The first thing that you should do is make sure that you fully understand the situation, and if necessary, find qualified legal representation for the next steps. Tax liens can appear complicated and intimidating the first time you approach it, but the basic principles are not difficult to understand.
First off, a lien is not a levy. A lien is a notice that your personal property and bank accounts may not be sold or cashed out until the lien is removed. A levy is the actual seizure of bank accounts and sale of property up to the full amount of your tax liability and any related fees, penalties and interest.
A tax lien is filed in an effort to force you to pay your outstanding tax obligations. You might think of it as your property and bank accounts as a box you want to pick up, and a lien as something on top of it preventing you from doing so. The lien isn’t permanent as once you remove it, you can then lift up your “box” of assets. Liens exist to protect the government’s right to claim your personal property in the event you do not pay your taxes.
Tax liens can occur at the local, state or federal level, and they may be applied to some or all of your assets. A lien makes it extremely difficult to sell property or obtain financing, and if it goes unpaid for too long, it can leave you vulnerable to more drastic collection actions.
The FTB records liens after a payment demand has gone unanswered. Typically, you are sent a notice of collection action 30 days before recording a lien. The notice contains the amount of tax debt, your rights in contesting the debt, and a deadline for avoiding collection action.
There are limited exceptions to ban for transfer of property encumbered by state lien. The taxpayer may still transfer interest in real property via a Quit Claim. It is possible to have multiple statutory lien dates for a single tax year.
For example, a self-assessed no-pay return is filed (lien date is posting date of return) and subsequently a Notice of Proposed Harassment is issued for the tax year.
The lien is valid for 10 years but may be extended by the FTB in accordance with the internal Lien Extension Guidelines and by taking into consideration factors listed in the Guidelines.
If the FTB fails to extend the lien for any reason after 10 years from the date of its creation, the lien expires.