However, it may be possible to recover the funds if the FTB acted improperly. If you believe that the California Franchise Tax Board improperly seized part or all of your tax refund for 2017, review your legal options with an experienced California tax attorney as soon as possible.
Full Answer
Do I owe the Franchise Tax Board?
You may owe the Franchise Tax Board if you were issued a Form 540 and your gross receipts exceed $1 million for the same company, or you are doing business as a franchisee. The California Franchise Tax Board is a taxing agency that collects taxes on behalf of the state of California.
Did the California Franchise Tax Board seize your tax refund?
However, it may be possible to recover the funds if the FTB acted improperly. If you believe that the California Franchise Tax Board improperly seized part or all of your tax refund for 2017, review your legal options with an experienced California tax attorney as soon as possible.
How long does the California Franchise Tax Board Hold Your Money?
The bank holds funds for 10 days before being transferred over to the FTB. An extension on the FTB taking the money can be issued by an FTB agent if you contact them and are dealing with them to try and get it released. There are three main ways to release a California Franchise Tax Board bank levy:
How do I resolve a balance with the California Franchise Tax Board?
The four most common ways to resolve a balance with the FTB are: An FTB Offer In Compromise is considered the best form of California tax debt forgiveness, but not everyone will qualify. A California Franchise Tax Board bank levy will not be issued if any of the other options are in place.
Why Did the Franchise Tax Board (FTB) Take My State Income Tax Refund?
Each year, the FTB issues millions of refunds collectively amounting to billions of dollars. However, that money doesn’t always find its way back into the hands of taxpayers. If your California tax refund was smaller than anticipated, the FTB – and one or more unpaid debts – may be to blame for the discrepancy. What some taxpayers initially fail to realize is that the FTB is not only a tax authority, but also functions as a debt collection agency for the state of California. Along with tax liens, tax levies, and wage garnishment, the interception of tax refunds is another debt collection tool at the FTB’s disposal. The FTB’s practice of intercepting refunds to pay outstanding debts is formally known as the “Interagency Intercept Collection Program,” or IIC.
What to do if California FTB seized your tax refund?
Depending on your situation, it may be appropriate to aggressively contest the interception, or to negotiate a payment plan that alleviates your financial burden. However, a strategy cannot be designed without first discussing your matter in detail. For a confidential, reduced-rate tax consultation with the Los Angeles tax attorneys of the Tax Law Offices of David W. Klasing, contact us online, or call our tax firm at (800) 681-1295 today.
What is the FTB intercept?
The FTB’s practice of intercepting refunds to pay outstanding debts is formally known as the “Interagency Intercept Collection Program,” or IIC. If you owe one or more fines, fees, penalties, or other payments to a California town, city, or state government entity, the FTB may (1) intercept your tax refund, and ...
What is the purpose of the California Franchise Tax Board?
One of the FTB’s most important functions is to review state income tax returns and, where appropriate, issue refunds to eligible California taxpayers. Unfortunately for some taxpayers, not only can the FTB issue tax refunds – it can also intercept them. If your California tax refund was short of the expected amount, an outstanding debt could be the cause. However, it may be possible to recover the funds if the FTB acted improperly. If you believe that the California Franchise Tax Board improperly seized part or all of your tax refund for 2017, review your legal options with an experienced California tax attorney as soon as possible.
Can the FTB intercept California tax refunds?
Unfortunately for some taxpayers, not only can the FTB issue tax refunds – it can also intercept them. If your California tax refund was short of the expected amount, an outstanding debt could be the cause. However, it may be possible to recover the funds if the FTB acted improperly.
Can debt trigger a seizure of state income tax?
As you can see from this non-exhaustive list, a wide range of debts can trigger the seizure of one’s state income tax refund – including debts which are not directly related to tax obligations. For more information on the subject of FTB debt collections, our readers may wish to review:
Is a state tax lien unenforceable?
FTB staff finds the liability underlying the state tax lien is legally unenforceable. For instance, in certain circumstances a liability may become legally unenforceable as a result of a discharge in bankruptcy proceedings under federal law
Does FTB have to send a copy of a lien release?
In those instances FTB must send a copy of the lien release to the three major credit reporting companies
Can a FTB lien be released?
An FTB lien can be released without being satisfied under the following situations:
How long does a bank have to pay a levy?
When a levy attaches a bank account, the debtor has ten days to pay his debt, or the bank forwards the funds to FTB. The funds are not allowed to be released during that 10 day period to the taxpayer but yes, the bank has 10 days to wait to allow the debtor to pay and FTB to release the levy. The safety deposit box is also barred from any action on the debtor's part till the levy is past.
Should you explain the value of the access to the box in paying the debt?
Yes , you should explain the value of the access to the box in paying the debt.
How long does the FTB have to collect taxes?
This is due to the fact that the FTB has 20 years to collect tax debt from a taxpayer. A more cynical view is that California needs the money and therefore, they are less willing to settle for less. Accordingly, the other alternative is setting up a payment agreement. Now, this is where it gets tricky.
How much of your income will be garnished by the FTB?
The FTB will generally garnish up to 25% of your disposable income from each paycheck until the debt is paid in full. Your disposable income is any income after deductions for federal income tax, social security, state income tax, and state disability. Your employer is also required to provide you with a copy of the withholding order within 10 days of receiving the order. In this withholding order you should receive:
What is an Earnings Withholding Order for Tax?
1) Earnings Withholding Order for Tax: This is a wage garnishment that is sent to your employer due to you owing back taxes to the FTB. This will be the main focus of this blog.
What is FTB in tax?
You look at the notice your employer handed you and it’s not the IRS come to collect. Instead, it’s the Franchise Tax Board (FTB). Much like the IRS, FTB is able to take different types of collection action against taxpayers for unpaid taxes; one of the most common being a wage garnishment.
What happens if you don't file a lien on your taxes?
However, this will most likely result in a higher payment each month (perhaps even more than what is garnished from your wages).
Is the FTB stingy?
Additionally, the FTB is extremely stingy when it comes to releasing an order to withhold. When a taxpayer doesn’t qualify for a financial hardship the options become limited. The FTB does have an Offer in Compromise program to settle tax debt but, the likelihood of this being accepted is very low.
Can the FTB garnish your wages?
Having the FTB garnish your wages can sometimes be even more difficult to deal with than the IRS. Many times, they assess tax debt quicker, giving them a head start on collection action.
How much did the client owe back to the FTB?
The client owed back due debt to the FTB of about $280,000. He had an Offer In Compromise accepted by the IRS a year before the FTB bank levy. Part of the terms of his IRS Offer In Compromise is to stay current on taxes for 5 years without a hiccup.
When Is A California Franchise Tax Board Bank Levy Issued?
Levies are issued to bank accounts after a final notice to the taxpayer is sent requesting them to resolve the balance and no contact or arrangements are made. Time beyond what is stated in the letter can be granted if you or your attorney call in to resolve the case. Doing nothing almost always eventually results in a levy on any bank account at a bank for which you have received 1099. Often a California Franchise Tax Board lien has gets filed if it already is not on file.
What is an FTB offer in compromise?
An FTB Offer In Compromise is considered the best form of California tax debt forgiveness, but not everyone will qualify. A California Franchise Tax Board bank levy will not be issued if any of the other options is in place. Bankruptcy is a good option if you have a lot of other debts. See Bankruptcy or Offer In Compromise for more info.
How to resolve a FTB balance?
The four most common ways to resolve a balance with the FTB are: Pay In Full – Pay off the debt completely. Payment Plan – Paying off the debt in monthly payment. Offer In Compromise – Settling a tax debt for less than the amount owed.
What is a FTB bank levy?
A California Franchise Tax Board bank levy is a legal action by the State of California where funds are taken from a bank account of a tax debtor for back due tax debts. Technically called an “Order To Withhold,” FTB bank levies are difficult to release and in most situations a release is not possible. If you have received a bank levy, you should ...
Is Social Security exempt from FTB?
Social Security income and veterans’ benefits are exempt from FTB levies.The funds can be released if they are levied by you or your tax attorney contacting the FTB. Other forms of public assistance are usually exempt as well. This is the easiest type of FTB bank levy release to get.
Is there a guarantee that the FTB will release the bank levy?
The FTB agent released the bank levy with a lot of back and forth and documentation. Still no guarantee this would happen again. It was up to the discretion of the agent and the manager.
Overview
We issue orders to withhold to legally take your property to satisfy an outstanding balance due. We may take money from your bank account or other financial assets or we may collect any personal property or thing of value belonging to you but in the possession and control of a third party.
Orders to withhold (OTW)
Personal Income Tax orders will collect 100% of all assets available or the entire balance due, whichever is less.
Continuous Order to Withhold (COTW)
A COTW is an order that attaches to payments you may be entitled to and remains in effect for 12 months.
