Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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United States Fire Insurance Co.; People v. . . . (1976)

Suit Against Surety for Tax Not Barred by Statute of Limitations Where Certificate of Tax Lien Is Filed Timely

Defendant, surety for a delinquent taxpayer, contended that the Board's action to collect taxes through enforcement of the contract of surety was barred because suit was brought more than three years after the cause of action arose, i.e., the date the determination of tax became final. The court upheld the Board, holding that although Section 6711 of the Revenue and Taxation Code as it read at the time the cause of action arose provided for a limitation on the bringing of action of three years after the recording of a certificate of tax lien, the Legislature amended this section to permit the Board to bring an action within the ten-year period that a tax lien is in force. This change took effect before the cause of action was barred under the earlier version of the statute. Since the statute of limitations affects only the remedy and not the right, the period may be extended by the Legislature if it does so before the cause of action is barred. The Board's action was brought within the limitations of the statute as amended, and was timely.

The court stated that it was unnecessary to decide the Board's contention that the applicable statute was Section 337, subdivision 1 of the Code of Civil Procedure, which provides that an action founded upon a contract, obligation, or liability founded upon an instrument in writing must be brought within four years. However, in considering defendant surety's contention that a three-year period of limitation specified in Section 338 of the Code of Civil Procedure applied, the court pointed out that Section 6711 prescribes a different limitation period for actions to collect taxes. People v. United States Fire Insurance Co. (1976) 61 Cal.App.3d 231.