I am a member of the State Bar of California, the Bar of the U.S. District Court for the Central District of California (San Luis Obispo, Santa Barbara, Ventura, Los Angeles, Orange, San Bernardino, Riverside Counties), and the California and National Associations of Realtors. Please permit me to assist.
This is what is known as an "administrative offset." There is no statute of limitations for an offset claim. Code Civ. Proc. § 431.70; see Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 195.
Since the money will most likely come from your taxes, the best way to avoid paying is to make certain that you are never entitled to a refund on your state (not federal) income taxes.
If you are an employee, adjust your W-4 so that you will owe less than $1,000 at year end. That way you will incur no tax penalties and the FTB will not be able to offset your refund.
Alternatively, you can try to negotiate a settlement, or you could appeal the offset with the State Board of Equalization, once it occurs -- but, that would be a giant litigation nightmare. Better to just make sure you are never entitled to a tax refund from the State.
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