The California Department of Tax and Fee Administration (known as the CDTFA) uses levy notices to seize a taxpayer’s money or right to money held by the taxpayer or a third party when the taxpayer has not resolved their outstanding tax liability. In most cases, levies are served on banks that hold the taxpayer’s money, but they can also be served on stock trading companies, tenants, or customers who owe the taxpayer money.
The Forms
The Notice of Levy issued by the CDTFA is first sent to the third party being levied. Again, in most cases that party will be a bank that holds the taxpayer’s funds. Later, a second copy of the Notice of Levy is sent to the taxpayer. In addition to the Notice of Levy, the taxpayer will receive forms CDTFA-425 Exemptions from the Enforcement of Judgments, CDTFA-425-L3 containing an Information Sheet and Exemption Claim Form, and CDTFA-403-E Individual Financial Statement.
10 Days
After receipt of the Notice of Levy, the bank will hold the levied funds for 10 days before sending the funds to the CDTFA. The taxpayer also has 10 days following receipt of the Notice of Levy to file a claim of exemption.
Release or Modify the Levy
Apart from the taxpayer paying the liability in full to release a levy, the CDTFA may release or modify the levy in certain situations. For instance, if the levied funds are exempt (see CDTFA-425 Exemption from the Enforcement of Judgments), the levy is served during a bankruptcy proceeding involving the taxpayer, or the CDTFA determines that the levy is creating a significant financial hardship for the taxpayer, the levy may be released or modified by the CDTFA.
Free Consultation
If you are being levied by the CDTFA call the Tax Law Office of Jin Kim at (916) 299-9913 for a free consultation.
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