STATE TAX LIENS LIEN PROGRAM 04/24/2010 Lien Resolution Unit Brenda Sizer, Lien Specialist (916)

STATE TAX LIENS 2 AGENDA Introductions Purpose General Information State Tax Liens

STATE TAX LIENS 3 INTRODUCTIONS Speaker introductions Business cards Handouts Questions & Answers

STATE TAX LIENS 4 PURPOSE Share information regarding FTB’s State Tax Lien program Establish and maintain open communication Answer questions regarding our program

STATE TAX LIENS 5 GENERAL CONTACT INFORMATION General Questions – Demand Requests – Use e>Demand FTB Lien Group: General Questions – Demand Requests – Use e>Demand Fax – Fax – Other Tax Agencies: Board of Equalization: Employment Development Department: IRS Centralized Lien Processing Center:

STATE TAX LIENS 6 STATE TAX LIENS (STL) WHAT IS A LIEN? A lien is a legal claim for a debt owed WHAT IS A STATE TAX LIEN? A state tax lien is a general lien It arises out of operation of law (R&TC 19221) Attaches to all property and rights to property, whether real or personal, belonging to the Taxpayer and located in California Referred to as a “statutory lien or secret lien”

STATE TAX LIENS 7 NOTICE OF STATE TAX LIEN (NSTL) Once recorded, the lien becomes a matter of public record Attaches to real property located within the county where Notice was recorded Remains in effect for ten years unless extended

STATE TAX LIENS 8 DEMAND REQUESTS To obtain a lien release, the liened liability must be resolved. Submit your payoff request through e>Demand, FTB’s online Demand Request application: Type eDemand in the search field or Fax:

STATE TAX LIENS 9 DEMAND REQUESTS E>Demand requires all the necessary information to process your request: Contact Information: Company name, contact person, address, phone number, and fax number of person requesting payoff Client’s Information: Full Name, SSN, Current Address, Property Address Lien Information: FTB Lien Certificate Number, Name on Lien, SSN on Lien **You can submit up to ten lien certificate numbers in your Demand Request**

STATE TAX LIENS 10 LIEN PRIORITY Determining priority between FTB Lien and other judgment creditors  Exemption: Purchase money Competing state tax liens or a state tax lien and federal lien

STATE TAX LIENS 11 REFERENCES Notice of State Tax Lien (IRC 6323 & GC 7171) Statutory lien (secret lien) (IRC 6321 & RTC 19221) Competing state tax liens or state tax lien and federal lien (GC ) Purchase money has priority (CC 2898)

STATE TAX LIENS 12 ORDER TO WITHHOLD (OTW) What is an OTW? Why is an OTW issued? What responsibility do I have to honor the OTW? What if there are insufficient funds to satisfy the OTW? What priority does the OTW have?

STATE TAX LIENS 13 ORDER TO WITHHOLD (OTW) What is an OTW?  An OTW is a legal order that requires you to withhold any funds held in your possession belonging to the debtor. Why is an OTW Issue?  An OTW is issued when a debtor owes the FTB for liabilities not secured by a State Tax Lien.

STATE TAX LIENS 14 ORDER TO WITHHOLD (OTW) What responsibility do I have to honor the OTW?  Failure to withhold and remit the amount held in your possession may make you liable for the amount of the order (RT&C 18672). What if there are insufficient funds to satisfy the OTW?  You are only required to withhold and remit the amount in your possession belonging to the debtor. This may be less than the amount of the order.

STATE TAX LIENS 15 ORDER TO WITHHOLD (OTW) What priority does the OTW have?  The OTW has priority over any debt not secured by a lien holder.

STATE TAX LIENS 16 PAYMENTS Always include copy of demand notice or OTW Place Debtors Name and SSN on face of remittance

STATE TAX LIENS 17 PARTIAL RELEASE AND SUBORDINATION OF LIEN What are they?  A partial lien release will release a specific piece of property from the lien.  A lien subordination permits another lien to take priority over FTB’s lien even though the other lien may not otherwise have priority.

STATE TAX LIENS 18 PARTIAL RELEASE AND SUBORDINATION OF LIEN When should either be considered? Partial release  During the transfer of property, if there are insufficient funds to satisfy our lien Subordination of lien  When refinancing loan and insufficient equity to satisfy the lien  When modifying a loan  When taking out a second mortgage to satisfy a higher priority lien

STATE TAX LIENS 19 PARTIAL RELEASE AND SUBORDINATION OF LIEN How do you apply?  To request a partial release or subordination of lien, call the FTB Lien Group at If it is determined that either is warranted, you will need to include the following with your written request:

STATE TAX LIENS 20 PARTIAL RELEASE AND SUBORDINATION OF LIEN How do you apply (cont’d)? 1.Letter of explanation 2.Estimated closing statement 3.Current title report 4.Appraisal 5.Documentation to substantiate payoff of lien holders 6.Copy of new Deed of Trust (Subordinations only)

STATE TAX LIENS 21 PARTIAL RELEASE AND SUBORDINATION OF LIEN How are they evaluated? Some of the key items reviewed during the evaluation process include:  Verification of fair market value of property  Excessive charges for repair  Excessive fees and commission charges  Verification that payments are only made to priority lien-holders

STATE TAX LIENS 22 PARTIAL RELEASE >SHORT SALE Request and Review Process is the same as any other partial lien release request Helpful items to expedite the review process  Short Sale Agreement from lender  Estimated closing date  Notice of Default/Foreclosure Notice (if applicable)

STATE TAX LIENS 23 WHAT’S NEW? Effective 2/9/07 FTB began masking the first 5-digits of the SSN on recordable lien documents. Example:XXX-XX-0000

STATE TAX LIENS 24 WHAT’S IN THE FUTURE? Expansion of electronic liens Title Exclusion Letter

STATE TAX LIENS 25 WHAT’S IN THE FUTURE? Title Exclusion Letter

STATE TAX LIENS 26 QUESTIONS???