California’s Offset Program Expands
The California offset program expanded to allow reciprocal agreements for California to collect debts from out-of-state residents. The Delinquent Taxpayer Accountability Act added Revenue and Taxation Code Section 19377.5, granting us the authority to enter into reciprocal agreements with other states to offset refunds to pay personal income tax (PIT) debts owed to the partner state.
In May 2013, we sent out 11,000 Multistate Refund Offset Notices to PIT taxpayers with delinquent California income tax liabilities and a New York state address.
To avoid offset, the letters instructed the New York residents to do one of the following:
- Pay their California balance in full.
- Provide evidence that the debt is not past due or not legally enforceable.
The letters also stated that if they did not respond within 30 days, we would submit their balance due to the New York State Department of Taxation and Finance to offset eligible income tax refunds due to them.
These agreements will enhance our ability to collect from taxpayers who reside out of state. Currently, the only state that we partner with at this time is New York.
If one of your clients receives a Multistate Refund Offset Notice, the phone number to contact is 916.845.2867.