Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2015
Sales and Use Tax Annotations
170.0000 COLLECTION OF TAX BY BOARD
(a) IN GENERAL
170.0002.850 Collection Activity Once Liens Expire. Neither the California Revenue and Taxation Code (RTC) or the Government Code contains a general statute of limitations limiting the collection of taxes and fees that the Board of Equalization administers. The California Constitution arguably imposes a 30-year limitations period on the collection of all California taxes, however, the Board cannot exercise all enforced collection remedies for thirty years because most of the collection remedies available to the Board under the RTC, the Government Code, or the Code of Civil Procedure, contain individual limitations periods for their exercise.
Perfected state tax liens arise by operation of law on the date that a sales or use tax obligation becomes due and payable and the taxpayer fails to pay it (RTC 6757(a)). The state tax lien attaches to all property and rights to property, belonging to the taxpayer and located in the State of California (Gov. Code section 7170(a)). A state tax lien continues in effect for ten years from the date of its creation unless it is released or discharged. If a notice of state tax lien is not filed or recorded, the tax lien is extinguished 10 years after the date of its creation. At any time before a tax lien is extinguished, the Board may file or record a notice of state tax lien. A notice of state tax lien is not effective to extend a statutory lien if it is filed or recorded after the statutory lien expires. When a notice of state tax lien is timely filed or recorded, the state tax lien continues in effect for a period of ten years from the date of filing or recording.
Notice of Levy
The notice of levy provisions in RTC section 6703 contain no time limitation for the exercise of this collection remedy by the Board. Therefore, a notice of levy may be exercised after a tax lien expires.
Notice To Withhold and Warrants
The limitations placed on the Board's use of the notice to creditors (also known as a Notice to Withhold) by RTC section 6702 and on the use of warrants by RTC section 6776, prevent the Board's exercising these remedies after the Board's statutory lien expires.
The outside limitation placed on the Board's use of court action under RTC section 6711 is that it may not be exercised after the Board's statutory lien expires. However, People v. Garg (1993) holds that an action to collect money from a Board taxpayer may be commenced only within the three year period stated in the statute. An action to enforce a state tax lien may be commenced before the lien is extinguished.
Seizure and Sale
The seizure and sale provisions of RTC section 6796 limits the Board's use of this collection remedy to three years from the date of delinquency. There is no reference in the statute to the Board's tax lien period.
Earnings Withholding Order for Taxes
Under Code of Civil Procedure sections 706.070 through 706.084, the Board's use of this collection remedy is limited to the time during which the Board has a state tax lien. 11/3/08. (2010-1).