. Filing starts the four-year clock; not filing leaves the FTB's assessment authority open indefinitely.

Collection Statute of Limitations

Once the FTB assesses a tax liability, it has 20 years to collect it — significantly longer than the IRS's 10-year collection statute. This means old California tax debts do not expire as quickly as federal tax debts. However, the collection statute can be tolled (paused) by certain events, including bankruptcy, OIC submission, and installment agreement default. KDA tracks collection statute expiration dates for clients with old FTB liabilities to identify when debts may become uncollectible.

FTB vs. IRS Statutes Compared

Events That Pause the Statute

The FTB's audit statute is tolled (paused) by: bankruptcy filings (the statute is paused during the bankruptcy and for 60 days after), OIC submission (the statute is paused while the OIC is pending), and taxpayer absence from California for more than six months (the collection statute is paused during the absence). KDA tracks statute dates carefully — in some cases, the statute has been tolled for so long that a liability that appears to be within the statute has actually expired.