Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2011
 

Motor Vehicle Fuel Tax Law

CHAPTER 6. COLLECTION OF TAX.


CHAPTER 6. COLLECTION OF TAX.

Article 1. Security for Tax

7851. Notice of delinquency to creditors. If any supplier is delinquent in the payment of his or her tax, or in the event a determination has been made against him or her which remains unpaid, the Controller may, not later than 10 years after the payment became delinquent, or within 10 years after 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 supplier, or owing any debts to the supplier. In the case of any state officer, department or agency, the notice shall be given to such officer, department or agency prior to the time it presents the claim of the delinquent taxpayer to the Controller.

History.—Stats. 1963, p. 1808, in effect September 20, 1963, added references to determinations which remain unpaid, and three year statute of limitations. Also added last sentence. Stats. 1977, Ch. 481, operative July 1, 1978, changed statute of limitation from "three" years to "10" years; and substituted "or filing of a notice of state tax lien" for "of a certificate". Stats. 1978, Ch. 827, effective January 1, 1979, substituted "first-class" for "registered". Stats. 1980, Ch. 600, operative January 1, 1981, substituted "Section 7171 of the Government Code" for "Section 7872". Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "If any", "property belonging to the" and "any debts to the" and substituted "or her" for "license", and added "or her" after "determination has been made against him" in the first sentence; added "State" after "delinquent taxpayer to the" in the second sentence.

7852. Nontransfer of credits. After receiving the notice the persons so notified shall neither transfer nor make 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 Controller consents to a transfer or disposition or until 60 days elapse after the receipt of the notice, whichever period expires the earlier.

History.—Stats. 1959, p. 2469, in effect September 18, 1959, substituted "60" for "20." Stats. 1963, p. 1808, in effect September 20, 1963, added the phrase "whichever period expires the earlier".

7853. Report of credits to Controller. All persons so notified shall forthwith after receipt of the notice advise the Controller of all credits, other personal property, or debts in their possession, under their control, or owing by them. If such notice seeks to prevent the transfer or other disposition of a deposit in a bank or other credits or personal property in the possession or under the control of a bank, 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 such bank at which such deposit is carried or at which such credits or personal property is held. 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, the notice shall only be effective with respect to an amount not in excess of two times the amount, interest and penalty due from the person.

History.—Stats. 1963, p. 1808, in effect September 20, 1963, substituted "forthwith" for "within five days", and added the second sentence. Stats. 1972, Ch. 103, operative April 1, 1973, added "shall state the amount, interest and penalty due from the person and", and added the third sentence.

7854. Liability for transfer after notice. If, during the effective period of the notice to withhold, any person so notified makes any transfer or disposition of the poperty 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 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 such transfer or disposition the State is unable to recover the indebtedness of the person with respect to whose obligation the notice was given.

History.—Added by Stats. 1963, p. 1809, in effect September 20, 1963.

7855. Notice of levy. (a) The Controller may, by notice of levy served personally or by first-class mail, require all persons having in their possession, or under their control, any payments, credits other than payments, or personal property belonging to a supplier or other person liable for any amount under this part to withhold from these credits or other personal property the amount of any tax, interest, or penalties due from the supplier or other person, or the amount of any liability incurred by them under this part, and to transmit the amount withheld to the Controller at the time it may designate. The notice of levy shall have the same effect as a levy pursuant to a writ of execution except for the continuing effect of the levy, as provided in subdivision (b).

(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.

(c) The amount required to be withheld is the lesser of the following:

(1) The amount due stated on the notice. (2) The sum of both of the following:

(A) The amount of the payments, credits other than payments, or personal property described above and under the person's possession or control when the notice of levy is served on the person.

(B) The amount of each payment that becomes due following service of the notice of levy on the person and prior to the expiration 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, or mineral or other natural rights.

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

(3) Any other payments or credits due or becoming due the supplier 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. 1993, Ch. 1113, in effect January 1, 1994, added "(a)", added a comma after "may", deleted a comma after "levy" substituted "these" for "such" before "credit", substituted "the" for "such" after "due from", and substituted "the" for "such" before "times" in the first paragraph; added "(b)"; and added subdivision (c). Stats. 1998, Ch. 609 (SB 2232), in effect January 1, 1999, substituted "payments, credits, other than payments," for "credit" after "their control, any" and substituted "time" for "times as" after "Controller at the" in the first sentence and added "The notice of . . . . in subdivision (b)." as the second sentence of subdivision (a); relettered subdivision (b) as (e) and relettered subdivision (c) as (b); and added subdivisions (c) and (d). Stats. 1999, Ch. 991 (SB 45), in effect January 1, 2000, but operative July 1, 2001, substituted "paragraph (29) of subdivision (a) of Section 9102" for "Section 9105" after "as defined in" in subdivision (d). Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "property belonging to a" and "penalties due from the" in the first sentence of subdivision (a), and substituted "supplier" for "distributor" after "enforceable obligation to the" in subdivision (d) paragraph (2), and substituted "supplier" for "distributor" after "or becoming due the" in subdivision (d) paragraph (3).

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Article 1.5. Suit for Tax

7861. Request by Controller. The Controller may request the Attorney General to bring suit for the recovery of any unpaid tax, interest, penalties, and costs.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959. Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, deleted "license" after "recovery of any unpaid".

7862. Duty of Attorney General. The Attorney General shall bring suit for any amount due and costs on the written request of the Controller and in the name of the people of the State of California in a court of competent jurisdiction in the County of Sacramento.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959.

7863. Partial payment no bar to action. Payment of an amount to the board for and on account of the tax and the acceptance thereof does not bar an action by the state to recover any additional amount which is actually due.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959. Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, deleted "license" after "on account of the" and substituted "state" for "State".

7864. 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.

7865. Certificate; prima facie evidence. In the action a certificate issued by the board showing unpaid taxes determined against any supplier shall be prima facie evidence of all of the following:

(a) The determination of the tax, the delinquency thereof, and the amount of the tax, interest, penalties, and costs due and unpaid to the state.

(b) The indebtedness of the supplier to the state in the amount of the tax, interest, and penalties therein appearing unpaid.

(c) The full compliance by all persons required to perform administrative duties under this part with all the forms of law in relation to the determination and levy of the tax.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959. Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, deleted "license" after "board showing unpaid" and substituted "supplier" for "distributor" after "determined against any" in the first paragraph, deleted "license" after "The determination of the" and "the amount of the" and substituted "state" for "State" after "unpaid to the" in subdivision (a), substituted "supplier to the state" for "distributor to the State" after "The indebtness of the" and deleted "license" after "in the amount of the" in subdivision (b), and deleted "license" after "and levy of the" in subdivision (c).

Bankruptcy proceeding.—A verfied claim on information and belief filed in a bankruptcy proceeding supported only by evidence that the bankrupt broker sold more gasoline that he purchased tax-paid from distributors with whom he was known to have dealt is insufficient to establish the claim. Controller of California v. Lockwood. (1951) 193 Fed. 2d 169.

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Article 2. Lien of Tax

7871. Lien; priority of. [Repealed, Stats. 1977, Ch. 481, operative July 1, 1978.]

7872. Recording certificate; lien. [Repealed, Stats. 1977, Ch. 481, operative July 1, 1978.]

7872. 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. Such a 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 7698 (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.

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); substituted "board" for "Controller" in (b)(1), (b)(2), (b)(3); deleted former (b), (c), (d), (e), (f), (g).

7873. Release of lien. [Repealed by Stats. 1980, Ch. 600, operative January 1, 1981.]

7873.5. Unenforceable lien. [Repealed by Stats. 1980, Ch. 600, operative January 1, 1981.]

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Article 2.5. Warrant for Collection of Tax

7881. Issuance; limitations. 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 or filing of a notice of state tax lien under Section 7171 of the Government Code, the Controller or his 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.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959. Stats. 1965, p. 2046, in effect September 17, 1965, revised section to provide for periods of limitations. Stats. 1977, Ch. 481, operative July 1, 1978, deleted "of a certificate" and substituted "or filing of a notice of state tax lien". Stats. 1980, Ch. 600, operative January 1, 1981, substituted "Section 7171 of the Government Code," for "Section 7872".

7882. Effect. The warrant shall be directed to any sheriff or marshal and shall have the same force and 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 force and effect as a levy of and sale pursuant to a writ of execution.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959. Stats. 1996, Ch. 872, in effect January 1, 1997, deleted ", constable," after "to any sheriff" in the first sentence.

7883. Fees and expenses. The Controller may pay or advance to the sheriff or marshal, the same fees, commissions, and expenses for his or her services as are provided by law for similar services pursuant to a writ of execution. The Controller, and not the court, shall approve the fees for publication in a newspaper.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959. Stats. 1996, Ch. 872, in effect January 1, 1996, substituted "or marshal" for ", marshal or constable" after "to the sheriff" and added "or her" after "expenses for his" in the first sentence.

7884. Liability for expenses. 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.

History.—Added by Stats. 1959, p. 2470, in effect September 18, 1959.

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Article 3. Seizure and Sale

7891. Seizure and sale by Controller. Whenever any supplier is delinquent in the payment of the tax, the Controller or his or her authorized representative may forthwith collect the tax due in the following manner: The Controller shall seize any property, real or personal, of the supplier, and thereafter sell the property, or a sufficient part of it, at public auction to pay the tax due together with any penalties, interest and any costs incurred on account of the seizure and sale.

History.—Stats. 1943, p. 2702, operative July 1, 1943, added reference to interest. Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "Whenever any" and "real or personal, of the", deleted "license" after "the payment of the", "may forthwith collect the" and "at public auction to pay the".

7892. Notice of sale. Notice of the sale and the time and place thereof shall be given to the delinquent supplier 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 supplier or other person 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 of the taxes, penalties, interest, and costs, the name of the supplier, and the further statement that unless the taxes, penalties, interest, and costs are 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. 1943, p. 2702, operative July 1, 1943, added references to interest in last sentence. Stats. 1990, Ch. 1528, in effect January 1, 1991, added "and to all persons . . . property" after "delinquent distributor", substituted "20" for "10", added "in the following manner:" after "sale", deleted period after "sale", added "personally served or" after "The notice shall be", added "or other person" after "distributor", "or her" after "his", substituted "state." for "State" in the first sentence, substituted "If not . . . notice" for "and" before "shall" 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, inserted a comma after "interest" and substituted "interest," for "interests". Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "given to the delinquent" and "envelope addressed to the" in the first sentence in the first paragraph, and substituted "supplier" for "distributor" after "the name of the" in the second sentence of paragraph (b).

7893. Sale of property. At the sale the Controller or his or her authorized agent 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 title in the purchaser. The unsold portion of any property seized may be left at the place of sale at the risk of the supplier.

History.—Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, added "or her" after "Controller or his" in the first sentence and substituted "supplier" for "distributor" after "sale at the risk of the" in the third sentence.

7894. Controller may bid. The Controller may bid at the sale.

7895. Disposition of proceeds. If upon the sale the moneys received exceed the amount of all taxes, penalties, interest, and costs due the state from the supplier, the Controller shall return the excess to the supplier and obtain a receipt. If for any reason the receipt of the supplier is not available, the Controller shall deposit the excess moneys in an unclaimed property account, in trust for the supplier, subject to the order of the supplier, the supplier's heirs, successors, or assigns.

History.—Stats. 1943, p. 2703, operative July 1, 1943, added reference to interest. Stats. 1996, Ch. 860, in effect January 1, 1997, substituted "state" for "State" after "costs due the" and added "or her" after "and obtain his" in the first sentence, substituted "in an unclaimed property account, in trust" for "with the State Treasurer, as trustee" after "the excess moneys" and added "or her" after "distributor, his" in the second sentence. Stats. 2000, Ch. 1051 (AB 2114), operative January 1, 2002, deleted "license" after "exceed the amount of all", substituted "supplier" with "distributor" after "due the state from the" and "shall return the excess to the", and substituted "a" for "his or her" after "and obtain" in the first sentence, substituted "supplier" for "distributor" after "reason the receipt of the" and "in trust for the" and substituted "supplier, the supplier's" for "distributor, his or her" after "subject to the order of the" in the second sentence.

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Article 4. Collection of Tax from Deposited Security

7916. Collection from deposited security. Upon receipt of a certificate of the Controller setting forth the amount of a taxpayer's delinquencies, the board shall pay to the Controller the amount so certified from the money deposited with the board by the taxpayer or from the amounts received from the sale of bonds or other obligations deposited with the board by the taxpayer. Securities deposited with the board which have a prevailing market price may be sold by the board for the purposes of this section at private sale at a price not lower than the prevailing market price thereof.

History.—Stats. 1959, p. 2471, in effect September 18, 1959, completely revised section which formerly provided for a suit to effect bond forfeiture. Stats. 1987, Ch. 38, in effect January 1, 1988, deleted all references to the State Treasurer and substituted the board.

Right to exemption.—In an action under this section as it read prior to 1959 to collect the tax no exemption or deduction may be recognized that was not claimed in the distributor's report. People v. Sterling Refining Co., (1927) 86 Cal.App. 558.

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Article 5. Sale of State-Acquired Property

7931. Sale of State-acquired property by Controller. Whenever the state acquires any real or personal property seized and sold for delinquent taxes of the supplier, the Controller may, with the consent of the Department of General Services, sell the property or any part thereof at private sale or at public auction.

History.—Stats. 1965, p. 1595, in effect September 17, 1965, substituted "Department of General Services" for the "Department of Finance." Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "delinquent taxes of the".

7932. Publication of notice of sale. He may advertise the sale by one publication, at least 10 days before the date set for the sale, in a newspaper of general circulation in the county in which the property to be sold is situated. If there is no newspaper of general circulation in the county, publication may be made by posting notice in three public places in the county 10 days prior to the date of sale.

7933. Sale of property. The Controller or his authorized representative shall conduct the sale, and he may reject any or all bids at the sale.

7934. Distribution of proceeds. The Controller shall distribute the proceeds of the sale in the following order:

(a) The payment of all expenses of the sale.

(b) The payment of all amounts due from the supplier under this part.

(c) The remainder to the General Fund of the state.

History.—Stats. 1943, p. 2703, operative July 1, 1943, revised (b). Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substitute "supplier" for "distributor" after "amounts due from the" in subdivision (b) and substituted "State" for "state" after "General Fund of the" in subdivision (c).

7935. Title of purchaser. At the sale the Controller shall deliver to the purchaser a bill of sale for any personal property and a deed for any real property sold. The bill of sale or deed vests title in the purchaser free from any existing lien for amounts due under this part.

History.—Stats. 1943, p. 2703, operative July 1, 1943, substituted "amounts due" for "taxes and penalties accruing" in second sentence.

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Article 6. Payment on Termination of Business

7956. Discontinuance notice of distribution. Whenever a supplier ceases to engage in business as a supplier within the state by reason of the discontinuance, sale, or transfer of the business, the supplier shall give notice in writing thereof to the board on or before the date of the discontinuance, sale, or transfer.

History.—Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "Whenever a" and after "engage in business as a", substituted "state" for "State" after "within the", and substituted "the supplier" for "he" after "or transfer of the business,".

7957. Notice; form of. The notice shall give the date of discontinuance or, in the event of a sale or transfer of the business, the date thereof and the name and address of the purchaser or transferee.

7958. Tax due concurrently with termination of business. All amounts under this part, not yet due and payable under other provisions hereof, become due and payable concurrently with the discontinuance, sale, or transfer. The supplier shall forthwith make a report and pay all of the amounts due and shall surrender the supplier's license to the board.

History.—Stats. 2000, Ch. 1053 (AB 2114), operative January 1, 2002, substituted "supplier" for "distributor" after "The" and substituted "of the" for "such" after "and pay all", and substituted "the supplier's" for "his" after "and shall surrender" in the second sentence.

7959. Liability of purchaser. Unless notice is given as provided by Section 7956, the purchaser or transferee becomes liable for all taxes and penalties under this part accrued against the vendor or transferor to the date of the sale or transfer, but only to the extent of the value of the property and business thereby acquired.

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Article 7. Miscellaneous Provisions

7982. Cumulative remedies. The remedies of the State provided for in this chapter are cumulative, and no action taken by the Controller or the 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.

7983. Furnishing of 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 or issuance of a permit, license, or registration number under this part, 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. 1998, Ch. 609 (SB 2232), in effect January 1, 1999. Stats. 2001, Ch. 429 (AB 309), operative January 1, 2002, former subdivision (b) incorporated into subdivision (a); substituted "The" for "Any person who become liable for the" before "the backup tax imposed", substituted "and any" for "as a highway vehicle operator/fueler . . . motor vehicle fuel, the tax," after "under Section 7364", substituted "shall be" for ", if any, become" after "penalties and interest", and deleted "on account for all motor vehicle fuel used, delivered or sold" after "immediately due and payable" in the first sentence; substituted "sold, or delivered into the fuel tank of a motor vehicle fuel-powered highway vehicle, and" for "used, delivered, or sold and" after "amount of motor vehicle fuel", deleted ", adding to the tax a penalty of 25 percent of the amount of tax or five hundred dollars ($500), whichever is greater," after "immediately the tax on the amount" in the second sentence; added the third sentence to subdivision (a); added subdivisions (b), (c), and (d); and relettered former subdivision (c) as subdivision (e).