FTB Liens: The Basics 9

The California Franchise Tax Board (“FTB”) issues liens on taxpayers for owing a past due debt. FTB Liens can be issued for any amount due, while IRS liens require a minimum total debt of $10,000 to be issues against you.

When are FTB liens issued?

  1. A debt goes unpaid for a substantial amount of time.
  2. The debts are placed into hardship status (similar to Currently Non Collectable status with the IRS).
  3. A payment plan is entered into for an FTB debt that has a lower monthly payment than the lien-free payment plan options the FTB gives (usually 36 or 60 months).

How do I avoid FTB liens?

There are a few simple ways to avoid an FTB lien if you already have a debt:

  1. Pay off the debt in full.
  2. Enter into a payment plan that the FTB considers sufficient to pay off the balance within a specified time period (usually 36 months, but sometimes they allow 60 months).
  3. Submit an Offer in Compromise and have it accepted. The FTB can technically file liens while the Offer in Compromise is pending, but I have yet to see that done.

What are liens filed against?

Liens once filed will show up on the following:

  1. Credit reports. All credit reports should show the lien against you.
  2. Vehicles. A lien will show against any vehicles you own, making it difficult to sell (or making it so you have to give the FTB the funds leftover after paying any balance owed on the vehicle).
  3. Property. The lien will show up on any real property that you own including your home, land, or rental properties.

Does the lien mean they are going to garnish or levy me?

The lien itself is not a taking of any funds or property, it is just the FTB claiming their right to funds ahead of other creditors. If the case is also unresolved and in collections status, then the FTB may garnish or levy you also. If the case is in hardship status or a payment plan with a lien, then the FTB will take no additional collection actions.

Does the lien impact my credit negatively?

Yes. Your credit will be hurt by FTB liens, but to what extent we are not sure. Some have stated that tax liens drop credit scores by about 100 points, but the algorithms the credit evaluation companies use are so complex, no one knows for sure.

Not sure what to do?

Get help from one of our expert tax attorneys by calling (888) 515-4829 for a free, no obligation consultation. You can also fill out the form below and we will contact you back.

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