If you’ve ever dealt with the IRS, you probably thought you’d seen the worst of tax collections. But for California residents and businesses, there’s a more aggressive collector in town: the Franchise Tax Board (FTB).
And they just got a major upgrade.
The Silent Predator
Unlike the IRS’s somewhat predictable collection process, the FTB operates more like a stealth predator. In my 10 years helping taxpayers resolve their tax issues, I’ve never seen a collection agency move as swiftly and decisively as the FTB.
Here’s a sobering comparison:
The IRS Collection Process:
• Multiple notices over several months
• Clear appeal rights and procedures
• Various payment arrangements available
• Collection Statute Expiration Date (10 years)
• Willingness to correct errors
• Federal guidelines protecting taxpayer rights
The FTB’s Approach:
• Minimal notice requirements
• 10-day response window after levy
• Nearly unlimited collection timeframe
• Limited payment options
• Minimal administrative remedies
• Aggressive collection tactics
The 2024 System Upgrade
This year, the FTB implemented a new automated collection system. The results have been staggering. In San Diego alone last month:
• 312 bank accounts were levied
• 89 business licenses were suspended
• 437 wage garnishments were implemented
Most concerning? The majority of these actions happened without any recent contact with the taxpayers.
Real-World Impact
Let me share a recent case that illustrates the FTB’s new capabilities:
A small business owner in Sacramento thought she had handled her 2019 tax issue because she never heard back from the FTB. On a Tuesday morning, she discovered her business account drained – $47,000 gone overnight. Her business license was suspended the same week.
By the time she reached out to me, she had just 6 days left to respond before the levy became permanent.
Why The FTB Is More Dangerous Than Ever
- Enhanced Data Mining
The new system cross-references multiple databases to locate assets and income sources. Even if you’ve moved out of state, they can find you. - Automated Decision Making
The system now automatically triggers collection actions based on predefined criteria, removing the human element that might have previously delayed or reconsidered aggressive collection actions. - Expanded Reach
The FTB has strengthened its partnerships with other states and financial institutions, making it easier to collect from out-of-state residents who owe California taxes. - Limited Due Process
Unlike federal collections, the FTB’s process provides minimal opportunity to dispute or appeal before they take action.
Warning Signs You’re at Risk
• Haven’t filed California returns in recent years
• Received FTB notices but haven’t responded
• Made payment arrangements but missed payments
• Moved out of state with outstanding California tax debt
• Have unfiled returns from years worked in California
• Received any FTB correspondence in the last 6 months
Protecting Yourself
The key to dealing with the FTB is proactive action. Once they strike, you have very limited time and options. Here are the critical first steps:
- Determine Your Risk Level
Review any FTB notices and assess your compliance status. - Get Current on Filings
File any missing returns immediately, even if you can’t pay the full amount. - Document Everything
Keep detailed records of all communications and payments. - Understand Your Rights
While limited compared to IRS collections, you do have rights when dealing with the FTB. - Seek Professional Help Early
The complexity of FTB collections often requires specialized knowledge to navigate successfully.
The Bottom Line
The FTB’s new collection system has transformed them from a formidable state agency into an extremely efficient collection machine. The days of flying under the radar or hoping for the best are over.
If you have outstanding California tax issues, the time to act is now, before the FTB acts first.
Until Next Time,
Andrew Samaniego, EA
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