California FTB Notice Installment Agreement Financial Statement Request (FTB 5005 ENS)

The FTB 5005 ENS is a notice from California’s Franchise Tax Board requesting that you submit a financial statement to support your installment agreement application or to re-evaluate an existing payment plan. The FTB requires a financial statement when your tax balance exceeds $25,000 or when the proposed monthly payment amount can’t be verified without knowing your income and expenses. This is different from the streamlined installment agreement program, which doesn’t require a financial statement for balances under $25,000 paid within 60 months.

The financial statement the FTB 5005 ENS asks for is essentially Form 3561 (or the equivalent information)—a detailed disclosure of your monthly income from all sources, fixed and variable monthly expenses, asset values, and outstanding liabilities. The FTB uses this to calculate your reasonable collection potential and determine a monthly payment amount that covers the balance within an acceptable timeframe while leaving you enough to cover basic living expenses.

The Reed Corporation helps clients complete and submit FTB financial statements accurately. This is one of the most consequential documents in the installment agreement process—if you overstate your income or underreport your expenses, you’ll be locked into a higher monthly payment than you can afford. If you understate income or assets, you risk the FTB rejecting the agreement or revisiting it later.

The FTB’s financial statement request covers both income and expenses in detail. For income, you’ll disclose wages (gross), self-employment income, rental income, Social Security, pension and retirement distributions, alimony received, and any other regular income. For monthly expenses, you’ll list housing costs (rent or mortgage, property taxes, insurance), utilities, food, clothing and personal care, transportation (car payments, insurance, gas, public transit), health insurance premiums and out-of-pocket medical costs, minimum debt payments, and child care or dependent expenses.

On the asset side, expect to disclose bank account balances (checking and savings), investment and brokerage accounts, retirement account balances (IRA, 401k), vehicle equity (current market value minus loan balance), real estate equity (market value minus mortgage balance), and any other significant assets. The FTB cross-references real property disclosures against county assessor records and compares bank account balances to information it receives from financial institutions under California’s financial institution data match program.

The Reed Corporation gathers documentation for every line before we submit a financial statement to the FTB. We review the last 3 months of bank statements, current pay stubs, mortgage statements, loan balances, and utility bills. A documented financial statement that matches reality is more credible and more likely to be accepted as submitted—without the FTB going back to challenge specific numbers.

Not responding to the FTB 5005 ENS means the FTB will proceed with collection without the installment agreement you may have applied for—or it will revoke an existing agreement. If you’re already on an installment agreement and the FTB is requesting a financial statement for a periodic review, failing to respond can cause your agreement to default. A defaulted installment agreement triggers the full balance becoming immediately due and the FTB resuming enforcement actions like wage garnishments and bank levies.

If you haven’t yet established an installment agreement and you don’t submit the requested financial statement, the FTB will determine payment terms unilaterally based on whatever income and asset information it has on file. That usually results in a higher required monthly payment than what a properly documented financial statement would produce. The FTB may also accelerate collection activity, issuing earnings withholding orders under the FTB 2905 PIT authority.

The Reed Corporation prioritizes FTB 5005 ENS responses because the downside of non-response—levy action and defaulted agreements—far outweighs the effort of completing the financial statement. We’ve successfully reestablished installment agreements for clients who missed the original response deadline by contacting the FTB promptly, explaining the circumstances, and submitting the financial statement with a request to reinstate the agreement.

The FTB calculates your reasonable collection potential (RCP) from the financial statement data. It compares your total monthly income against your total allowable monthly expenses and arrives at a monthly disposable income figure—the amount available for debt repayment. The FTB’s Collection Financial Standards define caps on allowable expenses for housing, transportation, and food based on your county, household size, and income level. If your actual expenses exceed the standard, the FTB may only allow the standard amount.

For example, if you earn $5,000 a month after taxes and the FTB determines your total allowable expenses are $4,200, your disposable income is $800 per month. The FTB will typically set your monthly installment payment at or close to that $800 figure. If that payment doesn’t fully pay your balance within 72 months (the maximum installment agreement term California allows in most cases), the FTB may require a larger payment, a lump sum toward the principal, or consider an Offer in Compromise.

The Reed Corporation fights for every allowable expense in the FTB financial statement process. We document actual housing costs, health insurance premiums, retirement contributions up to IRS limits, and other legitimate expenses that directly reduce the monthly payment calculation. The difference between a well-documented financial statement and a bare-bones one can be $200 to $400 per month in required payments—real money over a multi-year installment agreement.

Yes, to a degree. The FTB installment agreement process involves negotiation, not just submission. You propose a monthly payment amount along with your financial statement, and the FTB reviews whether that amount is reasonable given your disclosed income and expenses. If your proposed amount is close to the FTB’s own calculated disposable income, it’s usually accepted. If there’s a large gap, the FTB will come back with a counter-proposal based on its calculations.

You can also argue for a lower payment if your expenses exceed the FTB’s Collection Financial Standards for documented reasons—higher housing costs in expensive California markets, documented medical expenses above the standard, or unusual but legitimate recurring expenses. Providing documentation for these out-of-standard expenses gives you a basis to negotiate the payment down. The FTB isn’t required to accept above-standard expenses, but a well-documented argument for them often succeeds.

The Reed Corporation negotiates installment agreement terms with the FTB on behalf of clients regularly. We know the FTB’s standard allowances for each California county and we know when and how to push for above-standard treatment. Our goal is always to get the lowest monthly payment that the FTB will accept without triggering additional scrutiny, while making sure the agreement term is realistic and that the client can actually stay current on the payments.