California tax debt · Beverly Hills
California State Tax Debt in Bankruptcy for Beverly Hills Taxpayers
State tax debt in bankruptcy, such as California Franchise Tax Board income tax, can be discharged when it meets the timing rules, and collection stops the day you file. If the FTB is taking your paycheck or freezing your bank account, call (310) 362-9071 for a free consultation.
- FTB: state income tax, often dischargeable if old enough
- CDTFA: sales tax you collected, generally not dischargeable
- EDD: payroll taxes withheld, generally not dischargeable
Signs bankruptcy may help with state taxes
- The FTB has sent an Earnings Withholding Order for Taxes to your employer
- The FTB levied your bank account with an Order to Withhold
- Your state tax balance is several years old and growing with penalties
- You also owe the IRS for the same years
How we handle California tax debt, step by step
- Get the FTB records. We review your FTB account history to see when each return was filed and each tax was assessed.
- Check federal changes. California requires you to report IRS changes to your federal return. Unreported changes can affect which state years qualify.
- Sort each year. We sort state income tax years into dischargeable and priority, and flag any trust fund taxes owed to the CDTFA or EDD.
- Time the filing. The same three-year, two-year and 240-day rules used for IRS debt apply. A few weeks can matter.
- File and stop collection. The filing stops FTB wage orders and bank levies while the case is open.
- Follow up. After discharge, we confirm the FTB has updated your account.
Cost and timeline
Tax cases need extra review of records. You get our fee in writing at the consultation after we see your tax history.
FTB collection stops when we file. Qualifying taxes are discharged in a Chapter 7 within a few months. Priority state taxes can be paid over a 3 to 5 year Chapter 13 plan.
State tax debt in the Los Angeles Division
Cases from Beverly Hills and most of Los Angeles County are filed in the Los Angeles Division of the U.S. Bankruptcy Court, Central District of California, at 255 East Temple Street. The FTB files its own proof of claim, separate from the IRS. We review both claims against your records.
The FTB can record a state tax lien that may stay on property even after the tax is discharged. We check for recorded liens with the Los Angeles County Registrar-Recorder before filing.
Mistakes to avoid
- Assuming state and federal timing match. Amended returns and federal changes can shift the state dates.
- Treating sales tax like income tax. Collected sales tax is held in trust and usually cannot be discharged.
- Leaving years unfiled. Unfiled state returns can block a discharge for that year.
Related services
Most clients with FTB debt also owe the IRS, so read about IRS tax debt in bankruptcy. If the taxes are mixed with credit card and medical debt, compare Chapter 7 bankruptcy in Beverly Hills.
State tax questions
Can California Franchise Tax Board debt be discharged in bankruptcy?
Yes, California Franchise Tax Board income tax debt can be discharged in bankruptcy if it meets the timing rules and no fraud is involved. Recent years usually cannot be discharged but can be paid through Chapter 13.
Does bankruptcy stop an FTB wage garnishment?
Yes, filing bankruptcy stops an FTB Earnings Withholding Order for Taxes while the case is open. We send proof of the filing to the FTB and to your employer.
Can sales tax owed to the CDTFA be discharged?
Generally, no. Sales tax you collected from customers is treated as trust money and usually cannot be discharged. Chapter 13 can be used to pay it over time while stopping collection.
Do I need to deal with the IRS and FTB separately?
Yes, the IRS and FTB are reviewed separately in bankruptcy. Each files its own claim and each tax year is tested on its own dates. We handle both in the same case.
Free consultation
Stop the FTB and sort out your tax years
Call (310) 362-9071 or send the form. Have any FTB notices ready.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.