As you know, we at Simons Accountancy keep up with the latest changes and updates to the world of taxation, and this blog post is being posted to keep our clients and readers informed.
And this could potentially be very damaging to some California taxpayers. It’s no secret that Sacramento’s lawmakers and politicians have had a hard time balancing the state’s budget, and they are looking very hard for ways to increase revenue.
And the Franchise Tax Board has found one. They have started using information gathered by the Financial Institution Record Match (FIRM) program from banks and other financial institutions. They use this information to find assets and collect on delinquent debts from California taxpayers by tapping their bank accounts.
They aren’t being shy about this levy either; the FTB expects to issue almost half a million levies this fiscal year—an increase of approximately 75 percent from last year.
How does it work? Luckily, they do give taxpayers a brief window for action. First, the FTB will issue a levy for the full amount of state tax that the taxpayer is delinquent on. Then they provide a 10-day holding period before the financial institution or bank pulls the funds in order to provide the taxpayer with time to negotiate the amount due.
This last sentence is extremely important, especially for those taxpayers who are currently suffering through financial hardship. This 10 days gives them time to contact the FTB and discuss ways of resolving their delinquent account balance, including payment options.
But don’t think that the bank or financial institution will be too busy to care about your California tax levy—you’ll be sorry. Under California Revenue and Taxation Code Section 19266, the FTB is authorized to instigate civil proceedings to enforce FIRM provisions. Financial institutions that do not apply the levies, without reasonable cause, will be subject to a penalty equal to $50 for each record not provided, up to a total of $100,000 per year. The banks absolutely will comply!
For more information on FIRM, go to www.ftb.ca.gov/businesses/FIRM_Financial_Institution_Record_Match/index.shtml.
For more information on how this could affect you, please call us right away to schedule an appointment before your account is levied. Don’t stick your head in the sand regarding this serious issue if you are delinquent on your California taxes! (714) 637-4552