Leaving California? Tell The DMV

September 23, 2013 | Kate Horrell

I recently heard about a ridiculous practice carried out by the State of California.  Apparently, if have a motor vehicle registered and move out-of-state, you have the obligation to let the Department of Motor Vehicles (DMV) know that the car and you have left.  Otherwise, they will assume that you still live there, continue sending notices to your California address, and eventually levy your bank account to pay whatever fees they think you owe.

The problem starts out simply enough.  You live in California, and you register a car there.  Then, you move out-of-state.  You register your car in the new state and figure that you’re good.  Right?  That’s the way it has probably worked when you’ve moved out of any other state.  But not California.  Under their laws, you are obligated to notify them when you leave the state and register your car elsewhere.  Apparently, they can figure out when you get a driver’s license elsewhere, but they can’t be bothered to figure out if you’ve registered your car elsewhere.

So, let’s say you fail to take the step of notifying the California Department of Motor Vehicles (DMV) that you’ve left and taken your car with you?  Well, the DMV will assume the vehicle is still in California, and assess you charges.  AND, they’ll send the notices to your California address.  When you don’t respond to the notices you’re not getting, they’ll transfer the debt to the Franchise Tax Board (FTB.)  The FTB will send you another notice, to the California address where you no longer live, and then they’ll attempt to collect the funds through other methods.  These other methods include levying your bank account, or garnishing a portion of your wages.  And you still don’t even know what is going on!

So, the DMV has transferred this debt (what it actually represents, I still don’t know) to the FTB.  And the FTB decides to levy your bank account.  Either they already know where you bank, through some nefarious methods, or they just blanket levy a bunch of banks in hopes that they’ll catch you banking with one.  A recent change in law has made it easier for the FTB to hit many banks at once, and that has resulted in an increase in levies being successful.

When your bank gets a request to levy your account, they have to check and make sure it is legitimate.  This will cause your bank to charge you a fee, usually $100.  (It’s in your Depository Agreement that you signed when you opened the account.)  Because it is legal, they’ll then take the amount of the levy out of your account.  They’ll probably send you a letter, but depending on the details, you might not get the letter until your account has already been debited.  You might be doing a routine check of your bank account, or trying to make a purchase, and you discover that your account is several hundred dollars short of the balance that you were expecting to see.  That is never a good feeling!

You call your bank, who tells you to call the DMV in California.  After stress, aggregation and hassle, you work out that you need to tell them in writing that you’ve moved the car out-of-state (or out of the country).  You fulfill this request, and California (probably) agrees to refund the money you’ve had levied.  Eventually.

In the meantime, your bank account is short money, and you’ve got this bank fee that no one is going to refund.  Pretty much a crappy situation all around.

This happens to civilians and military folks on a regular basis.  The worst part?  I’ve heard of this happening years after leaving the state.  A reader told me today that her bank account was just levied for a vehicle that left California in 2009.  Seriously?  That is just crazy.

Moral of the story:  If you have a car registered in California, and you leave California, TELL THEM.  If you are moving to California, and you’re not required to register your car there due to your military service, think seriously about the hassles of dealing with a California registration.

If you know anyone who lives in California and is moving out-of-state, please make sure to share this information.  I’m sure they will appreciate it.

Comments

  1. guest says:

    Well part of it may be that CA, if you are active duty non resident, you don't have to pay CA state taxes, registering a car out of state (especially if CA is your home of record) is one of the ways to establish residency in a state other then CA and lets face it, why are they going to make it easy on you to not have to pay them thousands in taxes ;-)

  2. I'm glad I never registered a car there. 20+ years ago CA was extremely aggressive about collecting capital gains taxes on our sale of a condo, with threatening letters and convenient "fill in here" forms that could be sent in postage-free business reply envelopes (along with a check).

    Homeowners had to know that the capital gains were not subject to tax (or seek the advice of a tax adviser) but I'm sure that at least half of the people who got those ominous letters sent back money just to avoid more hassle.

    30 years ago Virginia was just as bad with cars registered in Maryland. If you regularly parked your car (with MD plates) at a Virginia residence, you eventually got a police-delivered registration warning under your windshield wiper. Military had to know how to procure the correct exemption forms from their command, but again I'm sure many servicemembers simply gave in to the pressure and paid the VA registration fees.

    Perhaps CA & VA could take note of the military-friendly tax policies of Florida, Texas, and Pennsylvania!

  3. guest says:

    never had this happen to me or anyone I know. I have been stationed here x3 different times with cars. maybe it is a new policy.

  4. Justin says:

    I left CA in 2006 to move to NV, and they recently sent me notices that I had to prove why I did NOT owe them taxes for two previous years (2009 and 2010, when I had not lived there), with threats to send *assumed* tax amounts to collections if I couldn't prove that I didn't, in fact, owe them that money. F___ that Commie state.

    • KateKashman says:

      Justin, while I agree that it is ridiculous, please work with them. The State will levy your bank account. Not only will this cost you money and aggrevation, but it will probably also show up on your credit report. Good luck to you!

  5. Laura says:

    FYI: A levy was placed on our accounts today FIVE YEARS after leaving CA with our truck (also 2009!). It was fixed in one phone call. The # for the CA State Franchise Tax Board is 916-657-8120.

  6. Laura says:

    Also I meant FOUR years, capitalized for emphasis on the length of time lapsed.

  7. Michael says:

    I just got levied for a car that hasn't been in california since January 2011. I'm a civillian. The car has been registered in both Oregon and Washington since then. This is the SECOND time they've done this since I left.

  8. Nick says:

    Great explanation. I've just had the exact scenario painted above happen to me. Smart move by the shady California government, slap levies on people that no longer vote.

  9. Nick says:

    It took me only a few minutes on the phone to figure it out with the California DMV.

  10. zv1n says:

    Just happened to me. Left in 2008. There is a form you can use to request the bank money back from the DMV (DMV 10 (REV. 5/2010) ). I was told that all I had to do was show that I was charged money, and since they dropped the levy, they would pay the fee imposed by my bank. I was told this by a DMV employee, but I don't know if its necessarily true. I will, however, be mailing the form off today. May report back, if I remember.

    IANAL, but this sounds like Class Action material ^_^.

  11. tmarks11 says:

    MD does the same thing. The charge you a weekly $50 charge after your auto registration lapses as a fine for "failure to maintain insurance".

    When you go to the DMV to get this fixed, they spend 30 seconds with their computer to verify that you have indeed registered out of state before your registration lapses, and cancel the levied charges.

    I don't know what they do if you live 3000 miles away, and can't drive easily to the MD DMV…