Can the Franchise Tax Board Garnish my Wages? | Flat Fee Tax Service
Updated: Nov 22, 2019
Stop Wage Garnishments from the California Franchise Tax Board (FTB).
An FTB Wage Garnishment is a seizure order issued by the California Franchise Tax Board if they see that you have delinquent tax debt. In a FTB wage garnishment, the Franchise Tax Board will be given the right to take a percentage of your income. The FTB considers balances from taxes, penalties, fees, interest, and non-tax debts owed to government agencies and courts as basis for garnishment. The FTB sends a levy order to your employer to withhold funds from your paycheck to pay back tax debt.
The California Franchise Tax Board is extremely difficult to work with. The reason for that is simple. The state of California is basically broke and they need every penny they can collect. For that reason, you will need an experienced Tax Attorney to handle any release of a wage garnishment.
The FTB can garnish up to 25% of your disposable income. Your disposable income is your personal earnings after lawful deductions such as federal income tax, social security, state income tax, and state disability. The FTB can also calculate the wage garnishment by the amount by which your weekly disposable earnings exceed 40 times the state hourly minimum wage (which is currently $11.00 per hour).
Know how a FTB wage garnishment takes place.
There are certain procedures that the California Franchise Tax Board has to make first before they can send a FTB wage garnishment or what others refer to as an Order To Withhold (OTW).
First, they must send a notice to the employer or business entity. The notice to garnish wages should contain the following information:
Nature of the wage garnishment
Amount to be garnished and a summary of how this amount was derived
A statement indicating your right to an exemption in certain circumstances
Instructions on how to claim an exemption.
The receiver of the state tax levy - wage garnishment notice also is given an opportunity to request for a hearing. In any case that the Order to Withhold was sent to a financial institution like a bank, they must hold funds for 10 days from the notice was received before remitting funds to the FTB. During that time period you can try to claim hardship to get money back, but it is difficult without having an experienced tax professional handle the levy release.
The California Franchise Tax Board isn’t always right.
Sometimes, mistakes are made when sending out a notice of wage garnishment but until "the mistake" is proven to the FTB, the tax levy will stand.
When you receive the notice, make sure that you read this thoroughly and do a research as well to know if what the FTB is charging you is fair. Double check if the calculation of the amount you owe is correct. Other common mistakes for receiving wage garnishment is that if you already paid the debt and if the FTB did not follow proper procedures.
What can you do to stop a FTB wage garnishment?You CanFile for Hardship status and get it approved.
Filing for hardship status can stop the garnishment if the hardship is approved. This is approved if you can show that you need the money to support yourself or your family for basic necessities and the garnishment would prevent you be being able to cover basic expenses.
To file for hardship status, you or your representative need to contact the FTB collections area or individual that is assigned to your case. The FTB will want an FTB financial statement, Form 3561-PC.
Don’t have a rep or not sure where your case is assigned? Call 1-866-747-7435 immediately. That is our number to a STOP TAX LEVY GARNISHMENT.
The financial hardship is usually good for a year
Hardship status lasts for one year in most cases. After that year you have to submit documents to renew the status or send in another resolution. The FTB generally has 20 years to collect on a debt but they always find ways to extend the collection period. If you are in a case of financial hardship, often Offer In Compromise discussed below is a better option.
File for an FTB Offer In Compromise
Another way to settle your debt with the California Franchise Tax Board for the amount less than what you owe is through an Offer In Compromise. Generally speaking, a FTB OIC is more difficult to get accepted compared to an IRS OIC, but it’s not impossible.
The FTB looks at the following factors of a taxpayer's financial situation when deciding to accept an Offer In Compromise:
Ability to pay based on current finances.
Total value of assets including real estate, vehicles, retirement accounts.
Current and future income compared to current and future expenses. More left over income after reasonable expenses will cause less chance of settlement of your tx debt.
Whether the offer is in the State of California’s best interest. Age of the taxpayer. The younger you are the least likely they will accept it.
Concluding the Flat Fee Tax Service Insights on Stopping an FTB Wage Garnishment.
The best option for getting off an FTB wage garnishment is dependent on your financial situation. Our Tax Attorneys can use a hardship to get the garnishment off quickly then submit an Offer In Compromise that has a high chance of acceptance.
Not sure what to do with your FTB wage garnishment? Give our tax professionals a call at 1-866-747-7435 and we can help you resolve it immediately.