Call Kurtis Investigates: CA Raiding Bank Accounts and Intercepting Tax Refunds By Mistake

SACRAMENTO (CBS13) — Some Californians say they feel like the State of California robbed them, taking their money without notice.

Anthony Jones of Elk Grove says the Franchise Tax Board took $125 from his tax refund. He didn’t get a letter until afterward telling him to contact the City of Oakland Parking for details.

WEB EXTRA: See the Letter

He learned it was for a parking ticket he never got, on a car he never owned.

“You just can’t be taking people’s money man,” said Jones.

He and his fiancé found themselves getting ping-ponged between Oakland, the Franchise Tax Board and the DMV. No one would help or return his money.

“You’re telling me now I have to prove myself innocent to get back my own money.”

Franchise Tax Board Serves as Collection Agency

The Franchise Tax Board serves as a collection agency for more than 600 government agencies. It has the tremendous power to intercept tax refunds and pull money right out of your bank account or paycheck. But after a series of errors, CBS13 has uncovered the state does not always notify people before taking the money. Viewers say they had no chance to clear up the mistakes.

“It borders on criminal activity in my opinion,” said Randy Settlemire of Paso Robles. He said the State erroneously raided his tax refund for $76 for a toll violation he never got.

ALSO READ: Where’s My Tax Refund?

Michael Gardner’s $182 tax refund was also intercepted in 2015 over a parking ticket he never got.

ALSO READ: The State Mistakenly Intercepted My Tax Refund and Raided My Bank Account

John Kalinowski told us in 2013, the state took more than $1,200 from his tax return and his bank account right before a vacation.

Why Are Mistakes Happening?

Call Kurtis has spent more than a decade reporting on various government agencies making mistakes, causing the wrong people to get tickets. Sometimes it’s an “O” and a zero getting mixed up on a license plate, or an “I” and a “1”. Sometimes toll violation cameras don’t capture clear images of license plates. A CBS13 investigation found a flaw in the DMV’s own database that provided local agencies with outdated vehicle owner information. The DMV claimed it fixed the problem.

With the Franchise Tax Board serving as the collection agency, we’re shifting our questions to why these viewers can’t seem to fix the errors, before their money is taken.

WEB EXTRA: How do you make sure you’re taking money from the right person?

The Franchise Tax Board says it only notifies people in writing prior to raiding bank accounts or paychecks. The agency admits it does not send out notices before intercepting tax refunds. Instead, it relies on the local agency to send a notice prior to turning the debt over to the State, so you have the opportunity to clear up any mistakes.

Click here to read the intercept requirements

However, each viewer says they never got that pre-intercept letter.

Daniel Tahara, an FTB spokesperson, claims the FTB’s own policy is to confirm the address on the local pre-intercept letter matches the one in its database. However, Settlemire, who works for the State of California and filed taxes last year, says he later learned his pre-intercept notice went to an address he hasn’t used in 15-years.

Taxpayer advocate Jon Coupal with the Howard Jarvis Taxpayers Association says taking people’s money without due process is a violation of the United States Constitution.

“If it is the Franchise Tax Board who’s actually taking the money out; and it is; they need to be the ones that notify the taxpayer,” Coupal said. “The government is supposed to work for us, not the other way around.”

WEB EXTRA: You’re the collection agency. Why don’t you contact people before taking their money?

How Often Mistakes Happen

When we last reported on this issue in 2015, we specifically asked the Franchise Tax Board how often these mistakes happen. At the time, the agency told us it’s only happened four times in the prior two years.

CBS13 posed the same question this year, and the agency responded with the number 199 for the year 2016 alone. We questioned whether the 2015 number was an error, or if there was a dramatic rise in mistakes.

“After digging further, we determined the figure was actually 370 for the time you requested,” said Tahara.

Yes, California’s Tax Agency, which crunches numbers every day, provided a number that was off by 9150%.

How Does the Franchise Tax Board Explain the 9150% Discrepancy?

“There was a miscommunication related to the numbers provided in 2015. The figure provided in 2015 made up the number errors that resulted in media inquiries,” spokesperson Tami Grimes said in an email to CBS13. “However, total number of reversals [sic] in 2015 was 370 (.04%) out of nearly 900,000 offsets. In 2016, there were 199 (.02%) reversals out of more than 960,000 offsets.”

Those who had their money taken by mistake, see it differently.

“Here is a state agency, that is caught in a bold faced lie,” Settlemire said.

Call Kurtis has repeatedly pressed the Franchise Tax Board to identify what’s failing. We raised the questions why government agencies aren’t using the same address databases, if these databases have flawed information, if local jurisdictions are really mailing out letters, and if the Franchise Tax Board is truly double checking addresses.

WEB EXTRA: “I don’t know where the flaw is”

ison on your behalf.”

Yet, our viewers say that didn’t work for them, and they didn’t get their money returned until CBS13 intervened. Every one of these viewers is asking how many others simply give up.

“Once you’re caught in this, it’s up to you to fight your way out,” Settlemire said.

“I feel as if you’re putting a gun to me and robbing me, but you got immunity from any prosecution,” said Jones.

More from Kurtis Ming
Comments

One Comment

  1. Jane Ryan says:

    The FTB did this to me last year. Took 15k out of my account to satisfy a debt incurred by a family member. Once I proved to an agent at the agency, they returned all my money. Lesson to be learned is never believe a family member is honest. The reason they were able to take my money is that I had this person listed on my bank account as an authorized signature only, not a co-owner of the account. Bank messed up but I the FTB corrected their error when they saw my bank statements that showed this person never contributed to my account. Close call for me on that one but I feel sorry for the people who are being targeted because someone entered the wrong information into the system and they were charged for tickets and fines. Horrible experience and it’s true, they don’t notify you. Money had been removed and then I learned about it after it was done. Thought I was going to have a heart attack, I was so shook up about it. It’s true what Kurtis said. They can do anything they want and you have to prove you’re innocent before they’ll give it back. I think I’m going to start stuffing my money in a shoe box … right next to the gun I’m going to buy next week. Nice to see more women purchasing them. It’s a jungle out there.

  2. This is why you adjust your W-4 withholding, so you don’t have a big refund coming.
    Instead, you get a slightly bigger paycheck. You might owe a little at tax time, but that’s better than dealing with this sheit.

    Also, keep the bulk of your money in banks that don’t have California branches, so they’re outside of FTB jurisdiction.

    Consider a fire-proof home safe for cash storage.
    Since banks pay so little in interest these days, you’re not missing out much by storing at home.

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