A Continuous Order To Withhold (COTW) is a legal order seizing funds from a miscellaneous payor and remains in effect for up to a year from the date the COTW was issued. A COTW attaches rents, commissions or scheduled payments from a sale of property or any other type of asset where continuous multiple payments are made. COTW payors do not include funds held by a bank or escrow company. A COTW attaches 100% of the available funds at the time they are received, but does not exceed the amount due on the order. COTW is valid until the amount on the order is withheld in full or the twelve months has expired. The total amount due includes the total tax, penalties, fees and interest to the date of the COTW. Applicable tax years are all tax years with liabilities receiving due process that are due and payable.
FTB staff may modify or withdraw an OTW/COTW to ensure the fair and reasonable collection of tax revenue and to assure funds are not over collected. Franchise Tax Board (FTB) staff may modify or withdraw an OTW/COTW for the following reasons:
• Account balance indicates liability is lower than amount on the order
• Delinquent/amended returns have been processed and decreased original balance due
• Adjustments/corrections/errors reduce liability
• Received certified funds
• Verifiable funds allocated for payroll
• Lack of due process
• Liability is paid in full
• Financial hardship
• Agreement is made with the debtor allowing additional time for payment
FTB staff is required to thoroughly review and verify all supplied documentation prior to modifying the order. When modifying or withdrawing an OTW/COTW, FTB staff must document the basis of the action, and cite all supporting documentation. FTB staff should fax a copy to the bank and follow up by sending the hard copy via first class mail.
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