IRS And California Tax Garnishment | Flat Fee Tax Service
Updated: Nov 22, 2019
Tax Garnishment: IRS and California Franchise Tax Board (FTB) Who looks forward to a tax garnishment? Anyone? The obvious answer is no. Few people relish the obligation to file and pay income taxes, but the only thing that may be worse than paying taxes is failing to ensure that the full extent of your tax duties are satisfied. The failure to pay taxes can result in an IRS tax garnishment including the addition of significant penalties and interest on the unpaid amount of tax. The amount of tax due, penalties and interest will continue to grow either due to, the taxpayer’s refusal to pay the tax, failure to challenge the amount due, or due to neglect on the taxpayer’s part. If the failure to satisfy the federal or state debt continues for a long enough period, the IRS or California Franchise Tax Board (FTB) may take additional action to collect on the unpaid tax debt. This action may include filing a tax lien against the taxpayer or levying (enforced seizure) a taxpayers assets. A taxpayers "assets" is usually their paycheck and bank account(s).
What is a Tax Levy or Tax Garnishment?
Both a tax levy (#taxgarnishment) is a forced formal claim to take your property or money to satisfy an unpaid tax debt. When filed by the IRS or FTB, a tax levy is the legal process utilized to seize your property in satisfaction of a tax debt. A tax garnishment is similar to a levy in the sense that it is also a legal process used to seize your property to cover an unpaid debt. The main difference between the two terms and procedures is that a tax levy typically applies to your property or money in a bank account. By contrast, a tax garnishment applies to your wages or other income. Thus, a bank levy is a one-time event. By contrast, a tax garnishment on a taxpayer’s wages is continuous. "Continuous" means the tax garnishment will go on and on unless it is stopped and released. The IRS or FTB can use these processes to secure partial or full payment for an unpaid tax debt that is due and owing. Tax Garnishments vs. Tax Liens
Taxpayers may have also heard the term “tax lien.” Many taxpayers confuse a tax garnishment/levy with a tax lien. In actuality, a tax lien refers to a different process by which the IRS or FTB may attempt to improve its collection position when a tax debt is owed against other creditors. Unlike a tax levy or tax garnishment that is the seizure of property, a lien is a formal public claim against your property. A federal tax lien attaches to all of your property including later acquired assets. The tax lien notifies the public, including potential creditors, that you have a tax debt and the government is attempting to secure a preferential right to collect that debt over other creditors. A tax lien could affect your ability to secure credit.
While a tax lien protects the government’s priority against other creditors to your property, a tax levy or garnishment is the actual legal process by which your property, assets, or income are seized. FLAT FEE TAX SERVICE CAN STOP A TAX GARNISHMENT IN ONE DAY.
When Will the IRS Issue a Tax Garnishment or Tax Levy in Los Angeles?
The steps and processes the IRS must satisfy before issuing a tax levy or garnishment are dictated by nationwide standard. Whether you live in Los Angeles, Orange County, somewhere else in California, or anywhere else in the United States the a tax garnishment (#IRSGarnishment) is the same.
The IRS must send a number of notices to the taxpayer. The IRS does not need to ensure that the taxpayer actually received the notices. Forget about complaining about not receiving the levy notice. Claims of this type are in fact useless as all that is required that they notify you at your last known address whether you still reside at that address or not. The steps the IRS must take before issuing a levy on property are:
The IRS has assessed your taxes. Following the assessment, the IRS mailed a tax bill to you. The tax bill is typically titled along the lines of a Notice and Demand for Payment. The taxpayer then ignores or neglects the letter sent. In some cases, the taxpayer may refuse to pay the tax bill or exhaust all appeal options. The IRS will then send the taxpayer a final notice. The notice is typically titled Final Notice of Intent to Levy and Notice of Your Right to A Hearing or similar language. The notice can be delivered in a number of ways including in-person service at your home or regular place of business or by registered mail.
THE IRS NEEDS TO SEND THIS NOTICE ONLY ONCE.
The levy notice is sent at least 30 days before the IRS will take action to seize your property. While the tax levy may not necessarily occur on the 31st day, it is still import for the taxpayer to file a timely appeal or otherwise take timely action to stop the levy. If the taxpayer fails to do so, he or she will forfeit certain rights that would otherwise protect his or her property. When Will the California Franchise Tax Board (FTB) Levy to Collect Unpaid State Income Taxes?
The failure to pay California state income tax can also result in facing a levy or tax garnishment. While the IRS enforces federal income tax obligations, the California Franchise Tax Board (FTB) enforces state income tax obligations. The State of California is broke. The FTB needs to collect as much money as possible. The FTB can be more difficult than the IRS. A taxpayer will face collections actions by the FTB because they have ignored the obligation, refused to pay, or are unable to pay an outstanding tax balance that is due and owing. The FTB can then move forward with the enforced collection action.
Similar to IRS collection enforcement, FTB can levy the taxpayer’s bank account or garnish his or her wages. However, as compared to the IRS, different standards apply to FTB enforcement actions. For instance, while the IRS permits the taxpayer 21 days to modify or release a bank levy, the FTB only typically provides the taxpayer 10 days to alter or release the levy. The FTB can grant additional time if the taxpayer can present sufficient evidence of a hardship. In any case, immediate action such as contacting an experienced tax lawyer is necessary. Furthermore, for wage garnishments, the IRS is guided by formulas computed into tables published in Publication 1494 providing for a taxpayer’s allowed exemptions from a garnishment. The FTB may garnish up to 25% of the taxpayer’s disposable income subject to modification.
How Do I Stop an IRS Tax Garnishment?
One means available to stop a wage tax garnishment or other levy on your property is to file your appeal through IRS Collection Due Process (CDP). A timely request for a due process hearing filed within 30 days, will be followed by a notification alerting the taxpayer their request has been forwarded to IRS Appeals. A timely request will prevent collection enforcement action by the IRS until the CDP hearing. IRS Appeals typically follows-up within 60 to 90 days. This 60 to 90 day window will give the taxpayer "breathing room" and enough time to have their unfiled tax returns prepared and/or have their Offer in Compromise filed. Furthermore, if a Final Notice was served, documents evidencing the taxpayer’s ability to pay must be provided. Achieving compliance is important because without taking such action, the IRS Settlement Officer will decline to discuss the merits of the case because no other viable collection alternatives are available. Discussion and negotiations during the CDP hearing generally concern procedural issues and alternatives to the proposed levy by the IRS. If an agreement cannot be reached, the taxpayer retains the right to appeal to Tax Court. While other options exist, they should be discussed thoroughly with a tax lawyer prior to taking action.