How to Stop a California Tax Levy
A tax levy is a serious matter that can have severe consequences on your financial well-being. In California, the Franchise Tax Board (FTB) has the authority to levy your property or assets to collect unpaid taxes. However, there are steps you can take to stop a tax levy and regain control of your finances. Here are some strategies to help you stop a California tax levy:
1. Pay the Outstanding Tax Debt: The most straightforward way to stop a tax levy is to pay the outstanding tax debt in full. Once the debt is satisfied, the FTB will release the levy and your assets will no longer be at risk.
2. Enter into an Installment Agreement: If you are unable to pay the full amount of the outstanding tax debt, you can negotiate an installment agreement with the FTB. This allows you to make monthly payments towards your tax debt. Once the agreement is in place, the tax levy will be released.
3. File an Offer in Compromise: An Offer in Compromise is a settlement agreement that allows you to pay a reduced amount of your tax debt to satisfy the FTB. If accepted, this option can help you stop a tax levy and settle your debt for less than the full amount owed.
4. Request a Collection Due Process Hearing: If you believe the tax levy is unjust or that you have other viable options to resolve your tax debt, you can request a Collection Due Process hearing. This gives you an opportunity to present your case to an independent appeals officer who can evaluate your situation and potentially halt the levy.
5. Demonstrate Financial Hardship: If you can prove that a tax levy would cause significant financial hardship, you may be able to stop the levy. The FTB will review your financial situation and consider alternatives to collection, such as an installment agreement or an Offer in Compromise.
6. Seek Professional Assistance: Dealing with a tax levy can be complex and overwhelming. Seeking professional assistance from a tax professional or an attorney who specializes in tax matters can help you navigate the process effectively, increasing your chances of stopping the levy.
7. Challenge the Tax Assessment: If you believe there are errors in the tax assessment, you can file an appeal with the FTB. If successful, the tax levy will be halted until the matter is resolved.
8. Bankruptcy Filing: In some cases, filing for bankruptcy can stop a tax levy. However, this should be considered as a last resort, as it has significant implications on your credit and financial future.
1. Can the FTB levy my wages?
Yes, the FTB can levy your wages to collect unpaid taxes. They can garnish your wages up to 25% of your disposable income.
2. Is there a time limit for the FTB to collect unpaid taxes?
Yes, the FTB has up to 20 years from the date of the tax assessment to collect unpaid taxes.
3. Can the FTB levy my bank accounts?
Yes, the FTB can levy your bank accounts to collect unpaid taxes. They can freeze your accounts and seize the funds to satisfy the tax debt.
4. Can I negotiate a lower amount with the FTB?
Yes, you can negotiate a lower amount through an Offer in Compromise. However, the FTB will carefully review your financial situation before accepting the offer.
5. Can I stop a tax levy by filing for bankruptcy?
Filing for bankruptcy can temporarily stop a tax levy, but it should be considered as a last resort due to its long-term consequences.
6. How long does it take to release a tax levy?
Once you have resolved the outstanding tax debt or entered into an agreement with the FTB, it can take several weeks for the levy to be released.
7. Can I stop a tax levy if I can prove financial hardship?
Yes, demonstrating significant financial hardship may allow you to stop a tax levy. The FTB will review your financial situation and consider alternative collection options.
8. Can I stop a tax levy if I can prove errors in the tax assessment?
Yes, if you believe there are errors in the tax assessment, filing an appeal with the FTB can halt the levy until the matter is resolved.