California has a  "taxpayer advocate" for its FTB -- like IRS, it may often be as useless as mammary glands on a boar -- but I would look for some kind of policy statement on how far back they will pursue delinquent returns, especially if there is little likelihood of collecting tax and penalties.  And of course, the collection agent you are dealing with does have a supervisor, who may be more reasonable.  Especially if you mention a letter to state legislators about the policy (or lack thereof).