Collection Rights in California
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Reviewed by the Commoner Law Editorial Team. Sourced from primary statutes (U.S. Code, CFR, state compiled statutes) and official government agency guidance. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
How California differs from federal law
California FTB has its own collection powers and taxpayer protections:
- Collection statute: California has a 20-year statute of limitations on tax collection (vs. 10 years for the IRS). This is one of the longest in the nation.
- Earnings Withholding Orders: The FTB can garnish wages through an Earnings Withholding Order (EWO), taking up to 25% of disposable earnings.
- Bank levies: FTB can levy bank accounts with a "100% demand" — meaning they can take the entire balance, unlike the IRS which has exempt amounts.
- State tax liens: FTB automatically files liens when tax debt exceeds $250 (individual) or $1,000 (business). These appear on your credit report.
Additional Steps in California
Contact the FTB at (800) 689-4776 to discuss collection alternatives. Request a hearing if you believe the collection action is improper. Contact the Taxpayer Rights Advocate at (916) 845-3300.
Relevant Law: California Revenue and Taxation Code § 19255 (collection period), § 706.050 (earnings withholding), § 19221 (tax liens)
Federal baseline: Collection Rights nationwide
What is this right?
The IRS has the most powerful collection toolkit of any creditor in the country — wage garnishment, bank levies, federal tax liens, asset seizures, passport revocation for serious tax debts. They also have legal limits on how and when they can use those tools. The Collection Due Process framework at §§ 6320 and 6330, added by the 1998 Restructuring Act, requires notice and a 30-day hearing window before they can take most enforcement actions. Section 6334 exempts certain property from levy entirely — unemployment, workers' comp, a portion of wages, school books, undelivered mail, necessary clothing.
And there's a clock. Under § 6502, the IRS has 10 years from the date of assessment to collect tax debt. The Collection Statute Expiration Date (CSED) is real — past that date, the debt expires and the IRS can no longer collect. Various events pause the clock (bankruptcy, OICs under review, requested CDP hearings), but the clock exists, and for some long-running debts, waiting it out is the right strategy.
When does it apply?
Collection rights kick in when:
- The IRS sends a Notice of Intent to Levy — typically Letter 1058 or LT11.
- A Notice of Federal Tax Lien gets filed against your property.
- The IRS garnishes your wages or levies your bank account.
- The IRS contacts your employer, bank, or other third parties about your debt.
Three myths:
- "They can take everything I own." No. § 6334 exempts unemployment benefits, workers' comp, a minimum exempt amount of wages (depends on filing status and dependents), school books, undelivered mail, and necessary clothing.
- "Once the bank gets levied, the money's gone." Not yet. The bank has to hold the funds for 21 days before sending them to the IRS. You can request a CDP hearing or work out a release in that window.
- "They can show up at my door without warning." Not for the first levy. § 6330 requires a Final Notice of Intent to Levy at least 30 days in advance, plus your right to request a CDP hearing during that window.
What to Do If the IRS Is Garnishing Your Wages or Seizing Assets
Step 1: If you get a Notice of Intent to Levy, move immediately. Thirty days to request a Collection Due Process hearing — and the request itself stops the levy while your case is reviewed.
Step 2: File Form 12153 within 30 days. The CDP hearing is your chance to propose alternatives — installment agreement, OIC, currently not collectible status. The Settlement Officer has authority to resolve the case.
Step 3: For active wage garnishments, call the number on the notice. If the garnishment creates economic hardship — can't pay rent, can't buy food — you can request a modification or release.
Step 4: Watch the CSED. If the 10-year collection statute is close, talk to a tax professional. Sometimes the right move is no movement — let the clock run out.
Step 5: Call the Taxpayer Advocate. 1-877-777-4778. TAS exists for cases where regular collection is causing real hardship and the regular IRS channels haven't fixed it.
What should you NOT do?
Don't miss the 30-day CDP deadline. After it passes, the most you can get is an "equivalent hearing" — same conversation, but with weaker procedural rights and no right to take an unfavorable decision to Tax Court.
Don't hide assets. Transferring property to dodge IRS collection is a federal crime under § 7206. The IRS can also unwind fraudulent transfers and pursue the recipient.
Don't extend the collection statute on autopilot. The IRS will sometimes ask you to sign a Form 900 extending the 10-year CSED in exchange for an installment agreement. You usually have no obligation to agree, and extending the clock can be a worse deal than the agreement itself.
Don't assume bankruptcy wipes tax debt. Income tax debts can be discharged in Chapter 7 only if they meet specific age and filing requirements (the "3-2-240 rule"). Trust fund taxes (payroll withholding) and recent debts generally survive. Talk to a bankruptcy attorney before assuming.
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