Living in the Shadow of the FTB: Strategies for Sacramento Taxpayers

For most Americans, the IRS is the ultimate bogeyman. But for residents of Sacramento, there is a creditor far closer to home and often far more aggressive: the California Franchise Tax Board (FTB). Headquartered right here in Rancho Cordova, the FTB has unique powers and digital systems that allow them to collect debts faster and more ruthlessly than their federal counterparts.

FTB vs. IRS: Why California is Tougher

The FTB’s collection system is highly automated. While an IRS Revenue Officer might take months to get around to your case, the FTB’s computer systems automatically issue levies as soon as a debt is finalized. Here are the key differences Sacramento residents need to know:

1. The Bank Levy Speed

The FTB issues levies against bank accounts frequently. Unlike the IRS, which usually sends a warning sequence, the FTB can issue a levy order that freezes your funds immediately. Banks in California are legally required to hold those funds for 10 days before sending them to the state. This 10-day window is your only chance to fight back. If we don’t intervene within those 10 days to prove hardship, that money is gone.

2. Wage Garnishment Limits

The FTB issues an “Earnings Withholding Order for Taxes” (EWOT). By default, they can take 25% of your disposable earnings. While this is sometimes less than what the IRS takes, it is persistent and difficult to stop without full financial disclosure.

3. Professional License Suspension

This is critical for Sacramento’s workforce. The FTB maintains a “Top 500 Delinquent Taxpayers” list, but even for smaller debts, they can notify state licensing boards. If you are a contractor, a nurse, a real estate agent, or a lawyer, the FTB can suspend your license to practice until you arrange payment. This creates a catch-22: you can’t work to pay the tax because they suspended your license for not paying the tax.

Navigating the FTB Bureaucracy

Because the FTB is local, many people try to visit the public counter or call, only to face bureaucracy. The FTB demands specific forms (like the FTB 3561) to evaluate your ability to pay. They scrutinize your expenses much more strictly than the IRS. For example, they often disallow expenses for private school tuition or high car payments that the IRS might let slide under certain “allowable living expense” standards.

How We Handle the FTB

At Kugelman Law, we have extensive experience dealing specifically with the Sacramento FTB agents. We know how to:

• Negotiate Hardship Stays: Stopping collections for 6-12 months if you are in financial distress.
• Set Up Installment Agreements: Creating a payment plan that fits your budget, which automatically releases potential license holds.
• Protest Proposed Assessments: If the FTB is basing your tax bill on incorrect information (like a federal IRS audit that was wrong), we can file a protest to pause the assessment before it becomes a final debt.

Do not ignore letters from the FTB; it does not go away. Contact us to build a firewall between your assets and the state.