STOCKTON (CBS13) — Constantly coughing while he waits for a lung transplant, Jay Mahendran said the last thing he needed was to learn the California Franchise Tax Board filed a lien against his home, for taxes he already paid.

“This is something I don’t need in my life,” he said. “I’m already under a lot of stress; physically, mentally.”

The letter from the Franchise Tax Board gave him 15 days to pay $8,042 or threatened to go after more, including his bank account.

“$8,042 is a lot of money for a person like me,” he said.

California law states he should’ve received three warning letters before that lien was filed. These letters give Californians a chance to clear up mistakes.

The state knows where Jay lives because he filed taxes from the same address, but we learned the agency sent his warning letters to an address he hasn’t used in more than three years.

“Anyone you talk to at the Franchise Tax Board is a nightmare,” he said.

We sat down with Franchise Tax Board spokesman Jacob Roper.

Kurtis: You know where the guy lives. You filed a lien against his property. How did you not send a warning letter to that address?

Roper: It shouldn’t have been done that way. We fully acknowledge that was an error.

Our investigation uncovered between 2014 and 2016, the Franchise Tax Board Classified 41,486 liens as “filed in error.” Roper says it’s not what it seems, saying some of these are really old accounts tied to debt the State thinks is uncollectable.

Kurtis: Why would you classify it as filed in error?

Roper: So it doesn’t stay on their credit report.

Kurtis: You’ll list things as filed in error, even if it wasn’t an error?

Roper: That’s right. That way it goes off that person’s credit report

Kurtis: Isn’t there a classification that would be more honest than claiming it was filed in error?

Roper: I don’t know. It’s the one we use currently because it’s the one we know will not impact the taxpayer’s credit.

VIEWERS SAY TAX BOARD TOOK MONEY FROM THEM WITHOUT ANY WARNING

CBS13 has heard from several viewers over the years, who say the Franchise Tax Board garnished their tax refunds in error and even raided their bank accounts for money they didn’t owe.

In each case, our viewers complained the State refused to refund the money.

“You’re telling me now I have to prove myself innocent to get back my own money,” said Anthony Jones of Elk Grove.

Despite being a state employee, Randy Settlemire who filed his taxes on time from his current address, says the Franchise Tax Board sent his warning letter to address he hasn’t used in years.

“It borders on criminal activity in my opinion,” Settlemire said.

Jon Coupal of the Howard Jarvis Taxpayers Association says depriving people of, “life, liberty, or property, without due process of law” violates the United States Constitution.

“The government is supposed to work for us. Not the other way around,” Coupal said.

Kurtis: Are you violating the U.S. Constitution?

Roper: No. Not to my knowledge.

But we pointed out these people have had money taken from them, or liens placed on their property by mistake, without due process.

“Sometimes those notices haven’t been addressed as well as they could have, and that’s what we’re working on,” Roper said.

STATE KNOWS YOUR ADDRESS, BUT SENDS WARNING LETTERS ELSEWHERE

After the agency spent months resisting our questions over a potential systemic problem with where these warning letters are mailed, the agency now tells CBS13 when it collects on many debts, it relies on outside address databases, despite having your current address from when you last filed taxes.

“There’s a Federal tax law that says you cannot use taxpayer information to collect a non-tax debt,” Roper said.

The Franchise Tax Board serves as a collection agency for more than 500 government agencies, which may include non-tax debt for things like unpaid parking tickets.

Kurtis: So your office knows these people’s addresses, but there’s a law that says your people can’t look at that address and send it to the correct address?

Roper: Yes.

Kurtis: It seems ass-backwards?

Roper: It’s frustrating.

NEW CONCLUSION

After our investigation, attorneys for the Franchise Tax Board have come to the new conclusion that the agency can now legally separate just the address portion out of your tax return, and mail warnings letters to that address.

“Taxpayers have the right to be notified beforehand, so they get time to take care of it; especially if it’s money they don’t owe,” Roper said. “We don’t want to rob them of that time.”

In each case after we got involved, the Franchise Tax Board fixed the issues, refunding our viewers. In Jay’s case, the State removed the lien against his home allowing him to focus on his health battle, instead of one with the State agency.

“That’s a big relief to me,” he said. “It’s a very scary situation.”