Although just a few months into a program that allows the FTB to obtain information from banks and other financial institutions to find assets and collect on delinquent debts from California taxpayers, the FTB estimates that it will increase the amount of levies issued to more than 475,000, an increase of 75% compared to the last fiscal year.
The FTB modeled this program on the Financial Institution Data Match Program, and refers to the new program as the Financial Institution Record Match (FIRM). FIRM is designed to aid the FTB in finding assets of debtors and improving the accuracy of levies on the accounts of debtors. Participation in FIRM is mandatory for all financial institutions doing business in California.
Under California Revenue and Taxation Code Section 19266, the FTB is authorized to institute civil proceedings to enforce FIRM provisions. Financial institutions that fail to comply, without reasonable cause, will be subject to a penalty equal to $50 for each record not provided, up to a total of $100,000 per year.
Most Financial institutions are now complying and providing the FTB with account information of delinquent taxpayers to the FTB. Included under the types of accounts being reported to the FTB are demand deposit accounts, share or share draft account, checking or negotiable withdrawal order accounts, savings accounts, time deposit accounts and money market mutual fund accounts regardless of whether the accounts bears interest.
Once the account of a delinquent taxpayer has been identified, the FTB will issue a levy for the full amount of state tax due and provide a 10-day holding period before the financial institution will be required to remit the funds to the FTB. This short time period will allow taxpayer to negotiate or contest the amount of tax due to the state. Some form of relief is possible for taxpayers who would suffer financial hardship as a result of the levy.