It would be nice if people hired us before the IRS and any state taxing agencies issued collection garnishments and liens. But with tax collectors being as fearsome as they are, and people falling into the traps that are known, many times we are hired by clients who are currently under wage levies — both IRS and state. And now, they become very motivated to solve their tax problem.
Now that's most people with wage levies — they knew at some point, if they continued to ignore the IRS or a state, there would be a levy coming. But what if someone wrongfully issues your employer wage levy for back taxes? What if this entire horrible thing was a mistake you seem unable to control. Would you know how to fix this?
Releasing a wrongful levy
Let's talk about our client, "Joseph Blue." He was a real estate broker who sold high-end homes around the country. He was licensed to work in many different states but depending on sales, he may not have earned income in each state each year. He held his Realtor license with the State of California starting in 2006. He endured the housing crash and was clearly taking advantage of an untapped real estate market.
Mr. Blue reached out to us because our investigation of his tax matter showed that the state of California Franchise Tax Board prepared a substitute for return on his behalf. Mr. Blue who "may have" struggled to pay his taxes, was always a timely filler and was under the impression that he did not earn income in the state of California for the tax year in question.
We met with Mr. Blue to discuss the case further. Our tax resolution team not only concluded that Mr. Blue did not have a filing requirement or state income for that year, but he was also levied based on the substitute for return prepared by the California Franchise Board. Meaning, there really should be no tax bill!
After a bit of back and forth, including long hold time listening to California's slightly more upbeat (compared to the IRS) hold music, we were eventually successful in arguing that Mr. Blue had no California state income. We were not only able to stop the wage levy — we got a refund of all funds previously levied. Seven days later, Mr. "Not-So-Blue" let us know he received all his refund checks and a notice showing a zero balance for the tax period in question. Read reviews of Parent & Parent LLP here, or click here to contact us:
Note: California's Franchise Board is one of the better state revenue departments we have encountered. Our experience with them has always been positive.
