We have talked about how tax liens are handled by the Franchise Tax Board and the California Department of Tax and Fee Administration in past blog posts. Now we would like to take up the final taxing authority you deal with as a business owner in the state of California: the Employment Development Department, or EDD.
To lead into this article, let’s start with the definition of what this agency is responsible for.
Our last few posts have been about how the various California state tax agencies handle tax liens.
A brief review:
We previously discussed how the Board of Equalization handles tax liens. For this post in our series, we would like to talk about how the California Franchise Tax Board addresses the use of liens. There are differences between the way the various California tax agencies and the IRS use tax liens about which you need to take note to stay out of hot water.
In our continuing series about tax liens, we would like to talk about how the California Board of Equalization handles them. While there are similarities between how the IRS and the various California tax agencies pursue, impose, and release tax liens, there are some important differences that every tax payer should be aware of.
In Part 1, you learned what a lien is, how taxpayers are notified of a lien, and what elements are required for a valid lien. In Part 2, you will read how a lien can impact your credit report, who has access to a list of those with liens, and what happens during bankruptcy and other financial events if a lien is involved.
The tax community is a house somewhat divided over the effectiveness of liens. On the one hand, the government needs to protect their interests in regards to taxes owed them. On the other hand, tax liens are filed against taxpayers with few or no assets to file a lien against.
Taxpayers often confuse the terms tax lien and tax levy and do not understand the difference in actions represented by these concepts. While liens and levies can both be filed by the IRS and the California Franchise Tax Board (FTB) and there are many similarities to when they are issued and how they can be removed, liens and levies are terms for very different actions.
As if taxes were not complicated and frightening enough, the federal and state taxing authorities have a variety of devices in their arsenal to compel payment and stave off penalties.
Tax liens, one of the most common of those devices, can cause trouble not just with your property and bank accounts, but with your credit score and ability to obtain lines of credit.