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.