The state of California has three tax agencies that collect taxes: The Franchise Tax Board, the Employment Development Department, and Board of Equalization. The Franchise Tax Board collects income taxes; the Employment Development Department collects payroll taxes, and the Board of Equalization sales and use taxes.
All three tax agencies are extremely aggressive in their tax collection tactics and techniques. On income tax, the Franchise Tax Board will levy your wages much faster than the IRS. When tax returns are not filed, the FTB will prepare returns on guesses even when it has no income information…the IRS would never do this.
The Employment Development Department is even more ruthless than the Franchise Tax Board on the collection of taxes. The majority of the taxes they collect are payroll taxes that are not dischargeable in bankruptcy. As EDD will not process an Offer in compromise for an in-business taxpayer, and their installment agreements are extremely harsh, owing back taxes to EDD is not a pleasant situation.
The Board of Equalization is the worst of all. They just want the money; they don’t care how they get it. They often want the taxpayer to pay their sales taxes before they pay their mortgages. The BOE will even seize retirement accounts and savings accounts of the disabled – their behavior is deplorable.
All three tax agencies can issue a bank levy that has to be paid by a bank within ten days. This is in contrast to an IRS levy where the bank must hold the money for 21 days. Often the money is paid out of a bank account on a fictitious state lien before the taxpayer even has notice of the levy. Once it is gone, it is gone.
In another state if a taxpayer has a tax debt he or she cannot pay, the state of California can pursue them, but California must get a court judgment on the taxes in the new state. Generally, the state of California does not pursue such judgments.
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