An FTB bank levy happens when the California Franchise Tax Board sends your bank an Order to Withhold for unpaid state tax. The bank freezes funds up to the amount listed and, after a short holding period, sends them to the FTB. That holding window is usually the most practical time to request a release or arrange payment.
If your account has been frozen by the FTB, call (415) 754-0115 to schedule your free consultation, or send a brief message through our contact page so an attorney can review the notice with you right away.
How an FTB bank levy works
California law lets the Franchise Tax Board collect delinquent state tax without first going to court. Instead of a court judgment, the FTB issues an Order to Withhold directly to a bank, credit union or other financial institution that holds your money.
The holding period
When the bank receives the order, it holds the funds in your account up to the amount owed. The bank generally keeps the money on hold for a short period, typically ten days, before remitting it to the FTB. During that period, the FTB can release the order if the issue is resolved or a valid reason for release is shown. Once the money is sent, getting it back is far more difficult.
Repeat orders
An Order to Withhold usually captures only what is in the account when the bank processes it. Deposits made afterward are generally not covered by that order, but the FTB can issue new orders until the balance is paid or another arrangement is in place.
Warning signs before the levy
Bank levies rarely come without notice. Before one is issued, the FTB usually sends a series of billing notices and then a final notice warning that it may levy or file a lien. Our article on the FTB final notice before levy and lien explains what that letter means and why it matters.
Many people miss these warnings because they moved, changed email addresses, or assumed the bill related to a return they believed was correct. When a bank reports an FTB hold, the FTB online account and recent FTB mail usually show which tax years are involved.
Options after an FTB bank levy
The right response depends on why the tax is owed and what you can afford. An attorney can review your situation and explain which of these paths may apply:
- Request a release for financial hardship. If the frozen money is needed for basic living expenses such as rent, food or medical care, you can ask the FTB to release the order. This request usually needs supporting documents.
- Set up a payment arrangement. Entering an installment agreement can stop further levies while you pay over time. See our guide to the FTB installment agreement in California.
- Dispute the underlying tax. If the balance comes from an estimated assessment for an unfiled return or from an error, filing the correct return or contesting the assessment may reduce or eliminate it.
- Consider a settlement. In limited cases, the FTB offer in compromise program may resolve a balance that cannot realistically be paid.
- Evaluate bankruptcy. Filing bankruptcy triggers the automatic stay, which generally stops new collection actions. Whether a particular state tax debt can be discharged depends on its age and other conditions.
Funds that may be protected
Some types of money have special protection under federal or state law. Federal benefits such as Social Security deposited directly into an account often receive protection, and other funds may qualify depending on their source.
Showing where the money came from
Protection often depends on being able to trace the deposit. Bank statements showing a direct deposit from a benefits agency, or records showing that funds belong to someone else, can be important when asking for a release.
An FTB bank levy compared with other California levies
A state tax levy is different from a levy by a private creditor. A credit card company or debt buyer generally needs a court judgment before levying a bank account, while the FTB does not. The FTB also uses an Earnings Withholding Order for Taxes to garnish wages, which is explained in our article on FTB wage garnishment in California. For a broader look at levies in California, see our guide on how to stop a bank levy in California.
The IRS and the FTB also operate separately. Resolving a federal balance does not stop a state levy, and the reverse is also true, so each agency's account needs its own plan.
The Somal Law Firm, led by attorney Bob Somal in Pleasanton, helps individuals and small business owners throughout the Tri-Valley, Alameda and Contra Costa Counties respond to state and federal tax collection. Our tax law practice covers IRS and FTB disputes, and we can communicate with the FTB on your behalf so you are not handling a frozen account alone.
Frequently asked questions
How long does the bank hold the money before sending it to the FTB?
The bank generally holds the funds for a short period, typically ten days, before remitting them. That holding period is the main window for requesting a release.
Can the FTB levy my bank account more than once?
Yes. Each Order to Withhold usually reaches only the balance at the time it is processed, but the FTB can issue additional orders until the debt is resolved.
Will a payment plan stop an FTB bank levy?
An approved installment agreement generally prevents new levies as long as you keep to its terms. Whether a levy already in progress is released depends on the timing and the FTB's review.
Can the FTB levy a joint account?
A joint account can be affected by an Order to Withhold. If the other account holder contributed the funds, documents showing whose money it is may support a release request.
A frozen bank account is stressful, but the holding period gives you time to respond. Call (415) 754-0115 to schedule your free consultation with Bob Somal, or use the contact page. We will review the FTB notices and your account records and explain the steps that may be available.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.