The state of California’s Franchise Tax Board (FTB) has a reputation for being a mean, green, tax-collecting machine. They are one of the few states to be able to penalize you for back taxes even after you move to another state. In the state, the FTB tends to catch people by surprise. California is one state that does not hesitate to forcibly collect a debt.
However, it is possible to find the merciful side of California FTB tax collection. It’s just a question of knowing how to navigate the system. For instance, California has recently backed down on some of its collection efforts due to the COVID pandemic. See, they can play nice too.
Steps the FTB Uses to Collect a Debt
This applies, of course, to those with outstanding tax debts in the state of California.
- California FTB will create a return for the outstanding year automatically if you have not created one yourself
- The FTB will attempt to contact you by mail; sometimes using multiple addresses on file
- Levy a bank account they find linked to you
- Garnish your wages from your employer
When the FTB creates a return for you, they will often do so much faster than the IRS would have in a similar scenario.
It is possible to fight back against a California FTB wage garnishment, visit that link and we walk you though the process.
Levies are issued directly to bank accounts, but there are various scenarios where you can stop a California FTB bank levy too. Again, follow that link if you’re in that particular frying pan.
The FTB Collects From Out of State!
In most states, back taxes are treated as a secondary priority or none at all once you move out of state. Some states even have no tax to speak of below the large business line, or have a shorter statue of limitations. The California FTB has a 20 year window to collect, where the average US state carries a 10 year limitation on collecting back taxes. This may catch some people by surprise, if they have long ago moved out of state and here’s this collection attempt from years back.
California is a bit more aggressive than most states at collecting back taxes, but you have to remember, they’re also a hugely populous state with a very large budget to cover. Another thing they will do is piggyback on an IRS audit of your back taxes. In those cases, the state of California FTB will conduct its own audit and bill you for any back taxes found to be owed as well.
The FTB Can Be Wrong!
There have been cases where the California FTB was in error.
One case we handled had not lived in California at all and was even out of the country when the collection attempt occurred. The FTB drew up a return for that case and levied their bank account, but the individual had been living and working out of the country. We were able to rectify this case, again using the means we outline in our links above to contest collection efforts.
Need help? Get a Free, Dedicated Tax Evaluation!
If you are looking for help to resolve your own IRS debt case, schedule a consultation with one of our expert tax attorneys by clicking here or calling (888) 515-4829. If we cannot help you, we’ll tell you. No false promises for settlements. We only submit settlements that have a good shot at acceptance.
If you are doing your case on your own, check out our free tax relief help guide. You can also ask a question below by posting a comment or post a comment on one of the videos on our YouTube channel and well do our best to assist you.
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