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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Sales and Use Tax Law > Chapter 6 > entire chapter

Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 6. Collection of Tax

Article 9. Collection of Tax Debts Due to the Internal Revenue Service or Other States

6850 Agreement to collect tax debt due the Internal Revenue Service or other states

Article 1. Security for Tax

6701. Security. The board, whenever it deems it necessary to insure compliance with this part, may require any person subject thereto, to place with it such security that the board may determine. Any security in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions shall be held by the board in trust to be used solely in the manner provided by this section and Section 6815. The amount of the security shall be fixed by the board but, except as noted below, shall not be greater than twice the estimated average liability of persons filing returns for quarterly periods or three times the estimated average liability of persons required to file returns for monthly periods, determined in the manner that the board deems proper, or fifty thousand dollars ($50,000), whichever amount is the lesser. In case of a person who, pursuant to Section 6070 of this part, has been given notice of hearing to show cause why his or her permit or permits should not be revoked, or a person whose permit or permits has been revoked or suspended, the amount of the security shall not be greater than three times the average liability of persons filing returns for quarterly periods or five times the average liability of persons required to file returns for monthly periods, or fifty thousand dollars ($50,000), whichever amount is the lesser. The limitations herein provided apply regardless of the type of security placed with the board. The amount of the security may be increased or decreased by the board subject to the limitations herein provided. Security held by the board shall be released after a three-year period in which the person has filed all returns and paid all tax to the state or any amount of tax required to be collected and paid to the state within the time required. The board may sell the security at public auction if it becomes necessary so to do in order to recover any tax or any amount required to be collected, interest, or penalty due. Notice of the sale may be served upon the person who placed the security personally or by mail; if by mail, service shall be made in the manner prescribed for service of a notice of a deficiency determination and shall be addressed to the person at his or her address as it appears in the records of the board. Upon any sale any surplus above the amounts due shall be returned to the person who placed the security.

History—Stats. 1945, p. 1725, operative July 1, 1945, added next to last sentence. Stats. 1947, p. 1557, operative July 1, 1947, added provision in second sentence limiting amount of security to three times estimated average liability of persons filing returns monthly. Stats. 1955, p. 1450, in effect September 7, 1955, substituted "place" and "placed" for "deposit" and "deposited", respectively, throughout section, added "except as noted below" in second sentence, and added third and fourth sentences. Stats. 1991, Ch. 236, in effect July 29, 1991, added the second sentence, and added "or her" after "him" in the fourth and eighth sentences. Stats. 1994, Ch. 903, in effect January 1, 1995, substituted "that" for "as" after "security" in the first sentence, substituted "the" for "such" after "determined in" and "that" for "as" after "manner" in the third sentence, and deleted former ninth sentence which provided, "Security in the form of a bearer bond issued by the United States or the State of California which has a prevailing market price may, however, be sold by the board at private sale at a price not lower than the prevailing market price thereof." Stats. 1996, Ch. 1087, in effect January 1, 1997, substituted "fifty thousand dollars ($50,000)" for "ten thousand dollars ($10,000)" in the third and fourth sentences, and added the seventh sentence.

Surety liable on bond.—Surety was held liable on a bond in effect prior to the termination of a prior bond by another surety when the subsequent bond stated the date of effectiveness and the surety collected the premium on the bond even though the board did not approve the bond until a later date, and the fact that both bonds total more than $10,000 did not preclude the board from asserting the claim against the subsequent bond. People v. Great American Ins. Co. (1963) 222 Cal.App.2d 552.

Duplicate notice to surety not required.—Plaintiff, an insurance company acting as surety for persons required to post security for payment of sales and use taxes, sought a refund of certain penalties paid by it on its bonds. Plaintiff contended that it was entitled to duplicate notice of tax determinations issued against its principals, so that it could make payment of the tax before the determinations become final and penalties were added thereto. The court, in affirming the judgment of the trial court, held that there is no constitutional compulsion for the state to give a duplicate notice to the surety; notice to the taxpayer is sufficient. Nor was this a situation requiring notice to the surety under Civil Code Section 2808, because the surety could have acquired notice of default from its principal through the exercise of due diligence. Lastly, the court held this was not an illegal agreement to indemnify a wrongdoer prohibited by Civil Code Section 2773, because here the indemnity was for the benefit of the State under a reasonable procedure to secure payment of revenue. American Fidelity Fire Insurance Co. v. State Board of Equalization (1973) 34 Cal.App.3d 51, cert. denied (1974) 415 U.S. 990.

Surety liable for penalties and interest on transactions occurring prior to cancellation of bond.—The State of California sought to enforce respondent's liability on a surety bond for penalties and interest assessed against respondent's principal subsequent to the effective date of the cancellation of the bond. The penalties and interest were assessed for transactions all of which had occurred prior to the cancellation date. The contract of surety provided that the surety could terminate its liability to the extent and in the manner set forth in Civil Code Section 2851, but that in no event would the surety be relieved from liability as respects transactions occurring before the effective date of cancellation of the bond. The surety contended that it was not liable for penalties and interest assessed subsequent to the cancellation of the bond since Civil Code Section 2851 provides that after the effective date of cancellation "… the surety is relieved of all liability which otherwise thereafter would arise on its bond." The court, observing that Section 2851 does not stand alone but must be applied to the contract of surety, held that respondent had waived the provisions of Civil Code Section 2851 and had agreed to be liable for the sums at issue. Since no public policy dictated that the agreement not be enforced, its terms were binding upon respondent. People v. Pacific Employers Ins. Co. (1973) 36 Cal.App.3d 296.

Surety not exonerated because of taxpayer's waiver.—A surety who had guaranteed the tax liability of the taxpayer was not exonerated of such liability because of a waiver signed by the taxpayer extending the time in which the Board might issue a delinquency determination. The language of the Board's standard guarantee form that "the surety's liability shall be coextensive with that of the taxpayer" overrides the provision of Civil Code Section 2819 exonerating a surety if the terms of the principals obligations are altered without the surety's consent. State Board of Equalization v. Carleton (1990) 223 Cal.App.3d 1607.

Bankruptcy.—Property held by the Board as security prior to the taxpayer's filing of a petition for reorganization pursuant to Chapter 11 of the bankruptcy law belongs to the bankruptcy estate and is not immune from the claims of general creditors. The Board violated the automatic stay in bankruptcy by cashing the certificate of deposit taken as security from the taxpayer. In re Sluggo's Chicago Style, Inc. (9th Cir., 1990) 912 F.2d 1073.

6702. Notice to creditors. (a) If any person is delinquent in the payment of the amount required to be paid by him or her or in the event a determination has been made against him or her which remains unpaid, the board may, not later than three years after the payment became delinquent, or within 10 years after the last recording of an abstract under Section 6738 or the last recording or filing of a notice of state tax lien under Section 7171 of the Government Code, give notice thereof personally or by first-class mail to all persons, including any officer or department of the state or any political subdivision or agency of the state, having in their possession or under their control any credits or other personal property belonging to the delinquent, or person against whom a determination has been made which remains unpaid, or owing any debts to the delinquent or that person. In the case of any state officer, department, or agency, the notice shall be given to the officer, department, or agency prior to the time it presents the claim of the delinquent taxpayer to the Controller. After receiving the notice the persons so notified shall neither transfer nor make any other disposition of the credits, other personal property, or debts in their possession or under their control at the time they receive the notice until the board consents to a transfer or disposition or until 60 days elapse after the receipt of the notice, whichever period expires the earlier. All persons so notified shall forthwith after receipt of the notice advise the board of all those credits, other personal property, or debts in their possession, under their control, or owing by them.

(b) If the notice seeks to prevent the transfer or other disposition of a deposit in a bank or a state or federal savings and loan association or other credits or personal property in the possession or under the control of a bank or a state or federal savings and loan association, the notice to be effective shall state the amount, interest, and penalty due from the person, and shall be delivered or mailed to the branch or office of the bank or a state or federal savings and loan association at which the deposit is carried or at which the credits or personal property is held. A bank, state or federal savings and loan association, or a state or federal credit union withholding any deposit or other credits or personal property required to be withheld in which the delinquent taxpayer and another person or persons have an interest, or held in the name of a third party or parties in which the delinquent taxpayer is ultimately determined to have no interest, is not liable therefor to any of the persons who have an interest in the deposit or other credits or personal property unless the deposit or other credits or personal property is released or transferred to the delinquent taxpayer.

(c) In the case of a deposit or other credits or personal property for which the transfer or other disposition is prevented, the depository institution required to prevent transfer or other disposition shall send a notice by first-class mail to each person named on a deposit, other credits, or personal property included in the notice from the board, provided a current address for each person is available to the institution. This notice shall inform each person as to the reason for preventing transfer or disposition of the deposit or other credits or personal property, the amount thereof which is prevented from transfer or other disposition, and the date by which that amount is to be remitted to the board. An institution may assess the deposit or other credits or personal property of each person receiving this notice a reasonable service charge not to exceed three dollars ($3).

(d) Notwithstanding any other provision, with respect to a deposit in a bank or other credits or personal property in the possession or under the control of a bank or a state or federal savings and loan association, the aggregate amount of deposits, credits, or personal property to be withheld shall be an amount equal to two times the amount of the tax, interest, or penalty due from the person. If, during the effective period of the notice to withhold, any person so notified makes any transfer or disposition of the property or debts required to be withheld, to the extent of the value of the property or the amount of the debts thus transferred or paid he or she shall be liable to the state for any indebtedness due under this part from the person with respect to whose obligation the notice was given if solely by reason of that transfer or disposition the state is unable to recover the indebtedness of the person with respect to whose obligation the notice was given.

History—Stats. 1943, p. 2457, operative July 1, 1943, increased limitation period to three years after recording of abstract or certificate. Stats. 1949, p. 1344, operative July 1, 1949, added "personally or," "or person against whom a determination has been made which remains unpaid" and "or such person" to the first sentence; substituted "60" for "20" and added "whichever period expires the earlier" to the second sentence; substituted "forthwith" for "within five days" in the third sentence; added the last two sentences. Stats. 1951, p. 2389, operative July 1, 1951, added "officer or department of the State or any political subdivision or agency of the State" as persons to whom notice may be given prior to presentation of the delinquent taxpayer's claim to the State Controller. Stats. 1971, p. 3526, operative January 1, 1972, applicable only with respect to certificates of lien or abstracts of judgment filed on or after that date. Substituted "within 10 years after the last recording" for "within 3 years after the last recording" in first sentence. Stats. 1972, Ch. 103, operative April 1, 1973, added "shall state the amount, interest and penalty due from the person and" to the fifth sentence, and added the sixth sentence. Stats. 1978, Ch. 827, effective January 1, 1979, in the first sentence substituted "first-class" for "registered". Stats. 1980, Ch. 600, operative January 1, 1981, substituted present wording between "Section 6738 or" and "give notice" for "of a certificate under Section 6757" in first sentence, added "or a state or federal savings and loan association" where it appears following "bank", and substituted present wording following "control of a bank," in sixth sentence for former wording. Stats. 1984, Ch. 562, effective January 1, 1985, added subdivision designations, in (a) substituted "he or she" for "he" and "him or her" for "him" throughout section, substituted "that" for "such" after "to the delinquent or," substituted "the" for "such" before "officer," deleted "State" before "Controller," in (b) substituted "the" for "such" before "notice," substituted "the" for "such" before "credits," added "A bank, state … taxpayer," at end of (a), added text of (c), deleted "hereunder" after "withheld," substituted "that" for "such" before "transfer or disposition."

Text of Section Operative Through June 30, 2001

6703. Notice of levy. (a) Subject to the limitations in subdivisions (b) and (c), the board may by notice of levy, served personally or by first-class mail, require all persons having in their possession, or under their control, any credits or other personal property belonging to a retailer or other person liable for any amount under this part to withhold from such credits or other personal property the amount of any tax, interest, or penalties due from such retailer or other person, or the amount of any liability incurred by them under this part, and to transmit the amount withheld to the board at such times as it may designate. The notice of levy shall have the same effect as a levy pursuant to a writ of execution.

(b) The person served shall continue to withhold pursuant to the notice of levy until the amount specified in the notice, including accrued interest, has been paid in full, until the notice is withdrawn, or until one year from the date the notice is received, whichever occurs first.

(1) The amount due stated on the notice.

(2) The amount of each payment due or becoming due to the retailer or other person liable during the period of the levy.

(d) For the purposes of this section, the term "payments" does not include earnings as that term is defined in subdivision (a) of Section 706.011 of the Code of Civil Procedure or funds in a deposit account as defined in Section 9105 of the Commercial Code. The term "payments" does include any of the following:

(1) Payments due for services of independent contractors, dividends, rents, royalties, residuals, patent rights, mineral or other natural rights.

(2) Payments or credits due or becoming due periodically as a result of an enforceable obligation to the retailer or other person liable for the tax.

(3) Any other payments or credits due or becoming due the retailer or other person liable as the result of written or oral contracts for services or sales whether denominated as wages, salary, commission, bonus, or otherwise.

(e) In the case of a financial institution, to be effective, the notice shall state the amount due from the taxpayer and shall be delivered or mailed to the branch or office of the financial institution where the credits or other property is held, unless another branch or office is designated by the financial institution to receive the notice.

History—Added by Stats. 1982, Ch. 1589, in effect January 1, 1983. Stats. 1984, Ch. 1490, effective September 27, 1984, added subdivision designations, added "Subject … (c)" before "the board" in (a), added all text of (b) through (d). Stats. 1987, Ch. 38, in effect January 1, 1988, added last sentence in paragraph (a), in paragraph (b), changed "Notice of Levy" to "notice of levy".

Text of Section Operative July 1, 2001

6703. Notice of levy. (a) Subject to the limitations in subdivisions (b) and (c), the department may by notice of levy, served personally, by first-class mail, or by electronic transmission or other electronic technology, require all persons having in their possession, or under their control, any credits or other personal property belonging to a retailer or other person liable for any amount under this part to withhold from such credits or other personal property the amount of any tax, interest, or penalties due from such retailer or other person, or the amount of any liability incurred by them under this part, and to transmit the amount withheld to the department at such times as it may designate. The notice of levy shall have the same effect as a levy pursuant to a writ of execution.

(1) The amount due stated on the notice.

(2) The amount of each payment due or becoming due to the retailer or other person liable during the period of the levy.

(d) For the purposes of this section, the term "payments" does not include earnings as that term is defined in subdivision (a) of Section 706.011 of the Code of Civil Procedure or funds in a deposit account as defined in paragraph (29) of subdivision (a) of Section 9102 of the Commercial Code. The term "payments" does include any of the following:

(1) Payments due for services of independent contractors, dividends, rents, royalties, residuals, patent rights, mineral or other natural rights.

(2) Payments or credits due or becoming due periodically as a result of an enforceable obligation to the retailer or other person liable for the tax.

(e)In the case of a financial institution, to be effective, the notice shall state the amount due from the taxpayer and shall be delivered, mailed, or served by electronic transmission or other electronic technology to the branch or office of the financial institution where the credits or other property is held, unless another branch or office is designated by the financial institution to receive the notice.

History—Stats. 1999, Ch. 991, (SB 45), in effect January 1, 2000, but operative July 1, 2001, substituted "paragraph 29 of subdivision (a) of Section 9105" for "Section 9102" in subdivision (d). Amended by Stats. 2022, Ch. 474 (SB1496), in effect January 1, 2023, replaced "board" with "department" throughout, deleted "or" before "first class mail" and added "or by electronic transmission or other electronic technology" after in subdivision (a), and deleted "or mailed" and added "mailed, or served by electronic transmission or other electronic technology" in subdivision (e).

6704. Withheld earnings; employer's liability. (a) Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines upon receiving information from a retailer or other person liable for any amount under this part that the person's employer withheld earnings for taxes pursuant to Section 6703 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board's determination shall be based on payroll documents or other substantiating evidence furnished by the person liable for the tax.

(b) Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted.

(c) If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld.

(d) When the determination against the employer is final and due and payable, the person's account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer.

(e) Collection against the person liable for the tax is stayed for both the following amount and period:

(1) An amount equal to the amount determined by the board under subdivision (a).

(2) The earlier of the time the credit is applied to the person's account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof.

(f) If under this section an amount that was withheld and not remitted to the board is final and due and payable by the employer and credited to the person's account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer.

(g) This section shall apply to determinations made by the board on or after the effective date of the act adding this section.

History—Added by Stats. 2000, Ch. 1052 (AB 2898), in effect January 1, 2001.

Article 2. Suit for Tax

6711. Court action. At any time within three years after any tax or any amount of tax required to be collected becomes due and payable and at any time within three years after the delinquency of any tax or any amount of tax required to be collected, or within the period during which a lien is in force as the result of the recording of an abstract under Section 6738 or the recording or filing of a notice of state tax lien under Section 7171 of the Government Code, the board may bring an action in the courts of this state, of any other state, or of the United States in the name of the people of the State of California to collect the amount delinquent together with penalties and interest.

History—Stats. 1943, p. 2458, operative July 1, 1943, added provision permitting action within three years of recordation of abstract or certificate. Stats. 1969, p. 1821, in effect November 10, 1969, operative January 1, 1970, substituted "the period during which a lien is in force as the result of the" for "three years after the last", and added the reference to Section 6757.5. Stats. 1977, Ch. 481, operative July 1, 1978, substituted "the recording or filing of a notice of state tax lien under Section 6757," for "of a certificate under Section 6757 or 6757.5,". Stats. 1980, Ch. 600, operative January 1, 1981, substituted "Section 7171 of the Government Code" for "Section 6757".

When tax is "delinquent."—An action brought within three years of the service of notice of an additional assessment is timely, even though more than three years has elapsed since the fifteenth day following the close of the period for which the assessment is made. People v. Hochwender (1942) 20 Cal.2d 181; People v. West Publishing Co. (1950) 35 Cal.2d 80.

An action brought within three years from 30 days after mailing of notice of redermination is timely, since the determination did not become final until 30 days after service of the notice. People v. Nymer (1945) 71 Cal.App.2d 550.

Statute of limitations—alter ego.—The statute of limitations does not bar an action against the defendant where the defendant is the alter ego of a tax debtor corporation and a certificate of delinquency has been duly filed against the tax debtor corporation prior to the running of the statute of limitations. People v. Clauson, People v. Miller, People v. Johnson (1964) 231 Cal.App.2d 374.

Statute of limitations.—Where an action was filed more than three years after the recording of a certificate and before the recording of a new certificate under Section 6757, the action was barred by the statute of limitations. People v. Smejkal (1968) 266 Cal.App.2d 971.

Action on Surety Contract—Effect of Time Extension Before Cause of Action Barred.—An Action to enforce the liability of a surety for delinquent taxes of its principal was held timely under this section when brought three years and five months after the cause of action arose, i.e., the date the determination of tax became final, where the prior limitation period of three years was extended by the Legislature before the cause of action was barred under the prior period. People v. United States Fire Insurance Co. (1976) 61 Cal.App.3d 231.

Statute of Limitations.—The State can bring an in personam action within three years after the tax becomes due and payable, but no later. People v. Garg (1993) 16 Cal.App.4th 357.

Fraudulent transfer.—Agreement between spouses transmuting future earnings from community property to separate property was fraudulent transfer, in violation of Family Code section 851 and Civil Code section 3439.04(a), since the taxpayer had a present interest in the future earnings of his spouse and the purpose for the agreement was to avoid having the spouse's earnings be community property which could be used to pay the tax debt of the taxpayer. State Board of Equalization v. Woo (2000) 82 Cal.App.4th 481.

6712. Rules of procedure. The Attorney General shall prosecute the action, and the provisions of the Code of Civil Procedure relating to service of summons, pleadings, proofs, trials, and appeals are applicable to the proceedings.

6713. Attachment. In the action a writ of attachment may be issued in the manner provided by Chapter 5 (commencing with Section 485.010) of Title 6.5 of Part 2 of the Code of Civil Procedure without the showing required by Section 485.010 of the Code of Civil Procedure.

History—Stats. 1974, Ch. 1516, effective January 1, 1975, deleted the statement that no bond or affidavit was required previous to the issuing of the attachment, and added the proviso that the writ of attachment may be issued in the described manner.

6714. Certificate of delinquency. In the action a certificate by the board showing the delinquency shall be prima facie evidence of the determination of the tax or the amount of tax, of the delinquency of the amounts set forth, and of the compliance by the board with all the provisions of this part in relation to the computation and determination of the amounts.

Presumption of correctness.—A certificate of delinquency carries with it the presumption that the board's determination is correct. The taypayer has the burden of proving not only that the determination, based upon his records, is incorrect, but also of producing evidence from which another and proper determination may be made. People v. Schwartz (1947) 31 Cal.2d 59.

Board's certificate sufficient to establish prima facie case.—In action to collect delinquent sales taxes the certificate provided for by this section is sufficient to establish a prima facie case. Consequently, when such a certificate has been submitted in evidence, a motion for a directed verdict may not be granted. People v. Mahoney (1939) 13 Cal.2d 729.

Board's certificate not sufficient to establish fraud.—In a suit for refund of sales tax paid pursuant to a deficiency determination issued after the period of limitations had run, the burden of proving fraud is on the State Board of Equalization. Marchica v. State Board of Equalization (1951) 107 Cal.App.2d 501.

6715. Service of process. In any action relating to the use tax brought under this part process may be served according to the Code of Civil Procedure and the Civil Code of this State or may be served upon any agent or clerk in this State employed by any retailer in a place of business maintained by the retailer in this State. In the latter case a copy of the process shall forthwith be sent by registered mail to the retailer at his principal or home office.

Article 3. Judgment for Tax

6736. Request for judgment. If any amount required to be paid to the State under this part is not paid when due, the board may, within ten years after the amount is due, file in the office of the Clerk of the Superior Court of Sacramento County, or any county, a certificate specifying the amount required to be paid, interest and penalty due, the name and address as it appears on the records of the board of the person liable, the compliance of the board with this part in relation to the determination of the amount required to be paid, and a request that judgment be entered against the person in the amount required to be paid, together with interest and penalty as set forth in the certificate.

History—Stats. 1987, Ch. 38, in effect January 1, 1988, changed "within three years" to "within ten years" and changed "county clerk" to "County Clerk". Stats. 2003, Ch. 296 (SB 66), in effect January 1, 2004, deleted "County" after "office of the", and added "the Superior Court of" after "Clerk of".

6737. Entry and filing of judgment. The clerk of the court immediately upon the filing of the certificate shall enter a judgment for the people of the State of California against the person in the amount required to be paid, together with interest and penalty as set forth in this certificate. The clerk of the court may file the judgment in a looseleaf book entitled, "Special Judgments for State Retail Sales or Use Tax."

History—Stats. 2003, Ch. 296 (SB 66), in effect January 1, 2004, deleted "county" after "certificate. The", and added "of the court" after "clerk" in the first and second sentence.

Constitutionality.—The procedure provided by this and the preceding section is not violative of due process of law, nor does it constitute special legislation. People v. Skinner (1941) 18 Cal.2d 349.

Certificate need not be signed by board itself.—Since Section 7052 specifically empowers the board to appoint such assistants as it may deem necessary to enforce its powers and perform its duties, a certificate signed by the tax counsel appointed by the board rather than by the board itself is valid. Id.

6738. Abstract of judgment; lien. An abstract of the judgment or a copy of such judgment may be filed for record with the county recorder of any county. From the time of the filing the amount required to be paid together with interest and penalty set forth constitutes a lien upon all the real property in the county owned by the person liable or afterward and before the lien expires acquired by him. The lien has the force, effect, and priority of a judgment lien and shall continue for 10 years from the date of the judgment so entered by the clerk of the court unless sooner released or otherwise discharged. The lien may within 10 years from the date of the judgment or within 10 years from the date of the last extension of the lien in the manner herein provided, be extended by filing for record in the office of the county recorder of any county an abstract or copy of the judgment and from the time of such filing the lien shall be extended to the property in such county for 10 years unless sooner released or otherwise discharged.

History—Stats. 1957, p. 2020, in effect September 11, 1957, substituted "afterward" for "afterwards" and "10" for "five." Stats. 1965, p. 2464, in effect September 17, 1965, deleted "real" before the word "property" and added the last sentence. Stats. 1977, Ch. 481, operative July 1, 1978, added "of such judgment" in the first sentence; added the word "real" in the second sentence; deleted the last sentence concerning personal property. Stats. 2003, Ch. 296 (SB 66), in effect January 1, 2004, deleted "county" after "entered by the", and added "of the court" after "clerk" in the third sentence.

No priority over private liens.—The liens provided by this section are subordinate to previously recorded private liens. Home Owner's Loan Corporation v. Hansen (1940) 38 Cal.App.2d 748.

6739. Execution. Execution shall issue upon the judgment upon request of the board in the same manner as execution may issue upon other judgments, and sales shall be held under such execution as prescribed in the Code of Civil Procedure.

6740. Release of liens. (a) If the board determines that the amount of tax, interest, and penalties are sufficiently secured by a lien on other property or that the release or subordination of the lien imposed under this article will not jeopardize the collection of the amount of the tax, interest, and penalties, the board may at any time release all or any portion of the property subject to the lien from the lien or may subordinate the lien to other liens and encumbrances.

(b) If the board finds that the liability represented by the lien imposed under this article, including any interest accrued thereon, is legally unenforceable, the board may release the lien.

(c) A certificate by the board to the effect that any property has been released from a lien or that the lien has been subordinated to other liens and encumbrances is conclusive evidence that such property has been released or that the lien has been subordinated as provided in the certificate.

History—Added by Stats. 1980, Ch. 600, operative January 1, 1981.

Article 4. Priority and Lien of Tax

6756. Priority. The amounts required to be paid by any person under this part together with interest and penalties shall be satisfied first in any of the following cases:

(a) Whenever the person is insolvent.

(b) Whenever the person makes a voluntary assignment of his assets.

(c) Whenever the estate of the person in the hands of executors, administrators, or heirs is insufficient to pay all the debts due from the deceased.

(d) Whenever the estate and effects of an absconding, concealed, or absent person required to pay any amount under this part are levied upon by process of law.

This section does not give the state a preference over any lien or security interest which was recorded or perfected prior to the time when the state records or files its lien as provided in Section 7171 of the Government Code.

The preference given to the State by this section shall be subordinate to the preferences given to claims for personal services by Sections 1204 and 1206 of the Code of Civil Procedure.

History—Stats. 1977, Ch. 481, operative July 1, 1978, deleted "recorded lien which attached prior to the date when the amounts required to be paid became a lien." in second paragraph of (d) and added the language following "over any". Stats. 1980, Ch. 600, operative January 1, 1981, substituted "as provided in Section 7171 of the Government Code" for "pursuant to subdivision (b) or (c) of Section 6757".

Expenses of last illness and family allowance prior to sales tax.—Expenses of last illness and family allowance are entitled to priority of payment over a claim for sales tax owing by decedent. Estate of Jacobs (1943) 61 Cal.App.2d 152.

Prior lien creditor.—The state has no preference over a creditor who has a prior lien, recorded or not. Durkin v. Durkin (1955) 133 Cal.App.2d 283.

Interest and penalties.—Where the taxpayer makes a voluntary assignment for the benefit of creditors, the state has priority as to interest and penalties accruing subsequent to the date of assignment as well as to the taxes and the interest and penalties accruing up to the date of the assignment. People v. Warfel (1958) 162 Cal.App.2d 400.

Transfer of liquor license.—Preferred wage claims of employees and federal tax liens are not being subordinated to state tax claims when an assignee for the benefit of creditors or a receiver in bankruptcy makes prior payment of delinquent state sales and use taxes and unemployment contributions, as a condition to the renewal or transfer of a liquor license pursuant to Section 24049 of the California Business and Professions Code since this isn't a question relating to priority of liens or claims, but rather one relating to the nature of the property rights to which such liens and claims attach. United States v. California (1960) 281 F.2d 726; Meyer v. Bass (1960) 281 F.2d 728.

Liability of receiver.—A receiver who collects and withholds sales and unemployment disability taxes is liable in his representative capacity as a receiver for the payment of such funds on a priority basis in case of the insolvency of the receivership estate. Stewart v. State of California (1969) 272 Cal.App.2d 345.

Property in hands of receiver.—A dealer's reserve account which passes into the hands of a receiver is a part of a tax debtor's "assets" against which the state has a priority claim. Wright v. Standard Engineering Corp. (1972) 28 Cal.App.3d 244.

6757. Recording certificate; lien. [Repealed by Stats. 1977, Ch. 481, operative July 1, 1978.]

6757. Liens; perfection and enforceability of. (a) If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. The lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code.

(b) For the purpose of this section, amounts are "due and payable" on the following dates:

(1) For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent;

(2) For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board;

(3) For amounts determined under Section 6536 (pertaining to jeopardy assessments), the date the notice of the board's finding is mailed or issued;

(4) For all other amounts, the date the assessment is final.

(c) The lien provided by this section shall not arise during any period that Section 362 of the United States Bankruptcy Code applies to the person against whom the lien would otherwise apply.

History—Added by Stats. 1977, Ch. 481, operative July 1, 1978. Stats. 1979, Ch. 322, effective January 1, 1980, changed wording of second paragraph of (a), deleted reference to judgment creditors following second sentence of (f), changed "January 1, 1978" to "July 1, 1978" in (g). Stats. 1980, Ch. 600, operative January 1, 1981, deleted part of first sentence in (a) following "lien"; substituted present second sentence for former second sentence; renumbered second paragraph of (a) to become (b); deleted former (b), (c), (e), (f), and (g). Stats. 1994, Ch. 903, in effect January 1, 1995, substituted "The" for "Such a" before "lien" in the second sentence of subdivision (a), and added subdivision (c).

6757.5. Filing with Secretary of State; statewide lien. [Repealed by Stats. 1977, Ch. 481, operative July 1, 1978.]

6758. Release of lien. [Repealed by Stats. 1980, Ch. 600, operative January 1, 1981.]

6758.5. Unenforceable lien. [Repealed by Stats. 1980, Ch. 600, operative January 1, 1981.]

6759. Certificate of release. [Repealed by Stats. 1980, Ch. 600, operative January 1, 1981.]

Article 5. Warrant for Collection of Tax

6776. Warrant; time of issuing. At any time within three years after any person is delinquent in the payment of any amount herein required to be paid, or within 10 years after the last recording of an abstract under Section 6738 or the last recording or filing of a notice of state tax lien under Section 7171 of the Government Code, the board or its authorized representative may issue a warrant for the enforcement of any liens and for the collection of any amount required to be paid to the state under this part. The warrant shall be directed to any sheriff, marshal, or the Department of the California Highway Patrol and shall have the same effect as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner and with the same effect as a levy of and a sale pursuant to a writ of execution and shall be levied within five working days following receipt of the warrant.

History—Stats. 1943, p. 2458, operative July 1, 1943, revised first sentence. Stats. 1965, p. 2046, in effect September 17, 1965, substituted "10" years for "three" years. Stats. 1977, Ch. 481, operative July 1, 1978, deleted "of a certificate" in the first paragraph, and substituted "the recording or filing of a notice of state tax lien". Stats. 1980, Ch. 600, operative January 1, 1981, added "last" following "Section 6738 or the" and substituted "Section 7171 of the Government Code" for "Section 6757". Stats. 1986, Ch. 1361, effective January 1, 1987, added "California State Police" to the list of officials authorized to direct a warrant. Stats. 1996, Ch. 305, in effect January 1, 1997, substituted "the Department of the California Highway Patrol" for "California State Police" after "constable, or" in the second sentence, and added "and shall … the warrant" in the third sentence. Stats. 1998, Ch. 931, in effect September 28, 1998, deleted "constable," after "marshal," in the second sentence.

Note.—Sec. 41, Stats. 1986, Ch. 1361 required that:

(a) On January 15 of each year from 1988 to 1992, inclusive, the State Board of Equalization and the Franchise Tax Board shall submit a report to the Legislature on implementation of the provisions of this act, with the exception of Section 40 of this act (for which separate reporting requirements are set out).

(b) The revenue and taxation policy committees of each house of the Legislature shall hold a public hearing no later than June 30 of each year from 1988 to 1992, inclusive, on the reports submitted pursuant to subdivision (a).

(c) The intent of this section is to assure the Legislature the opportunity to oversee the implementation of this act. The intent of the Legislature in enacting this act is to improve enforcement and voluntary compliance with the tax system and cash-pay reporting rules. The intent of the Legislature in enacting this act is not to cause harassment of or undue burden on innocent taxpayers.

Sec. 41 applies to the following Revenue and Taxation Code Sections: 6069, 6071, 6366, 6366.1, 6368, 6368.1, 6452, 6455, 6776, 6777, 7154, 8404, 9355, 30481, 32556, 40188, 41143, and 44186.

6777. Fees and expenses. The board may pay or advance to the sheriff, marshal, or the Department of the California Highway Patrol, the same fees, commissions, and expenses for services as are provided by law for similar services rendered pursuant to a writ of execution. The board, and not the court, shall approve the fees for publication in a newspaper.

History—Stats. 1951, p. 2390, operative July 1, 1951, added provisions permitting advance of fees and expenses. Stats. 1986, Ch. 1361, effective January 1, 1987, added "California State Police" to the list of officials authorized to direct warrants. Stats. 1996, Ch. 305, in effect January 1, 1997, substituted "Department of the California Highway Patrol" for "California State Police", deleted "his" after "expenses for", and added "rendered" after "similar services". Stats. 1998, Ch. 931, in effect September 28, 1998, deleted "constable," after "marshal," in the first sentence.

Note.—Sec. 41, Stats. 1986, Ch. 1361 required that:

Sec. 41 applies to the following Revenue and Taxation Code Sections: 6069, 6071, 6366, 6366.1, 6368, 6368.1, 6452, 6455, 6776, 6777, 7154, 8404, 9355, 30481, 32556, 40188, 41143, and 44186.

6778. Collection of fees. The fees, commissions, and expenses are the obligation of the person required to pay any amount under this part and may be collected from him by virtue of the warrant or in any other manner provided in this part for the collection of the tax.

Article 6. Seizure and Sale

6796. Seizure and sale. At any time within three years after any person is delinquent in the payment of any amount, the board may forthwith collect the amount in the following manner: The board shall seize any property, real or personal, of the person and sell the property, or a sufficient part of it, at public auction to pay the amount due together with any interest or penalties imposed for the delinquency and any costs incurred on account of the seizure and sale.

Any seizure made to collect a sales tax due shall be only of property of the retailer not exempt from execution under the provisions of the Code of Civil Procedure.

6797. Notice of sale. Notice of the sale and the time and place thereof shall be given to the delinquent person and to all persons who have an interest of record in the property in writing at least 20 days before the date set for the sale in the following manner: The notice shall be personally served or enclosed in an envelope addressed to the person, in case of a sale for use taxes due, at his or her last known address or place of business, and, in case of a sale for sales taxes due, at his or her last known residence or place of business in this state. If not personally served, the notice shall be deposited in the United States mail, postage prepaid. The notice shall be published pursuant to Section 6063 of the Government Code, in a newspaper of general circulation published in the city in which the property or a part thereof is situated if any part thereof is situated in a city or, if not, in a newspaper of general circulation published in the county in which the property or a part thereof is located.

Notice shall also be posted in both of the following manners:

(a) One public place in the city in which the interest in property is to be sold if it is to be sold in a city or, if not to be sold in a city, one public place in the county in which the interest in the property is to be sold.

(b) One conspicuous place on the property.

The notice shall contain a description of the property to be sold, a statement of the amount due, including taxes, interest, penalties, and costs, the name of the delinquent, and the further statement that unless the amount due is paid on or before the time fixed in the notice for the sale, the property, or so much of it as may be necessary, will be sold in accordance with law and the notice.

History—Stats. 1990, Ch. 1528, in effect January 1, 1991, added "and to all persons … property" after "delinquent person", substituted "20" for "10", added "personally served or" after "The notice shall be", added "or her" after "his" twice, and substituted "state" for "State" in the first sentence; substituted "If not … notice" for "It" in the second sentence, deleted "also" after "shall", substituted "pursuant to … Code" for "for at least 10 days before the date set for the sale", substituted "city" for "county" and "or a part thereof is situated … part thereof is located" for "seized is to be sold" in the third sentence, deleted the former fourth sentence which provided, "If there is no newspaper of general circulation in the county, notice shall be posted in three public places in the county 10 days prior to the date set for the sale", and added the sentence "Notice shall also be posted …", in the first paragraph; created the second paragraph from the former last sentence of the first paragraph and added "taxes," after "including", and substituted "is" for ", interest, penalties, and costs are."

6798. Bill of sale; deed. At the sale the board shall sell the property in accordance with law and the notice and shall deliver to the purchaser a bill of sale for the personal property and a deed for any real property sold. The bill of sale or deed vests the interest or title of the person liable for the amount in the purchaser. The unsold portion of any property seized may be left at the place of sale at the risk of the person liable for the amount.

6799. Disposition of proceeds. If upon the sale the moneys received exceed the total of all amounts, including interest, penalties, and costs due the State, the board shall return the excess to the person liable for the amounts and obtain his or her receipt. If any person having an interest in or lien upon the property files with the board prior to the sale notice of his or her interest or lien, the board shall withhold any excess pending a determination of the rights of the respective parties to the excess moneys by a court of competent jurisdiction. If for any reason the receipt of the person liable for the amount is not available, the board shall deposit the excess moneys with the Controller, as trustee for the owner, subject to the order of the person liable for the amount, his or her heirs, successors, or assigns.

History—Stats. 1996, Ch. 860, in effect January 1, 1997, added "or her" after "his" throughout text, substituted "to the excess moneys" for "thereto" after "respective parties" in the second sentence, and substituted "Controller" for "State Treasurer" in the third sentence.

Article 7. Payment on Termination of Business and Successor's Liability

6811. Withholding by purchaser. If any person liable for any amount under this part sells out his business or stock of goods or quits the business, his successors or assigns shall withhold sufficient of the purchase price to cover such amount until the former owner produces a receipt from the board showing that it has been paid or a certificate stating that no amount is due.

History—Stats. 1943, p. 2458, operative July 1, 1943, revised wording. Stats. 1963, p. 1492, in effect September 20, 1963, substituted "person" for "retailer."

6812. Liability of purchaser; release. (a) If the purchaser of a business or stock of goods fails to withhold from the purchase price as required, he or she becomes personally liable for the payment of the amount required to be withheld by him or her to the extent of the purchase price, valued in money.

(b) (1) Within 60 days after the latest of the dates specified in paragraph (2), the board shall either issue the certificate or mail notice, to the purchaser at his or her address as it appears on the records of the board, of the amount that must be paid as a condition of issuing the certificate.

(2) For purposes of paragraph (1), the latest of the following dates shall apply:

(A) The date the board receives a written request from the purchaser for a certificate.

(B) The date of the sale of the business or stock of goods.

(c) Failure of the board to mail the notice referred to in subdivision (b) will release the purchaser from any further obligation to withhold from the purchase price as above provided. The last date upon which the obligation of the successor may be enforced shall be not later than three years after the date the board is notified of the purchase of the business or stock of goods.

History—Stats. 1943, p. 2458, operative July 1, 1943, added last sentence. Stats. 1945, p. 1001, operative July 1, 1945, substituted "60" for "30." Stats. 1947, p. 2029, operative July 1, 1947, added provisions extending to 90 days under certain conditions time for issuance to purchaser of business of certificate or statement of amount due. Stats. 1963, p. 1492, in effect September 20, 1963, substituted "person" for "retailer" in the last sentence. Stats. 1977, Ch. 921, operative January 1, 1978, added provision for 90 days from date of sale. Stats. 1986, Ch. 333, effective January 1, 1987, reduced the Board's allowable response time from 90 to 60 days after receiving the purchaser's request or from the date of sale. Stats. 1991, Ch. 236, in effect July 29, 1991, added "from the"after "to withhold" in subdivisions (a) and (c), substituted "last date upon" for "time within" after "provided. The", and substituted "be not later than … purchase of the" for "start to run at the time the person sells out his or her", and deleted "or at the time that the determination against the person becomes final whichever event occurs the later" after "stock of goods" in subdivision (c).

Tax assessed after sale of business.—The purchaser of a business is liable, up to the amount of the purchase price, for sales tax assessed against the retailer after the sale of the business is consummated, measured by taxable sales made before the sale of the business. Such tax is "due and unpaid" even though not then assessed. People v. Buckles (1943) 57 Cal.App.2d 76.

Purchaser of Fixtures and equipment.—A purchaser of fixtures and equipment is not liable for sales tax due from the seller, on account of failing to withhold sufficient of the purchase price to cover such liability when the evidence showed that the purchaser did not purchase the business of the former owner or become his successor in the business. People v. Gabriel (1943) 57 Cal.App.2d 788.

Related corporations.—A wholly owned subsidiary of a creditor corporation was a "purchaser" of a debtor corporation where the debtor corporation transferred all of its operating assets to the subsidiary, and the subsidiary in turn issued to the creditor corporation a promissory note, equivalent to the value of the assets, which the creditor corporation credited to the debtor corporation, in reduction of its indebtedness. Knudsen Dairy Products Co. v. State Board of Equalization (1970) 12 Cal.App.3d 47.

Effect of Order of Bankruptcy Court.—Where the board fails to appeal the order of a bankruptcy court which finds the claim of the board not a valid debt of the bankrupt seller, the board is barred from subsequently attempting to collect the amount of the tax from the buyer under the successor liability theory. Century Geophysical Corp. v. California Board of Equalization (1977) 564 F.2d 342.

Compliance with Bulk Sales Law did not avoid successor liability.—A purchaser of a business deposited the purchase price into escrow to comply with Commercial Code § 6101 et seq., but did not obtain a tax clearance from the Board. The Board was entitled to collect the purchase price from the purchaser as a successor. The public interest in collection of taxes outweighs a private interest in the transfer of business assets. Successor liability is a remedy distinct from the Bulk Sales Law. Schnyder v. State Board of Equalization (2002) 101 Cal.App.4th 538.

6813. Certificate. The certificate may be issued after the payment of all amounts due under this part, according to the records of the board as of the date of the certificate, or after the payment of the amounts is secured to the satisfaction of the board. Such security is not subject to the limitations contained in Section 6701.

History—Added by Stats. 1978, Ch. 827, effective January 1, 1979.

6814. Notice of successor liability. (a) The obligation of the successor shall be enforced by serving a notice of successor liability on the person. The notice shall be served in the manner prescribed for service of a notice of a deficiency determination, not later than three years after the date the board is notified of the purchase of the business or stock of goods. The successor may petition for reconsideration in the manner provided in Article 5 (commencing with Section 6561) of Chapter 5 of this part. The notice shall become final and the amount due and payable in the manner provided in that article except that no additional penalty shall apply if not paid when due and payable. The provisions of this chapter with respect to the collection of any amount required to be paid under this part shall apply when the notice becomes final.

(b) (1) If the board finds that a successor's failure to withhold a sufficient amount of the purchase price to cover the amount owed by the former owner is due to reasonable cause and circumstances beyond the successor's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, the successor may be relieved of any penalty included in the notice of successor liability.

(2) Any successor seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief.

History—Added by Stats. 1979, Ch. 260, effective July 17, 1979. Stats. 1989, Ch. 768, in effect January 1, 1990, added ", not later … of goods" after "determination" in second sentence and added subdivision (b).

6815. Effect of security for tax when business discontinued. If at the time a business is discontinued the board holds security pursuant to Section 6701 in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions, such security when applied to the account of the taxpayer shall be deemed to be a payment on account of any liability of the taxpayer to the board on the date the business is discontinued.

History—Added by Stats. 1966, p. 188, in effect April 18, 1966, operative July 1, 1966.

Article 8. Miscellaneous Provisions

6826. Report of collections. The board shall report to the Controller the amount of collections under this part, and he shall keep a record thereof.

6827. Remedies; cumulative. The remedies of the State provided for in this chapter are cumulative, and no action taken by the board or Attorney General constitutes an election by the State to pursue any remedy to the exclusion of any other remedy for which provision is made in this part.

6828. Board; authority of. In all proceedings under this chapter the board may act on behalf of the people of the State of California.

6829. Personal liability of corporate officer. (a) Upon the termination, dissolution, or abandonment of the business of a corporation, partnership, limited partnership, limited liability partnership or limited liability company, any officer, member, manager, partner, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax, or who is under a duty to act for the corporation, partnership, limited partnership, limited liability partnership, or limited liability company in complying with any requirement of this part, shall, notwithstanding any provision in the Corporations Code to the contrary, be personally liable for any unpaid taxes and interest and penalties on those taxes, if the officer, member, manager, partner, or other person willfully fails to pay or to cause to be paid any taxes due from the corporation, partnership, limited partnership, limited liability partnership, or limited liability company pursuant to this part.

(b) The officer, member, manager, partner, or other person shall be liable only for taxes that became due during the period he or she had the control, supervision, responsibility, or duty to act for the corporation, partnership, limited partnership, limited liability partnership, or limited liability company described in subdivision (a), plus interest and penalties on those taxes.

(c) Personal liability may be imposed pursuant to this section, only if the board can establish that the corporation, partnership, limited partnership, limited liability partnership, or limited liability company had included tax reimbursement in the selling price of, or added tax reimbursement to the selling price of, tangible personal property sold in the conduct of its business, or when it can be established that the corporation, partnership, limited partnership, limited liability partnership, or limited liability company consumed tangible personal property and failed to pay the tax to the seller or has included use tax on the billing and collected the use tax or has issued a receipt for the use tax and failed to report and pay use tax.

(d) For purposes of this section "willfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action.

(e) Except as provided in subdivision (f), the sum due for the liability under this section may be collected by determination and collection in the manner provided in Chapter 5 (commencing with Section 6451) and Chapter 6 (commencing with Section 6701).

(f) A notice of deficiency determination under this section shall be mailed within three years after the last day of the calendar month following the quarterly period in which the board obtains actual knowledge, through its audit or compliance activities, or by written communication by the business or its representative, of the termination, dissolution, or abandonment of the business of the corporation, partnership, limited partnership, limited liability partnership, or limited liability company, or, within eight years after the last day of the calendar month following the quarterly period in which the corporation, partnership, limited partnership, limited liability partnership, or limited liability company business was terminated, dissolved, or abandoned, whichever period expires earlier. If a business or its representative files a notice of termination, dissolution, or abandonment of its business with a state or local agency other than the board, this filing shall not constitute actual knowledge by the board under this section.

History—Added by Stats. 1981, Ch. 337, in effect January 1, 1982. Stats. 1987, Ch. 38, in effect January 1, 1988, in paragraph (a) changed "if such officer" to "if the officer", in paragraph (c), added the phrase "has issued a receipt for the use tax and failed". Stats. 1994, Ch. 1200, in effect September 30, 1994, added "Notwithstanding … Code," after "(a), substituted "upon" for "Upon", and added "domestic or foreign" after "abandonment of a" in subdivision (a); added "or limited liability company" and ", member, manager," throughout text of section; substituted "that" for "which" after "taxes" in subdivision (b); substituted "in" for "to" after "reimbursement" and added "or added … price of," after "price of," in subdivision (c). Stats. 1995, Ch. 679, in effect January 1, 1996, added "registered or foreign limited liability partnership or a" after "abandonment of a", in subdivision (a); added "partner," after "manager," in subdivision (a) and (b); added ", limited liability partnership" after "corporation" twice in subdivisions (a) and (c) and once in subdivision (b); and added "included use tax … tax or has" after "seller or has" in subdivision (c). Stats. 1996, Ch. 1003, in effect January 1, 1997, added "16306, 16307," after "Section" and added "a partnership," after "abandonment of" in subdivision (a); added "partnership" after "corporation" throughout text. Stats. 2008, Ch. 24 (AB 1895), in effect January 1, 2009, deleted "Notwithstanding Section 16306, 16307, 17101, 17158, 17355, 17450, or 17456 of the Corporations Code, upon" after "(a)", added "Upon the" before "termination", added "the business of" after "abandonment of a", added "corporation," before "partnership,", deleted "a registered or foreign" and added "limited partnership," after "partnership,", deleted "or a domestic or foreign corporate" after "limited liability partnership,", deleted "business" after "limited liability company,", added "limited partnership," after "partnership,", added "notwithstanding any provision in the Corporations Code to the contrary," after "part, shall," added "partner" after "manager,", and added "limited partnership," after "partnership," in subdivision (a); added "limited partnership," in subdivision (b); added "limited partnership," after "partnership," twice in subdivision (c); substituted "Except as provided in subdivision (f), the" for "The" in subdivision (e); and added subdivision (f).

Corporate officer liability.—Former corporate officer who had willingly failed to pay the subject sales taxes was liable for the corporation's debt for such taxes even though he was no longer an officer of the corporation at the time it dissolved. State Board of Equalization v. Wirick (2001) 93 Cal.App.4th 411.

6830. Contracts with private collection entities. (a) For the purpose of identifying persons or businesses who may owe taxes or other amounts, or for the purpose of collecting taxes, interest, additions to tax, and penalties, the board may enter into agreement with one or more private persons, companies, associations, or corporations providing these services outside this state with respect to the identification of persons or businesses who may owe taxes or other amounts, or the collection of taxes, interest, additions to tax, and penalties. The agreement may provide, at the discretion of the board, the rate of payment and the manner in which compensation for services shall be paid. The compensation may be added to the amount required to be identified or collected by the collection agency or provider of these services from the tax debtor. The board shall provide the necessary information for the contractor to fulfill its obligation under that agreement.

(b) With the approval of the board, the contractor may, as part of the collection process, refer the tax debt for litigation by its legal representatives in the name of the board.

History—Added by Stats. 1984, Ch. 1490, effective September 27, 1984. Stats. 1995, Ch. 555, in effect January 1, 1996, added "identifying … purpose of" after "purpose of", substituted "these" for "debt collection", and added "identification … or the" after "respect to the", in the first sentence, substituted "The" for "That" after penalties." in the second sentence, and substituted "these" for "debt collection" after "provider of" in the third sentence of subdivision (a).

6831. Partnership liability; absence of written partnership agreement. The board shall not be subject to subdivisions (c) and (d) of Section 16307 of the Corporations Code unless, at the time of application for a seller's permit, the applicant furnishes to the board a written partnership agreement that provides that all business assets shall be held in the name of the partnership.

History—Added by Stats. 1996, Ch. 1003, in effect January 1, 1997.

6832. Installment payment agreements. (a) The board may, in its discretion, enter into a written installment payment agreement with a person for the payment of any taxes due, together with interest thereon and any applicable penalties, in installments over an agreed period. With mutual consent, the board and the taxpayer may alter or modify the agreement.

(b) Upon failure of a person to fully comply with the terms of an installment payment agreement with the board, the board may terminate the agreement by mailing a notice of termination to the person. The notice shall include an explanation of the basis for the termination and inform the person of his or her right to request an administrative review of the termination. Fifteen days after the mailing of the notice, the installment payment agreement shall be void, and the total amount of the tax, interest, and penalties due shall be immediately payable.

(c) The board shall establish procedures for an administrative review for persons requesting that review whose installment payment agreements are terminated under subdivision (b). The collection of taxes, interest, and penalties that are the subject of the terminated installment payment agreement may not be stayed during this administrative review process.

(d) Subdivision (b) shall not apply to any case where the board finds collection of the tax to be in jeopardy.

(e) Except in the case of fraud, if an installment payment agreement is entered into within 45 days from the due date of the tax, and the person complies with the terms of the installment payment agreement, the board shall relieve the penalty imposed pursuant to Section 6565.

History—Added by Stats. 1998, Ch. 612, in effect January 1, 1999. Stats. 2000, Ch. 1052 (AB 2898), in effect January 1, 2001, added subdivision (e).

6832.5. Annual statement; installment payment agreements. On or before July 1, 2000, the board shall provide each taxpayer who has an installment payment agreement in effect under Section 6832 with an annual statement setting forth the initial balance at the beginning of the year, the payments made during the year, and the remaining balance as of the end of the year.

History—Added by Stats. 1999, Ch. 929, (AB 1638), in effect January 1, 2000.

6832.6. Notice to consumers. In the case of liability for use tax arising from the board's auxiliary collection provisions pursuant to Article 3 (commencing with Section 6291) of Chapter 3.5, or use tax liability arising from purchases described in Section 6405, the board shall provide notice to purchasers in simple and nontechnical language of its authorization under Section 6832 to enter into an agreement to accept the payment of use tax in installments. The notice shall be mailed to purchasers concurrently with the mailing of the return, notice of determination, or notice of redetermination.

History—Added by Stats. 2000, Ch. 1052 (AB 2898), in effect January 1, 2001.

6833. Collection cost recovery fee. (a) A collection cost recovery fee shall be imposed on any person that fails to pay an amount of tax, interest, penalty, or other amount due and payable under this part. The collection cost recovery fee shall be in an amount less than or equal to the California Department of Tax and Fee Administration costs for collection, as reasonably determined by the California Department of Tax and Fee Administration. The collection cost recovery fee shall be imposed only if the California Department of Tax and Fee Administration has mailed its demand notice, to that person for payment, that advises that continued failure to pay the amount due may result in collection action, including the imposition of a collection cost recovery fee.

(b) Interest shall not accrue with respect to the collection cost recovery fee provided by this section.

(c) The collection cost recovery fee imposed pursuant to this section shall be collected in the same manner as the collection of any other tax imposed by this part.

(d) (1) If the California Department of Tax and Fee Administration finds that a person's failure to pay any amount under this part is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person shall be relieved of the collection cost recovery fee provided by this section.

(2) Any person seeking to be relieved of the collection cost recovery fee shall file with the California Department of Tax and Fee Administration a statement under penalty of perjury setting forth the facts upon which the person bases the claim for relief.

(e) Subdivision (a) shall be operative with respect to a demand notice for payment which is mailed on or after January 1, 2011.

(f) Collection cost recovery fee revenues shall be deposited in the same manner as revenues derived from any other tax imposed by this part.

History—Added by Stats. 2010, Ch. 721 (SB 858), in effect October 19, 2010. Amended by Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added "less than or" after "shall be in an amount" in the second sentence of subdivision (a); and substituted "California Department of Tax and Fee Administration" for "board" throughout.

6834. Electronic earnings withholding orders.(a) Notwithstanding Sections 706.071, 706.073, 706.080, 706.101, and 706.105 of the Code of Civil Procedure, the California Department of Tax and Fee Administration may serve earnings withholding orders for taxes and any other notice or document required to be served or provided in connection with an earnings withholding order for taxes according to Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure to government and private employers by electronic transmission or other electronic technology.

(b) Upon consent of the employer, the California Department of Tax and Fee Administration may provide service by electronic transmission or other electronic technology under this section.

(c) Notwithstanding Sections 706.071, 706.073, 706.080, 706.101, 706.125, and 706.126 of the Code of Civil Procedure, the California Department of Tax and Fee Administration may receive the employer’s return, as described in Section 706.126 of the Code of Civil Procedure, by electronic transmission or other electronic technology.

(d) This section shall apply in the same manner and with the same force and effect and to the full extent as if this section had been incorporated in full into Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure.

(e) This section shall apply to notices served or provided on or after the effective date of the act adding this section.

History—Added by Stats. 2023, Ch. 511 (SB 889), in effect January 1, 2024.

6835. Collection of tax: Internal Revenue Service; other states. (a) The board may enter into an agreement with the Internal Revenue Service or any other state imposing a sales and use tax, or a similar tax, for the purpose of collecting delinquent tax debts with respect to amounts assessed or imposed under this part, provided the agreements do not cause the net displacement of civil service employees. The agreement may provide, at the discretion of the board, the rate of payment and the manner in which compensation for services shall be paid.

(b) At the discretion of the board, the Internal Revenue Service or the other state collecting the tax debt pursuant to subdivision (a) may, as part of the collection process, refer the tax debt for litigation by its legal representatives in the name of the board.

(c) For purposes of this section, "displacement" includes layoff, demotion, involuntary transfer to a new class, involuntary transfer to a new location requiring a change of residence, and time base reductions. "Displacement" does not include changes in shifts or days off, nor does it include reassignment to any other position within the same class and general location.

History—Added by Stats. 2011, Ch. 455 (AB 1424), in effect January 1, 2012.

Article 9. Collection of Tax Debts Due to the Internal Revenue Service or Other States*

6850. Agreement to collect tax debt due the Internal Revenue Service or other states. (a) The board may enter into an agreement to collect any delinquent tax debt due to the Internal Revenue Service or any other state imposing a sales and use tax, or similar tax, if, pursuant to Section 6835, the Internal Revenue Service or such a state has entered into an agreement to collect delinquent tax debts due to the board.

(b) Upon written notice to the debtor from the board, any amount referred to the board under subdivision (a) shall be treated as final and due and payable to the State of California, and shall be collected from the debtor by the board in any manner authorized under the law for collection of a delinquent sales and use tax liability, including, but not limited to, the recording of a notice of state tax lien under Article 2 (commencing with Section 7170) of Chapter 14 of Division 7 of Title 1 of the Government Code, and the issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes.

(c) This part shall apply to amounts referred under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this section, except to the extent that any provision is either inconsistent with this section or is not relevant to this section.

(d) The activities required to implement and administer this section shall not interfere with the primary mission of the board to administer this part.

(e) In no event shall a collection under this section be construed as a payment of sales and use taxes imposed under this part, or in accordance with Part 1.5 (commencing with Section 7200), or Part 1.6 (commencing with Section 7251), of Division 2.

*Article 9 was added by Stats. 2011, Ch. 455 (AB 1424), in effect January 1, 2012.

*Article 9's heading was amended by Stats. 2012, Ch. 162 (SB 1171) in effect January 1, 2013, which substituted "Service" for "Services" after "Internal Revenue".

Laws, Regulations and Annotations

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Business Taxes Law Guide—Revision 2024

Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes Part 1. Sales and Use Taxes Chapter 6. Collection of Tax

Article 1. Security for Tax

Article 2. Suit for Tax

Article 3. Judgment for Tax

Article 4. Priority and Lien of Tax

Article 5. Warrant for Collection of Tax

Article 6. Seizure and Sale

Article 7. Payment on Termination of Business and Successor's Liability

Article 8. Miscellaneous Provisions

Article 9. Collection of Tax Debts Due to the Internal Revenue Service or Other States

Article 1. Security for Tax

Text of Section Operative Through June 30, 2001

Text of Section Operative July 1, 2001

Article 2. Suit for Tax

Article 3. Judgment for Tax

Article 4. Priority and Lien of Tax

Article 5. Warrant for Collection of Tax

Article 6. Seizure and Sale

Article 7. Payment on Termination of Business and Successor's Liability

Article 8. Miscellaneous Provisions

Article 9. Collection of Tax Debts Due to the Internal Revenue Service or Other States*

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 6. Collection of Tax