Living with tax debt can be overwhelming, especially when the numbers continue to grow, and there seems to be no end in sight. However, there is something many people may not know. Tax debt does not last forever.
California tax debt has a shelf life. While it is not a quick fix, the legal expiration date for collecting most tax debts can help you plan your next steps.
What you need to know about the 20-year rule
In California, the Franchise Tax Board (FTB) has 20 years to collect unpaid taxes. That period starts from the date the tax liability becomes due and payable. Once those 20 years pass, the debt expires unless certain actions are taken to pause the countdown. Some situations that can extend the collection period include:
- Filing for bankruptcy: It can temporarily stop collections and extend the timeline once the process is completed.
- Leaving the state or country: If you move out of California, the clock may pause while you are away.
- Entering into a payment plan: While helpful, it may extend the timeframe during which the FTB can collect.
- Filing a formal appeal or protest: This act can freeze the timeline while the issue is under review.
These actions do not erase your debt but can extend the time the state has to collect it. Even if the 20 years is ticking, the FTB has tools like wage garnishment or bank levies, so ignoring the issue will not make it disappear. Understanding your timeline helps you respond in ways that protect your peace of mind and your wallet.
If you are unsure how long you have had the debt or what options are available to you, it is okay to seek legal help. A trusted tax resolution team and a legal practitioner can assess your situation, explain what is realistic and walk you through it.