California State Tax Lien Checklist
What Enforcement Means
California tax enforcement occurs when the California Department of Tax and Fee
Administration or the Franchise Tax Board takes collection action to recover unpaid tax liabilities. These two agencies operate under separate legal frameworks and administer different types of taxes.
CDTFA handles sales and use taxes, special taxes, and various fees under the Revenue and
Taxation Code. FTB administers personal income taxes and corporate franchise taxes under separate statutory authority. Enforcement actions include wage garnishments, bank levies, property liens, license suspensions, and refund offsets. Collection methods represent a significant escalation beyond initial billing notices and payment requests.
Why Agencies Issue Enforcement Actions
Tax agencies initiate enforcement when specific conditions exist that trigger collection authority under California law. CDTFA begins enforcement after issuing a Notice of Determination or
Demand for Immediate Payment that remains unpaid beyond the due date.
FTB initiates California tax enforcement collection procedures when tax liabilities become final, and payment arrangements have not been established. Both agencies must follow documented notice requirements before taking enforcement action.
The specific sequence depends on the type of tax owed, the amount of liability, and whether the taxpayer responded to earlier notices. Enforcement represents the agency’s legal authority to collect debt directly from income, financial accounts, or property.
Consequences of Ignoring Enforcement
Unaddressed enforcement actions continue until the debt is satisfied or the collection statute expires. California Revenue and Taxation Code Section 19255 provides that the state has 20 years from the date tax liability becomes due and payable to collect unpaid debts.
Wage garnishments continue until the balance is paid in full or the agency approves a modification. CDTFA bank levies capture funds on deposit at the time the bank receives the levy notice.
FTB continuously orders to withhold collection for 12 consecutive months or until the balance is paid. State tax liens remain attached to real property for 10 years from the date of filing and can be renewed for additional 10-year periods if the agency files extension paperwork within 90 days before expiration.
Interest and applicable penalties accrue on unpaid balances during enforcement. Collection cost recovery fees may be added to accounts that remain unpaid for more than 90 days on amounts exceeding $250.
What Enforcement Does Not Mean
Enforcement is a civil collection procedure authorized by statute, not a criminal prosecution.
Collection actions do not automatically seize all income or assets simultaneously.
California law provides exemptions for certain types of income and property under federal and state exemption statutes. Receiving one type of enforcement notice does not guarantee that all collection methods will be used.
Bank levies do not automatically result in wage garnishments. Taxpayers retain the opportunity to resolve the debt through payment arrangements or appeals even after enforcement begins.
Steps to Address CDTFA Enforcement
Taxpayers who receive a CDTFA enforcement notice should first verify the debt amount, tax periods involved, and the type of enforcement action being taken. Contact the CDTFA office listed on the notice to confirm current account status and available resolution options.
Appeal Rights for CDTFA Notice of Determination
- File a Petition for Redetermination using form CDTFA-416 within 30 days from the date
the notice was mailed.
- Filing after the 30-day deadline results in an invalid petition, and the liability becomes
final.
- A CDTFA Notice of Determination appeal preserves your right to challenge the
assessment.
Payment plans allow eligible taxpayers to pay amounts due in installments through the online payment plan system. Proposals requiring further review may need the submission of financial statements with supporting documentation.
CDTFA may waive the 10 percent finality penalty if your payment plan is initiated and accepted within 45 days of the due date. You must complete the payment agreement for the penalty waiver to apply.
Bank levies issued by CDTFA require banks to hold captured funds for 10 days before sending money to the agency. This period allows taxpayers to file a hardship hearing request, demonstrate that funds are exempt under federal or state law, or make satisfactory payment arrangements.
Steps to Address FTB Enforcement
The most effective way to stop garnishments or other levies is to pay the balance in full. If you cannot pay in full, contact the phone number shown on your withholding order to discuss financial hardship or payment plan options.
FTB wage garnishments can collect up to 25 percent of disposable earnings from each paycheck until the debt is paid. Modification is not automatic upon establishing a payment plan.
Demonstrating financial hardship through a formal review process may result in reduced garnishment amounts. Your specific situation will be evaluated on a case-by-case basis.
FTB wage garnishment payment plan eligibility requirements
1. The amount due does not exceed $25,000 for eligibility.
2. You must be able to pay the balance within 60 months or less for personal taxes.
3. You must have filed all income tax returns for the past five years.
4. The setup fee is $34 for individuals or $50 for businesses.
Payment plan processing takes up to 90 days. While your request is pending, continue making payments to avoid additional interest and penalties.
State Tax Liens and Public Records
Both CDTFA and FTB must mail a preliminary notice at least 30 days before filing a lien with the county recorder. A Notice of State Tax Lien becomes public record when recorded, giving creditors notice of the agency’s claim against all real property you own or subsequently acquire.
The lien attaches to real property, such as houses or rental property, and prevents you from selling or refinancing until the debt is satisfied. Although the three major credit bureaus stopped including tax liens in credit reports in 2017 and 2018, liens remain public records accessible through county recorder searches. Your ability to obtain loans or credit can be affected even though liens no longer appear on credit reports issued by Experian, TransUnion, or Equifax.
Offer in Compromise Eligibility
The Offer in Compromise program allows eligible taxpayers to settle tax debt for less than the full amount owed. You must agree with the amount due, and the liability must be final.
Both CDTFA and FTB require proof that you do not have, and will not have in the foreseeable future, the income, means, or assets to pay the amount due in full. Your offer must equal or exceed your reasonable collection potential based on detailed financial disclosure.
For CDTFA active businesses, only qualified liabilities are eligible for the Offer in Compromise program under current law. Applications require complete financial statements and supporting documentation showing the inability to pay.
Facing State Enforcement or Payroll Tax Issues?
If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.
We help with
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
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