The Franchise Tax Board operates in the United States and it is usually a state-operated tax agency for both personal and business taxes. Franchise taxes allow corporations to do business within a state, though states have varying tax rates for the corporations based on their legal filing and gross income levels.

It is important to note that the Franchise Tax Board (FTB) operates similarly to the IRS, but operates at the state level, rather than the federal. For example, the California Franchise Tax Board (FTB) states that its mission is to “help taxpayers file tax returns timely, accurately, and pay the correct amount to fund services important to Californians”.

A taxpayer will face collections actions by the Franchise Tax Board (FTB) if they ignore the obligation, refused to pay, or are unable to pay an outstanding tax balance that is due. Here are some of the tax programs that are under the purview of the Franchise Tax Board (FTB).

Tax Programs That Are Under The Purview Of The Franchise Tax Board

Personal Income Tax

In the United States, it is the responsibility of the Franchise Tax Board (FTB) to collect personal state income taxes. Interestingly, your first tax year is not subject to the minimum franchise tax. After the first year, your tax is the larger of your net income multiplied by the appropriate tax rate or the minimum franchise tax.

Meanwhile, non-residents are taxed on their California-based income. Available data shows that in recent years, the Franchise Tax Board (FTB) collects more than $50 billion each year in personal income taxes.

Please note that if you have a past-due, legally enforceable California income tax debt and are entitled to a federal income tax refund, the Franchise Tax Board (FTB) is authorized to offset that refund and apply it toward your balance due.

So also, it is important to state that the Franchise Tax Board (FTB) has the authority to take 100 percent of the balance owed directly out of your bank account. They can also garnish your wages and file tax liens against your property when collecting unpaid tax liabilities. The Franchise Tax Board (FTB) will first mail you a notice informing you that you owe California income tax.

Corporate Income Tax

Another key responsibility of the Franchise Tax Board (FTB) is to levy a franchise tax on businesses in California. The Franchise Tax Board (FTB) name reflects the fact that it was created to collect this tax. The agency’s name was left unchanged even after the state created a personal income tax and added it to the Franchise Tax Board (FTB) responsibilities.

Please note that the corporate tax is imposed on businesses that do business in California and derive income from within California. Available data shows that over the past decade, the Franchise Tax Board (FTB) has collected an average of $9.5 billion per year in corporate income taxes.

So also, it is important to state that California law generally imposes a minimum franchise tax of $800 on every corporation incorporated, qualified to transact business, or doing business in California. A corporation that incorporates or qualifies to do business in California is exempt from paying the minimum franchise tax in its first taxable year.

Non-Tax Programs

The Franchise Tax Board (FTB) is also responsible for the collection of what is known as delinquent vehicle registration debt collections on behalf of the California Department of Motor Vehicles and delinquent court-ordered debt.

It is important to state that the Franchise Tax Board (FTB) also does financial audits of certain candidates for state office, ballot proposition committees, and lobbyists, according to a random selection process by the California Fair Political Practices Commission.

In Conclusion,

If the Franchise Tax Board (FTB) or IRS needs to reach a taxpayer to verify a return or discuss a bill, both agencies begin by sending a letter via postal mail. If the taxpayer does not respond, the Franchise Tax Board (FTB) or IRS may reach out by phone, with courteous agents identifying themselves.