Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2011
 

Sales And Use Tax Law

CHAPTER 6. COLLECTION OF TAX

Article 1. Security for Tax

Section 6702

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."