When it comes to resolving an outstanding balance due with the CA Board of Equalization (BOE), the taxpayer has to be proactive. Proactive means that the taxpayer must respond in a timely manner to the notices they receive from the BOE to try to resolve their account. If the taxpayer does not deal with the outstanding balance due within a reasonable time, the BOE can and will take enforced collection action.
To prevent any enforced collection action, a taxpayer can pay the account in full (preferably before the account goes into collections). If this is a viable option for the taxpayer, the taxpayer can full pay the account by using one or more of the following payment methods.
- Direct from a bank account – to make a payment directly from a bank account, the taxpayer will need to log in at https://efile.boe.ca.gov/boe/boe_login.jsp with a User ID or Express Login. Once the taxpayer log in, the taxpayer will need to provide their bank account number, routing number, and type of account (i.e. checking or savings)
- Credit card payment – to make a payment via credit card, the taxpayer can pay on-line at https://onlineservices.cdtfa.ca.gov/Directory/ or over the phone at 1-855-292-8931 and follow the recorded instructions. Note that the BOE accepts credit card payments from American Express, Discover, MasterCard and Visa.
- Check or money order – to make a payment by check or money order, the taxpayer will need to make the check or money order payable to the Board of Equalization. The taxpayer must notate on the check or money order, the BOE account number, tax form and tax periods. The payment must be mailed to the address below. Please remember to allow several days for mailing time.
Board of Equalization
PO Box 942879
Sacramento CA 94279-7072
- Electronic funds transfer (EFT) payment – to make an electronic funds transfer, the taxpayer must log in at https://efile.boe.ca.gov/boe/boe_login.jsp with a User ID or Express Login to schedule the payment.
- From mobile device – to manage electronic payments from a mobile device, the taxpayer will have to download the BOE application at https://www.boe.ca.gov/mobile. The taxpayer will need to log in with a User ID or Express Login to make a payment via BOE ePay.
If the taxpayer cannot afford to pay the outstanding balance due, the taxpayer can request a payment plan or an offer in compromise. Before the BOE, will entertain a payment plan or an offer in compromise, they BOE will ask the taxpayer to sell their assets and/or borrow against them to pay the balance due in full or in part. If the taxpayer does not have the ability to sell or borrow against his assets, the BOE may consider a payment plan that pays the balance due within 6 to 12 months. The taxpayer can request a payment plan on-line, and will have to log in with a User ID or Express Login at https://efile.boe.ca.gov/boe/boe_login.jsp. Note that in order for the taxpayer to apply for a payment plan online, the taxpayer must be in filing compliance (all tax returns must be filed) and their sales permit or license has not been revoked. The taxpayer must agree to a direct debit installment agreement and can choose to make payments, weekly, biweekly, or monthly.
A short-term installment agreement, may not be an option for many taxpayers. If a taxpayer cannot afford to full pay the balance due within 6 to 12 months, the taxpayer will have to provide their financial information to determine their ability to pay over an extended period of time. The problem however, is that the BOE Collection Representatives have discretion on whether or not to accept a payment arrangement. If the installment agreement is accepted, it will be subject to a one year review to see if the taxpayer’s ability to pay has changed. If the installment agreement is not accepted, the BOE can use the financial information provided by the taxpayer to pursue enforced collection action.
If a taxpayer has an outstanding balance due with the BOE that has not been paid in full or resolved via an installment agreement or an offer in compromise, the case will end up with the BOE Collections Division. The Collections Division sole purpose is to collect on the outstanding balances due. At this point, the BOE’s position is that the taxpayer has not been cooperating with the BOE and the agency has no other choice but to move forward with collection action.
Usually, one of the first things the BOE will do is file a tax lien for the outstanding amount due. Note that a tax lien is not a seizure, but is filed with the County Recorder’s Office to protect the government’s interest. A tax lien attaches to all real property. It is public record and will negatively impact the taxpayer’s credit rating. The lien generally comes into play when a taxpayer is trying to sells assets or borrow against them. However, before the BOE will file a tax lien, they must give the taxpayer proper notice. This means that the BOE will issue a notice 30-days before a lien is filed to inform the taxpayer that a lien may be filed, and what the taxpayer can do to prevent a lien filing. Usually, the option presented to taxpayers is to full pay the balance due by the due date on the notice. Note a tax lien may be filed, even if a taxpayer has an installment agreement.
To get a taxpayer’s attention, the BOE will issue multiple levies for the outstanding amount due. A levy is a seizure, a taking of one’s personal and/or real property. Once demand for payment has been made, and the taxpayer has not made the payment, the BOE can levy a taxpayer’s wages, bank accounts, dividends, accounts receivables, and, cash value of insurance policy, etc.
- Bank levy – The BOE will issue a bank levy to your financial institution. The levy will attach to all the accounts associated with the taxpayer’s ID number; the employer identification number, social security number, or both. The day the bank receives the levy notice, the taxpayer will not have access to the funds in the account. If the taxpayer owes $10,000 to the BOE, but only has $5,000 in the bank, the levy attaches to the entire $5,000 in the account. However, if the levy is for $10,000, but the taxpayer has $20,000 in the bank, the levy only attaches to the amount on the levy notice, $10,000. Note the taxpayer has 10-days to attempt to release or modify the levy. The taxpayer will need to contact the BOE Collections Division or the person on the levy notice to try to get the levy released. If the levy is not released, the bank will send the funds directly to the BOE on the taxpayer’s behalf.
- Wage garnishment – The BOE will issue a levy against a taxpayer’s wages to collect on an outstanding balance due. The levy attaches to twenty-five (25) percent of a taxpayer’s after tax income. A wage levy is continuous and will be deducted from each paycheck until the tax liability is paid in full, or the collection statute expires, or the wage levy is released. When the employer receives the levy notice, the employer notifies the employee/taxpayer. The employee/taxpayer will have the opportunity to contact the Collections Division to resolve their account with the BOE and to request a release of levy.
- Bond as a security deposit – The BOE will request a security deposit in form of a bond to protect their interest from non-compliance taxpayers with a poor history. Generally, the BOE will request the taxpayer to post bond in an amount equal to six (6) months of their average taxes owed. If a taxpayer has previously posted a bond and is not current with their payments, the BOE will require the taxpayer to post a higher bond. If the taxpayer does not post bond, the BOE can suspend a taxpayer’s seller’s permit.
- Alcoholic beverage license – the BOE can seize or sell a taxpayer’s alcoholic beverage license if the taxpayer’s payments are 3 or more months past due, or if the taxpayer’s bond becomes void or unenforceable. This could be detrimental to a restaurant, bar, and/or catering business because the result, can essentially put the taxpayer out of business.
- Issue a “till-tap” or “keeper” warrant – If a taxpayer does not pay the outstanding sales tax due, the BOE can serve a warrant to the California Highway Patrol or the local sheriff to enter the taxpayer’s premises (business) and collect the gross receipts or contents of the cash register(s). A “till-tap” levy is when law enforcement enters the premises unannounced and takes all the contents from the cash registers. The officer collects the money on the premises, and leaves. A “keeper” warrant is when law enforcement enters the premises unannounced and stays the entire day to seize all of the gross receipts. Unfortunately, law enforcement can return to the business for the next 9 days, for a total of 10 days. Needless to say, a seizure of the day’s total gross receipts by law enforcement can be detrimental to the business financially and emotionally for the taxpayer’s employees.
- Revoke/suspend seller’s permit – The BOE may suspend a taxpayer’s seller’s permit if the taxpayer is not in filing compliance, has unpaid sales and use tax, or does not post bond as a security deposit. However, the BOE will revoke or suspend a taxpayer’s seller’s permit as a last resort, when all other options have been exhausted.
As you can see, the BOE has an arsenal of enforced collection methods at their disposal and it can be overwhelming for a taxpayer. However, a taxpayer will be given several opportunities to resolve their account prior to any enforced collection action. If the BOE has started to enforce collections, a taxpayer can still reach a resolution with the BOE, but it will be more difficult. The key to resolution with the BOE, is to be proactive. Therefore, it is highly recommended for taxpayers to seek counsel, before the case gets out of control.
