Hi there,

This is going to be a bit longish post. Please bear with me.

A friend who lives overseas recently asked my help. Apparently CA FTB has put a levy on his bank account for unpaid taxes from year 2007.

This friend is not a US citizen or permanent resident. He worked in US on a H1B work visa for few years. During that time he lived in CA and filed all federal and state taxes on time. He went back to his home country in 2008/2009. In 2009 he received a notice from FTB asking for unpaid taxes for year 2007. He had filed the 2007 CA tax return on time and had received refund as well. So he talked to FTB and sent them the paperwork they asked for through another friend in US using certified mail. That was end of it.

Now 4 years after that last communication, one day in 2013 he finds his checking and saving bank accounts in US frozen without warning. I have two questions about the whole situation:

1. Can CA FTB ask you to pay more taxes after they approved your return and issued a refund?

2. What can my friend do to get rid of this levy. I think he needs help of a professional. But who should he approach, a lawyer or a CPA? Is there any special designation / status / specialization he should look for?

Thanks
-Josh

1. Yes. 'Approving' a return is a cursory process by a clerk, and a later audit can find problems. Of course they make mistakes too, and I for one can tell you what a nightmare that can be. It's possible he did nothing wrong.
2. A CPA can handle this. We even have two here, and if they see this, they can tell you if they want to.

Joypulv,

Your advice is accurate, though I am NOT a CPA (assuming you were referring to me as one).

However, it would be best if the CPA practices in California so that face-to-face meetings are possible.

Also, a tax attorney can also work.

Yes, I thought you were a CPA!

I agree with joypulv - there is never a final "approval" by the FTB of your return, and if they issue a refund it's done before any errors may be found. So yes - they can come after you for additional taxes owed after issuing a refund. My guess is that in this case after your friend submitted his response it wasn't the end of it - did he ever receive a follow up notice from the FTB saying that they had received his submittal and the matter was settled? If not, perhaps mailings from the FTB requestung additional info or disputing his filing were sent to his old US address and not forwarded to his foreign address in his home country. And then because he never responded to those subsequent mailings the FTB concluded he was delinquent, and consequently garnished his account.

Any CPA specializing in tax matters can help.

This update was long time due. But better late than never. Just wanted to close the loop by reporting the outcome.

My friend was able to resolve this with FTB. The real challenge was communication since phone was the only practical mode of communication with FTB and the hold times were really long. After several sleepless nights and $$$ spent on international calls my friend was able to speak to a real person. The FTB representative was really helpful and accepted the documentation through FAX. It took couple of months but finally FTB accepted that their demand for additional tax was incorrect and removed the levy on his account.

Thanks to all those who replied.

Thanks for letting us know the outcome.