What the FTB Can and Can’t Legally Seize

Introduction: When You Owe Taxes in California, Everything Feels at Risk

If you’re behind on your California state taxes, you may have received a notice from the Franchise Tax Board (FTB) warning of levy or lien action. Maybe you’ve even been threatened with bank account seizures or wage garnishments.

At that point, most people ask:

“What can the FTB actually take from me — and what is off-limits?”

That’s exactly what we’re going to answer in this guide. As a tax resolution CPA serving Orange County, we help clients every day protect your property from FTB seizure with local CPA representation, understand what the FTB is legally allowed to seize, how to stop enforcement, and how to protect what matters most.

🔎 What Is a Seizure?

A seizure (also called a levy) is when the FTB takes property or assets to satisfy a delinquent tax debt.

Seizures can happen through:

• Bank levies
• Wage garnishments
• Liens that block property sales
• Third-party levies (e.g., vendors, rental income)

✅ What the FTB Can Legally Seize

Let’s break down the assets that are vulnerable to FTB enforcement:

💳 1. Bank Accounts

• Checking and savings accounts
• Money market accounts
• Online-only bank accounts

When they levy: Your bank account is frozen, and funds are transferred to the state unless released quickly. This is why it’s critical to take steps to prevent bank account freezes and seizures before they happen.

👉 How to Stop an FTB Bank Levy Before It Starts

🧾 2. Wages (Paycheck Garnishment)

• The FTB can garnish your paycheck
• They use a fixed exemption formula, not a percentage
• Garnishment continues until the debt is paid or resolved

👉 Wage Garnishment in California: Know Your Rights

🏠 3. Real Estate (Through Liens or Seizure)

• The FTB can record a lien against your home or other real property
• They typically don’t seize homes outright, but a lien blocks refinancing or sale
• If you try to sell, the FTB can force repayment through escrow

👉 How to Remove an FTB Tax Lien in California

🚗 4. Vehicles

• If a levy is issued and property is identified, the FTB can seize vehicles
• Not common — but legal in high-balance or nonresponsive cases
• Often used as leverage in aggressive collections

💼 5. Business Assets

• Business bank accounts
• Equipment or inventory
• Accounts receivable or customer payments

Small business owners are especially vulnerable to operational disruptions from FTB collection actions.

🧾 6. Vendor Payments and Rental Income

• The FTB can contact tenants, clients, or vendors and require them to redirect payments to the state instead of you.

This is called a third-party levy, and it’s legal in California.

🎯 7. Tax Refunds and State-Issued Payments

• Your federal or state tax refund
• Lottery winnings
• Unclaimed property
• State government vendor payments

The FTB is authorized to intercept funds from nearly any government-related source.

🚫 What the FTB Can’t Seize

Even with broad enforcement powers, the FTB can’t take everything.

Here are protected or restricted assets:

🚷 1. Social Security Benefits (Partially Protected)

• Direct Social Security income is generally protected
• However, once deposited into a bank account, it can be levied if commingled with other funds

💡 Use a dedicated account for Social Security if this is your only income source.

🚷 2. Retirement Accounts (Usually Protected)

• 401(k), IRA, and other qualified retirement accounts are typically exempt unless already withdrawn
• If you liquidate funds, those amounts become subject to levy

🚷 3. Veteran’s Benefits

• Generally exempt from FTB collection
• Again, must be identifiable in your bank account

🚷 4. Welfare or Disability Income

• State-administered programs like SSI, SSDI, or CalWORKs are protected
• You may need to prove the source of income if the account is levied

🚷 5. Tools of Your Trade (Limited Exemption)

California law limits the FTB’s ability to seize certain work-related property (e.g., equipment or vehicles essential to your job).

However, documentation is required to claim this exemption.

🧠 Strategy: What to Do If You’re at Risk of Seizure

✅ Step 1: Get Your FTB Transcript

Request or authorize a CPA to review your account:

• Outstanding balance
• Notice history
• Lien status
• Pending levies

✅ Step 2: Identify Vulnerable Assets

We help clients separate:

• Protected income (SSDI, retirement)
• Unprotected assets (bank accounts, wages)

✅ Step 3: File for Relief

Choose one:

• Installment Agreement to stop active collections
• Offer in Compromise if you can’t pay in full
• Hardship Deferral if any seizure would create financial hardship

👉 FTB Offer in Compromise vs Installment Agreement – Which Is Better?

✅ Step 4: Contact the FTB (Through Your CPA)

Never call the FTB without a clear plan. Let a tax professional request:

• Levy release
• Collection hold
• Alternative resolution

We also make sure you understand lien timelines and removal options and see how the FTB escalates enforcement actions so you know exactly what’s coming next and how to respond.

🧭 How Boulanger CPA Helps Orange County Clients

We help individuals and businesses in Irvine, Anaheim, Santa Ana, Fullerton, and surrounding areas:

• Identify levy and lien risks
• Protect vulnerable income and assets
• Negotiate installment agreements or settlements
• Stop FTB enforcement before seizure occurs
• Develop strategies to avoid triggering asset seizures and maintain financial stability

📞 Call 657-218-5700
🌐 www.orangecounty.cpa

📣 About the Author

Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.

He is the author of Defend What’s Yours: A California Taxpayer’s Guide to Beating the IRS and FTB at Their Own Game, available now on Amazon. The book offers a step-by-step plan for resolving IRS and FTB tax debt without losing your business, your home, or your peace of mind.

With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.

Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.

Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.

📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.