The Sacramento County Department of Child Support Services must alert the California State Franchise Tax Board anytime a paying parent (non-custodial parent) is more than $100.00 and 30 days past due in paying child support. The California State Franchise Tax Board can take funds from a paying parent’s wages, bank accounts, rental incomes, royalties, dividends, bonus pay and commissions. The California State Franchise Tax Board can also issue an Income Withholding Order (IWO) as well as take real and personal property, such as vacant land, cash, safe deposit boxes, vehicles, and even boats, to collect child support.

Once delinquent child support cases are submitted to the California State Franchise Tax Board Child Support Collection Program and accepted, FTB will send out a Demand for Payment notice to the paying parent (non-custodial parent). If the notice does not result in a child support payment, FTB has the option to issue a levy against the paying parent’s wages, bank accounts, or any of the other paying parent’s assets as noted above. An FTB bank levy can require the bank to withhold up to the total amount of child support arrears owed on the child support case. An IWO can require an employer to withhold up to 50% of the paying parent’s (non-custodial parent’s) net disposable income. These actions are taken under administrative authority and so are much faster than judicial proceedings. The Franchise Tax Board Child Support Collections Program is administered by California State FTB and when money is collected, it is forwarded to the Child Support Services State Distribution Unit for disbursement.

Regulation Change!! Effective July 1, 2004, AB 1752 (Assembly Bill 1752) amended the Revenue and Taxation Code (RTC) 19271.6 to require that all child support cases, including child support cases with functioning wage assignments and child support cases that have been open with the Local Child Support Agency for less than 90 days, be submitted to the California State FTB. However, the first $3,500 of a paying parent’s assets in a financial institution is exempt from collection without a Claim of Exemption being filed if any of the following exist:

(1) A paying parent is in compliance with a child support court order to make scheduled payments on a child support arrears obligation.

(2) An income withholding order (IWO) or an order/notice to withhold that includes an amount for past-due child support arrears is in place and the paying parent’s earnings are being withheld pursuant to that order .

–OR-

(3) At least 50 percent of the paying parent’s (obligor’s) earnings are currently being withheld for child support.

In addition to the $3,500 exemption, paying parent (obligor) in the three situations set out above may apply for a Claim of Exemption for up to the total amount of bank funds levied. The only basis for a Claim of Exemption is the financial hardship of the paying parent (obligor) and the paying parent’s (obligor’s) dependents. To make a Claim of Exemption, the paying parent (obligor) must file a Claim of Exemption form with the Local Child Support Agency within 10 days of receipt of the Demand for Payment Notice from the California State FTB.

What does this mean? This new regulation requires that all child support cases be referred to the California State Franchise Tax Board for assistance in collecting child support, even those cases in which the paying parent (non-custodial parent) is paying regularly. FTB is then required to seize funds in bank and brokerage accounts. The first $3,500 total in those accounts is “safe” from seizure, without any action on behalf of the paying parent (non-custodial parent). In order to oppose the seizure of funds over $3,500, a paying parent (non-custodial parent) must file a Claim of Exemption form with the Local Child Support Agency on whose behalf FTB is collecting. The Claim of Exemption form is available on this website under Forms.

If you are a paying parent and have an IWO (income withholding order) on your wages at your place of employment or would like to file a Claim of Exemption please contact our Public Service Center at (866) 901-3212 for assistance.