California Tax Levy: The FTB Expert Guide (6 Tips To Get A Release) (2024)

Failing to paytaxesto the California Franchise Tax Board (FTB) can result in severeconsequences,like getting hit with a tax levy. The law permits the FTB to aggressively pursue payment of due taxes through various involuntary collection actions, such as wage garnishment and asset seizure.

A California taxlevyis a process the FTB uses to collect tax debts owed. It may seize your assets to recoup tax you owe, along with related fees or interest. The agency can also seize funds in your bank account. These actions are unpleasant as they cause significant financial and personal stress.

Getting help from a tax expert is often the best way to resolve a California state tax levy, but either way, you’ll want to understand the process and your rights as much as possible. This guide explains Californiatax leviesand discusses how to deal with FTB levies to protect your assets.

• Personal income tax and corporate tax
• Homeowner and renter tax assistance programs
• Lawless vehicle registration liability collections on behalf of the DMV
• Other non-tax programs and outstanding liability collection functions, like child support liability collections

A levy only stops after you’ve resolved your case or a resolution is pending. The best option is to pay the tax you owe in full and on time. Another option is to set up a monthly payment plan with the agency to resolve your debts. The tax code also requires you to request an installment agreement by filling out anOffer In Compromiseform. This process can help settle part of your debt and can prevent some interest and late fees.

You may also choose to apply for hardship status to have your debt collections stopped for 6-12 months. Another option is to file bankruptcy to stop the FTB from taking further collection action, but be aware thatbankruptcyis a serious decision that may have ripple effects on your finances.

• Show that the CA state tax levy is resulting in a financial difficulty
• Prove the funds belong to someone else
• Create a payment plan and request a levy release
• Provide evidence that the levy garnished exempt funds
• Prove the FTB delivered a tax levy by mistake
• State that other unusual circ*mstances prevail

The FTB may issue a levy for any property, money, or asset you have, as mentioned above. This can get sticky when the property now belongs to someone else. In this case, you may request a levy release by proving someone else owns the property.

Let’s say you previously sold a car to another person but didn’t transfer its title. The individual has been maintaining and using the vehicle for years, but now the FTB has issued a levy against the car because it’s still registered in your name. The best option in this case is to call the FTB to resolve the situation and get a release (and make sure the title is properly transferred).

Here is another example. Say you’re the financial warden for your disabled adult child. A bank account is in your name, but your child owns the funds. Call the FTB if they issue a levy and prove the funds in that bank account aren’t yours. Be ready with documentation to make the process smoother.

Imagine your employer miscalculates the amount of money to withhold from your salary, and it sends an excess to the FTB. These are likely exempted funds, so provide evidence, and you’ll get those funds back after contacting the FTB.

Veteran benefits andSocial Securityincome are exempt from California state tax levies. You may be able to get a levy release by contacting the FTB and proving the levy seized exempt funds. Explain to the FTB that this is your only source of income to prove they took exempt funds from your account. It’s often the easiest type of a California FTB levy release to get; just be sure you have the paperwork to make proving your case easier.

Setting up a payment plan for your tax debts is a great way to get a California state tax levy released. You may be able to create an installment agreement with the FTB, and they’ll removewage garnishmentsand bank account levies as long as you honor the payment plan. Note that the agency will still issue you a levy if you fail to meet your agreement.

The agency will return seized assets to you only after setting up a payment plan. Stay as proactive as possible when handling FTB levies and take action early enough before the levy occurs, if possible.

The FTB may issue a levy by accident, as mistakes can happen. Contact the agency if this happens to you to start the process of having the California tax levy on your property or funds released. The agency will compensate you for charges incurred if it’s responsible for the error. The FTB may even reimburse you if the levy resulted in you being charged for insufficient funds in your bank account.

Aim to send a note to the agency within three months of the tax levy after the issuance date to receive compensation for charges. State that the costs you incurred were due to their error and that you need to be reimbursed. Ensure you provide any information the FTB requests, and they’ll typically reply to your request in 30 days.

• Prolonged diseases
• Natural disasters, like earthquakes
• Loss of paperwork to a fire
• Advanced age
• Other extreme events

Work with a California tax attorney if you think the FTB should release the levy for unusual circ*mstances. They’ll discuss the matter with you and let you know if the agency is likely to take away the levy. The tax expert will gather evidence to support your claim and negotiate with the agency on your behalf.

Finding out there is a levy against your assets is stressful, and the situation can be complex to navigate. Always try to communicate with the FTB promptly and provide proper documentation to support your claim.

The FTB can seize funds in your bank account equal to the amount of tax you owe.

Imagine your account has $6,500 and you owe the FTB $5,000. The agency can take $5,000 to repay your debts and leave $1,500 in your account. They’ll only seize all the funds if your tax debt exceeds $6,500.

A bank levy for tax owed in California usually occurs within 10 days.

Your bank typically freezes funds and transfers the amount owed to the agency. Acting quickly when you receive notice of a levy can help you get informed and in control of the situation faster.

The FTB can seize 100% of your assets to settle your outstanding income taxes.

Let’s say your tax dues are $6,000, and your assets are worth $50,000. The agency will take $6,000 worth of assets. Expect the agency to seize all of your assets if the amount you owe is more than $50,000, in this example.

Dealing with a California tax levy is difficult, so it’s best to avoid or stop it before it happens. You may be able to show you don’t actually have an outstanding tax bill, apply for hardship, establish a payment plan, or file an Offer in Compromise form if youcan’t payyour debts in full. The FTB has specific procedures and steps to follow, and the last thing you want is to have a levy disrupt your finances. That’s why getting help from experienced tax attorneys who understand the FTB is ideal.

AtSilver Tax Group, we have a team of qualified tax attorneys with vast expertise in handling FTB levies. Our specialists will guide you through the process to help protect your assets, property, and wages.Contact ustoday to speak with a tax expert and learn how we help you resolve a California tax levy.