Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
170.0000 COLLECTION OF TAX BY BOARD
(a) IN GENERAL
170.0250 Uniform Partnership Act (Revised Act). Prior to the enactment of the revised Uniform Partnership Act, the Board was not required to issue a determination against an individual partner if a determination had been validly issued to the partnership. There was no restriction on the Board's ability to execute on, or to impose a lien on, a partner's assets to satisfy a determination issued to the partnership. The revised Act provides that new partnerships formed after January 1, 1997 will be governed by the revised Act. Partnerships formed prior to January 1, 1997 will be governed by the existing Uniform Partnership Act (existing Act) until January 1, 1999.
Under Corporations Code section 16307(c), (a section of the revised Act), a judgment against a partnership is not by itself a judgment against a partner. A judgment against a partnership may not be satisfied from a partner's asset unless there is also a judgment against the partner. Corporations Code section 16307(d) further provides that a judgment creditor of a partner may not levy execution against the assets of the partner to satisfy a judgment based on a claim against the partnership until any of the conditions described in section 16307(d)(1) through (4) exist.
However, at the time the Legislature adopted the revised Act, it also added Revenue and Taxation Code section 6381, which provides:
"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."
Therefore, unless a partnership formed after January 1, 1997 and applying for a seller's permit after January 1, 1997 furnishes to the Board the written partnership agreement described in section 6831, there should be no changes in the Board's ability to lien or levy on a partner's assets for a partnership liability. If a partnership formed after January 1, 1997 and applying for a seller's permit after January 1, 1997 furnishes to the Board the written partnership agreement described in section 6831, the Board will be required to issue a determination against an individual partner before that partner's assets are subject to lien or levy. After the determinations become due and payable, the Board may file or record liens against that partner's assets and, if the Board can show that any of the conditions described in Corporations Code section 16307(d)(1) through (4) exist, it may levy against the partner's assets. 12/16/96.