What is the California Franchise Tax Board?
The California Franchise Tax Board (FTB) is responsible for collecting and managing state income taxes. They enforce all state tax laws in California and aid in debt collection on behalf of other state entities. Taxpayers who owe state taxes would have to pay them to the FTB. When those outstanding taxes are not paid off, the FTB is responsible for collecting the amount overdue.
Why Would I Get a Letter from the Franchise Tax Board?
The Franchise Tax Board often sends letters or notices to taxpayers with overdue state income tax debt. The type of letter or notice received specifies the reason they are contacting you.
In relation to withholding orders, the Franchise Tax Board sends out several types of notices and letters that include:
- FTB 4113 PC: Sent when the California FTB needs to request additional information to determine or update a taxpayer’s withholding
- FTB 2905 PIT: a legal order requiring a taxpayer’s employer to withhold up to 25% of their earnings to pay off state income tax debt
- FTB 2922 ENS: a notice demanding immediate tax action when the FTB believes they will be unable to proceed with tax debt collection due to severe tax delinquency
- FTB 2905 ENS: a garnishment order notice provided to an employee to inform them that wages will be withheld to pay off outstanding state tax debt
If you received a letter from the Franchise Tax Board, it’s crucial that you address the reason for the letter or notice as soon as possible to avoid further penalties or delinquencies. For help understanding FTB notices and letters, contact Priority Tax Relief for tax relief services including consultation to determine the best way to proceed based on your tax situation.
Franchise Tax Board Withholding Orders
Withholding orders are legal orders issued by the Franchise Tax Board to collect overdue state income taxes. There are several different types of withholding orders that could impact individuals with unpaid taxes:
- Earnings withholding order for taxes (EWOT): a wage garnishment issued to collect unpaid state taxes directly from an employer’s paycheck. The FTB can collect up to 25% of pay through a wage garnishment until the tax debt is paid in full.
- Order to withhold (OTW): for taxes (Form FTB 2900), 100% of all assets available or the entire balance due is collected
- Continuous order to withhold (COTW): ongoing income or assets collection for up to 12 months to pay outstanding tax debt
Taxpayers receive withholding notices or letters in the mail that specify the type of withholding action the FTB has issued for overdue taxes. If you receive one of the notices in the mail, consult with Priority Tax Relief’s team of tax relief professionals to determine the best course of action to pay off outstanding tax debt.
Common Scenarios Leading to a ‘Legal Order Debit’ Franchise Tax Board
Several situations could lead to the issuance of a legal order from the Franchise Tax Board. Here are some common scenarios:
- Unpaid Taxes: If an individual or business owes state taxes, such as income tax or business tax, and fails to make the required payments, the FTB may issue a legal order requiring them to pay the outstanding tax debt.
- Tax Penalties: Accumulated tax penalties, often due to late or non-payment of taxes, can lead to legal actions. The FTB order might be issued to collect the penalties.
- Non-Compliance: Failure to comply with state tax laws and regulations can result in legal orders, including garnishments or levies, to enforce tax compliance.
- Delinquent Child Support: In cases where an individual owes delinquent child support payments, a legal order might be issued to deduct the owed amount from their income or assets, and the Franchise Tax Board may be involved in facilitating this deduction.
How to Stop a Franchise Tax Board Garnishment
Taxpayers who are overdue in paying off their state income tax debt may experience wage garnishment, in which their taxes are withheld from their paycheck to pay off the debt. This can cause serious financial hardship to taxpayers who rely on their regular income or live paycheck-to-paycheck.
Strategizing how to stop a FTB garnishment is best done with the help of a tax professional. Priority Tax Relief consists of a team of tax attorneys, enrolled agents, and CPAs who have years of experience helping taxpayers stop wage garnishments and get relief from outstanding state tax debt. Contact us today for a free consultation.
