Did the California Franchise Tax Board (FTB) levy your bank account even though you don’t live in California? They may have levied your account and taken your money because you maintain an active professional license in California. Even if you haven’t lived there in years, if you continue to keep your California professional license active – be it a license to practice law, a medical license, a hairdressing license, or some other license – then California assumes that you owe them income tax, and will take the “average amount that your profession owes in California” unless you take steps to let them know that you have not had any California earnings. Each and every year.
I know all this, because this happened to me just last month, October 2015. I am fortunate in that I happen to have an awesome relationship with my bank, so when I logged into my bank’s portal to check my account balance, and noticed that a bit over ten thousand dollars was suddenly unavailable to me, with no explanation or warning, I was able to call the bank, and someone there said “Well, the note says ‘FTB’ put a levy on your account.” Fortunately, I remembered that FTB stood for the California Franchise Tax Board, from back when I lived in California, and actually had to file income taxes with the FTB – more than 8 years ago.
That’s right, I have not lived in California at all, and have not earned any income in California, in more than eight years.
Clearly something was rotten in the state of California.
The person at my bank said that I would need to call the Franchise Tax Board, which I did.
The number for the California Franchise Tax Board Office of Collections, which is where you need to call, by the way, is 800-689-4776.
And after going through the automated voice menu, a recording told me that my anticipated hold time was more than 3 hours.
But what choice did I have? They had taken my money, with no warning, and if I wanted them to release it, I had to talk with them.
So I waited.
But fortunately, despite the FTB Collections line telling me that the estimated hold time was going to be 3 hours, in fact it was only 21 minutes.
And I talked with a shockingly nice woman, who explained the following to me:
- All California licensing agencies provide a list of active professional licenses to the FTB, every year
- The FTB matches that list up with all of the income tax returns they have received for that year
- If you have an active professional license in California, and if you haven’t filed a California tax return, they will impute an amount of income to you equal to the average income that someone with your professional license has, and levy that amount
- EVEN IF YOU DON’T LIVE IN CALIFORNIA ANY MORE
- They claim to send out notices of intent to levy (as they are required to do), but I never got one
- Even if you do get the notice of intent to levy, you have to prove to them that you did not earn any money in California
- EACH AND EVERY YEAR
This means that for so long as you choose to keep your professional license active in California – while not living or earning money there – you will have to rebut the notice of intent to levy each and every year, and if you don’t get the notice, you could end up having a levy levied against your bank account, and then have to deal with that.
Each. and. Every. Year.
I actually ended up having to talk with two different people, because the first one had me fax my Colorado tax return to her (to prove I had filed elsewhere and didn’t owe California any money), and promised that she would have the levy lifted as soon as she got it – and then went out sick for the rest of the week. After a few days with the levy still in place (and don’t forget that after a set time, they completely remove the levied funds from your bank account, transferring them to California’s tax fund, so I was pretty motivated to get this taken care of before that happened), I called back, and got another very nice person who said “Oh, she’s out sick, let me help you.”
Both of these people confirmed that this will happen every single year, so long as I continue to keep my California license to practice law active.
And they also both confirmed that this is the case for any active California professional license.
My own plan to make sure that I never get caught up short like this again is to simply file a $0 California tax return every year. One of the FTB collections people said “Oh, you don’t have to do that, it will cost you extra money to your accountant. Just challenge the levy notice each year.”
Uh, thanks, but no thanks, I’d rather have the peace of mind, and give my accountant an extra $25.00, than risk bouncing checks (and the attendant fees) because California can’t figure out that the Colorado address to which they should have sent the notice of levy means that I probably am not on California.