Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Diesel Fuel Tax Law
CHAPTER 7. COLLECTION OF TAX.
Article 2. Suit for Tax
60421. Legal actions to collect deficiencies. At any time within three years after any tax or any amount of tax required to be collected becomes due and payable and at any time within three years after the delinquency of any tax or any amount of tax required to be collected, or within the period during which a lien is in force as the result of the filing of a notice of state tax lien under Section 7171 of the Government Code, the board may bring an action in the courts of this state, of any other state, or of the United States in the name of the state to collect the amount delinquent together with penalties and interest.
The Board's Interpretation of "Due and Payable" under Revenue and Taxation Code Sections 8971 and 60421 is Correct.—Cool Fuel, Inc., a licensed fuel wholesaler, was investigated by the Board and found liable for over $2.5 million for unpaid monthly use fuel taxes for diesel fuel sold in 1993. Cool Fuel requested a re-determination and a hearing before the Board, but before the Board issued a final determination, Cool Fuel filed for chapter 11 bankruptcy protection. The Board filed a proof of claim in the bankruptcy case for $2,606,570 in disputed taxes and interest. Cool Fuel objected to the Board's claim on the basis that it was barred by the three-year statute of limitations provided by Revenue and Taxation Code Sections 8971 and 60421. The Board argued that Revenue and Taxation Code Sections 8854 and 60355 define "due and payable" under Sections 8971 and 60421 as upon a final determination. Consequently, the Sections 8971 and 60421 time limitation period had not yet even begun and the Board's claim was not time barred. The Ninth Circuit held that the Board's interpretation was correct. Therefore, the amount of tax due pursuant to a Board determination is "due and payable" when the determination becomes final. Cool Fuel Inc. vs. Board of Equalization (In re Cool Fuel, Inc.) (2000) 210 F.3d 999. Subsequently, the Board's claim was dismissed on summary judgment. On appeal, the Ninth Circuit reversed and remanded with instructions to enter judgment in favor of the Board. In re Cool Fueling. (2004) 117 Fed. Appx. 514, unpublished. On appeal, the Bankruptcy Appeal Panel affirmed. BAP No. CC-05–1121-KPaB, June 21, 2006.