Tax Law ✦ Tax Defense
The Letter Has a Deadline. Your Options Have One Too.
IRS and Franchise Tax Board audits, appeals, and collections for California taxpayers: levies, wage orders, liens, license holds, and the Top 500 list. North Star Law Firm takes over the file the day the power of attorney is signed, reads both agencies’ transcripts like a CPA, and negotiates or litigates like a lawyer. Flat fees, free consultation, statewide.
The Short Answer
Yes, it can be stopped. The sooner, the more options.
Whatever the IRS or the FTB has done, or is threatening to do, there is a procedure for answering it, and almost every procedure has a clock. An audit can be defended and, if it goes badly, appealed. A proposed assessment can be protested. A levy or a wage order can be released. A balance that cannot be paid can be settled, spread out, or placed on hold. The single most expensive mistake is letting a deadline pass: an unanswered 90-day letter becomes an assessment, an unanswered Notice of Proposed Assessment becomes final, and an ignored final levy notice becomes an empty bank account. Find your notice below, and call while the window is open.
- IRS office, correspondence, and field audits; FTB audits and federal-adjustment assessments
- Protests, appeals, and hearings before the IRS Independent Office of Appeals and the Office of Tax Appeals
- Levy, garnishment, Order to Withhold, and Earnings Withholding Order releases
- Federal and state tax lien withdrawals, subordinations, and discharges
- Innocent spouse relief with the IRS (I.R.C. § 6015) and the FTB (R&TC § 18533)
- License suspension and Top 500 delinquency list defense
Your Notice
Which agency, which notice, how long do you have?
The IRS and the FTB run separate procedures with separate deadlines, and a problem with one usually becomes a problem with the other. Bring every letter you have received to the consultation; the notice number in the corner tells us where you are in the process.
| Notice | Agency | What it means | Deadline |
|---|---|---|---|
| Letter 566 / audit notice | IRS | An examination has opened | Respond by the date on the letter; documents, not explanations |
| 30-day letter (Letter 525 / 950) | IRS | Proposed audit adjustments | 30 days to protest to the Independent Office of Appeals |
| Notice of Deficiency (Letter 3219) | IRS | The 90-day letter | 90 days to petition U.S. Tax Court; the deadline cannot be extended |
| LT11 / Letter 1058 | IRS | Final Notice of Intent to Levy | 30 days to request a collection due process hearing (I.R.C. § 6330) |
| Notice of Proposed Assessment | FTB | California deficiency, often from an IRS adjustment or a 1099 match | 60 days to file a written protest (R&TC § 19041) |
| Notice of Action | FTB | FTB has decided the protest | 30 days to appeal to the Office of Tax Appeals (R&TC § 19045) |
| Demand for Tax Return | FTB | FTB believes you had a filing requirement | Respond or file by the date given, or a 25% demand penalty attaches (R&TC § 19133) |
| Order to Withhold / EWOT | FTB | Bank levy or a wage garnishment of up to 25% of disposable earnings | No notice period; call the day it arrives |
| Intent to suspend license | FTB / DMV / licensing board | Balance over $100,000 placed you on the Top 500 list (R&TC § 19195) | 90 days to resolve before driver’s and professional licenses are suspended (Bus. & Prof. Code § 494.5) |
What changes when you have representation?
The day IRS Form 2848 and FTB Form 3520 are on file, the agencies deal with us, not you. We pull your IRS account and wage-and-income transcripts and your FTB account through MyFTB and reconstruct what each agency thinks you owe: tax, penalties, interest, and the assessment and collection statute dates that control your options. The IRS has ten years from assessment to collect (I.R.C. § 6502); the FTB has twenty (R&TC § 19255). The IRS generally has three years to assess after a return is filed; the FTB has four (R&TC § 19057), and if the IRS adjusts your return, you must report it to the FTB within six months (R&TC § 18622) or the FTB’s clock never starts.
Then the leverage shifts. Revenue officers and FTB collectors follow their own manuals, and we know what those manuals let them accept. Collection alternatives are computed under the agency’s own financial standards, appeal rights are preserved at every step, and when the government is simply wrong, the case goes to Appeals, the Office of Tax Appeals, or the U.S. Tax Court.
Why is the FTB harder to deal with than the IRS?
Because the Legislature gave it tools the IRS does not have and fewer procedural checks on using them. The FTB can issue an Order to Withhold to your bank or an Earnings Withholding Order for Taxes to your employer without a hearing. It can suspend your driver’s license and any professional license if your balance lands on the Top 500 list. Its collection statute is twice the IRS’s. It has no equivalent of the collection due process hearing, no Taxpayer Advocate with the IRS advocate’s authority, and its residency audits are famous for reaching people who left California years ago. It also assesses automatically when the IRS does, so an IRS audit you lost is an FTB bill you have not yet received.
The counterweight is that the FTB is bound by its own statutes and its own published procedures, and it loses at the Office of Tax Appeals more often than it would like. A protest filed within 60 days, a hardship determination properly documented, an installment agreement in place, or an OTA appeal on a residency or sourcing question each has a defined path. We know the paths because we walk them.
What if the audit has criminal undertones?
Most audits are civil and stay that way. But if an examiner starts asking about intent, requests records for years outside the audit, or an IRS special agent or an FTB Criminal Investigation Bureau agent appears, the rules change: stop talking, and call a lawyer, not an accountant. Conversations with an attorney are privileged; conversations with a tax preparer are not. As an attorney-CPA, Phillip Zagotti can do the forensic accounting a defense requires under privilege, and can bring in criminal defense counsel where the facts warrant it. Voluntary disclosure, with the IRS or with the FTB, is often the right move, and it has to be made before the agency finds the problem on its own.
The Attorney-CPA Difference
Two agencies, one rulebook each. We know both.
- IRS and FTB transcripts read together, so the federal case and the California case are worked as one
- Every deadline calendared: protest, appeal, CDP, Tax Court, OTA
- Levy and wage-order releases negotiated from the agency’s own financial standards
- Privileged forensic accounting when an audit goes sideways
- Flat fee quoted in writing before you commit
Proof, In Print
He wrote the book on tax defense. Literally.
Phillip Zagotti co-authored Taxed: A Taxpayer’s Guide to Tax Defense and Resolution with Ashley Burdette. It explains, in plain English, what the notices mean, what the agencies can and cannot do, and how each resolution tool actually works. Read it before you call anyone. When you decide you want an advocate, the consultation is free.
Questions & Answers
Tax defense questions California taxpayers ask
The FTB levied my bank account. Can it be released?
Often, yes. An Order to Withhold can be released or reduced when an installment agreement is in place, when the levy creates a documented financial hardship, or when the underlying assessment is wrong. Speed matters: the bank holds funds for ten days before remitting them to the FTB, and that is the window.
My IRS audit adjustment is done. Do I have to tell California?
Yes, within six months (R&TC § 18622). Report it and the FTB has two years to assess the California tax on the same adjustment; fail to report it and the FTB can assess at any time. We file the amended California return with the federal closing agreement so the state case ends on the same terms.
I moved out of California years ago and the FTB says I still owe. How?
California-source income, a lingering address, a business, or a residency audit. Residency is a facts-and-circumstances test under R&TC § 17014 and the FTB’s published factors, and the FTB’s assessment can be protested within 60 days and appealed to the Office of Tax Appeals. Residency cases are among the most commonly won at the OTA when the facts are assembled properly.
Can the FTB really take my driver’s license?
If your balance exceeds $100,000 and you are placed on the FTB’s Top 500 delinquent taxpayer list, the DMV and state licensing boards suspend licenses 90 days after notice unless the balance is resolved or an installment agreement is in place. That is the most time-sensitive FTB collection matter there is.
Stop letting the agency set the terms.
A free, confidential case review with an attorney-CPA, and a flat fee in writing before you commit.