Personal Finance: Ask the Experts: Can my Social Security income be garnished by the Franchise Tax Board?

Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

March 5, 2013

Can my Social Security income be garnished by the Franchise Tax Board?

Q: I've got a state tax lien from the state Franchise Tax Board. With the new federal requirement that Social Security checks have to be received by electronic payment, I now have to open a bank account to get my monthly check. Does that mean my bank account could be garnished to pay my back taxes?
Wondering
Sacramento

A: If the Franchise Tax Board (FTB) is notified that the bank account consists only of Social Security earnings, we would not garnish your account. Social Security income is excluded from state tax collection activity. It's important to note that having Social Security income does not stop withholding orders for earnings from being issued if the taxpayer is already in active collections and it also does not stop liens from being filed.

If you open a bank account and deposit your Social Security earnings, you should contact FTB to let us know. Otherwise, when we locate a bank account opened by a taxpayer who has a lien filed against him/her, we would take actions to levy or attach the bank account as part of our collection activity (as long as due process has been served). You'd then have to show proof that the deposits are Social Security and therefore not garnishable.

It is important to note that if you deposit other income into your new bank account, the FTB can levy those non-Social Security amounts. That's why it is important to contact us and provide substantiation as to what deposits are related to Social Security.Taxpayers can call the FTB at (800) 689-4776.

For more information about FTB's collection process, please visit ftb.ca.gov and search for FTB Publication 1140, Personal Income Tax Collections Information.

Thank you for your question.

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Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.