Article 4. Miscellaneous Provisions of California Revenue And Taxation Code >> Division 2. >> Part 10.2. >> Chapter 5. >> Article 4.
The remedies of the state provided for in this chapter are
cumulative, and no action taken by the Franchise Tax Board
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.
In all proceedings under this chapter the Franchise Tax
Board may act on behalf of the people of the State of California.
The amounts required to be paid by any person under this
part together with interest and penalties shall be satisfied first in
any of the following cases:
(a) Whenever the person is insolvent.
(b) Whenever the person makes a voluntary assignment of assets.
(c) Whenever the estate of the person in the hands of executors,
administrators, or heirs is insufficient to pay all the debts due
from the deceased.
(d) Whenever the estate and effects of an absconding, concealed,
or absent person required to pay any amount under this part are
levied upon by process of law.
This section does not give the state a preference over any lien or
security interest which was recorded or perfected prior to the time
when the state records or files its lien as provided in Section 7171
of the Government Code.
The preference given to the state by this section shall be
subordinate to the preferences given to claims for personal services
by Sections 1204 and 1206 of the Code of Civil Procedure.
(a) (1) If any person, other than an organization exempt
from taxation under Section 23701, fails to pay any amount of tax,
penalty, addition to tax, interest, or other liability imposed and
delinquent under Part 10 (commencing with Section 17001), Part 11
(commencing with Section 23001), or this part, a collection cost
recovery fee shall be imposed if the Franchise Tax Board has mailed
notice to that person for payment that advises that continued failure
to pay the amount due may result in collection action, including the
imposition of a collection cost recovery fee. The collection cost
recovery fee shall be in the amount of:
(A) In the case of an individual, partnership, limited liability
company classified as a partnership for California income tax
purposes, or fiduciary, eighty-eight dollars ($88) or an amount as
adjusted under subdivision (b).
(B) In the case of a corporation or limited liability company
classified as a corporation for California income tax purposes, one
hundred sixty-six dollars ($166) or an amount as adjusted under
subdivision (b).
(2) If any person, other than an organization exempt from taxation
under Section 23701, fails or refuses to make and file a tax return
required by Part 10 (commencing with Section 17001), Part 11
(commencing with Section 23001), or this part, within 25 days after
formal legal demand to file the tax return is mailed to that person
by the Franchise Tax Board, the Franchise Tax Board shall impose a
filing enforcement cost recovery fee in the amount of:
(A) In the case of an individual, partnership, limited liability
company classified as a partnership for California income tax
purposes, or fiduciary, fifty-one dollars ($51) or an amount as
adjusted under subdivision (b).
(B) In the case of a corporation or limited liability company
classified as a corporation for California income tax purposes, one
hundred nineteen dollars ($119) or an amount as adjusted under
subdivision (b).
(b) For fees imposed under this section during the fiscal year
1993-94 and fiscal years thereafter, the amount of those fees shall
be set to reflect actual costs and shall be specified in the annual
Budget Act.
(c) Interest shall not accrue with respect to the cost recovery
fees provided by this section.
(d) The amounts provided by this section are obligations imposed
by this part and may be collected in any manner provided under this
part for the collection of a tax.
(e) Subdivision (a) is operative with respect to the notices for
payment or formal legal demands to file, either of which is mailed on
or after September 15, 1992.
(f) The Franchise Tax Board shall determine the total amount of
the cost recovery fees collected or accrued through June 30, 1993,
and shall notify the Controller of that amount. The Controller shall
transfer that amount to the Franchise Tax Board, and that amount is
hereby appropriated to the board for the 1992-93 fiscal year for
reimbursement of its collection and filing enforcement efforts.
(a) Except as otherwise provided in subdivisions (b) and
(e), after 20 years have lapsed from the date the latest tax
liability for a taxable year or the date any other liability that is
not associated with a taxable year becomes "due and payable" within
the meaning of Section 19221, the Franchise Tax Board may not collect
that amount and the taxpayer's liability to the state for that
liability is abated by reason of lapse of time. Any actions taken by
the Franchise Tax Board to collect an uncollectible liability shall
be released, withdrawn, or otherwise terminated by the Franchise Tax
Board, and no subsequent administrative or civil action shall be
taken or brought to collect all or part of that uncollectible amount.
Any amounts received in contravention of this section shall be
considered an overpayment that may be credited and refunded in
accordance with Article 1 (commencing with Section 19301) of Chapter
6.
(b) If a timely civil action filed pursuant to Article 2 of
Chapter 6 of this part is commenced, or a claim is filed in a probate
action, the period for which the liability is collectable shall be
extended and shall not expire until that liability, probate claim, or
judgment against the taxpayer arising from that liability is
satisfied or becomes unenforceable under the laws applicable to the
enforcement of civil judgments.
(c) For purposes of this section, both of the following apply:
(1) "Tax liability" means a liability imposed under Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part, and includes any additions to tax, interest,
penalties, fees and any other amounts relating to the imposed
liability.
(2) If more than one liability is "due and payable" for a
particular taxable year, with the exception of a liability resulting
from a penalty imposed under Section 19777.5, the "due and payable"
date that is later in time shall be the date upon which the 20-year
limitation of subdivision (a) commences.
(d) This section shall not apply to amounts subject to collection
by the Franchise Tax Board pursuant to Article 5, 5.5, or 6 of this
chapter, or any other amount that is not a tax imposed under Part 10
or Part 11, but which the Franchise Tax Board is collecting as though
it were a final personal income tax delinquency.
(e) (1) The expiration of the period of limitation on collection
under this section shall be suspended for the following periods:
(A) The period that the Franchise Tax Board is prohibited from
involuntary collection under subparagraph (B) of paragraph (1) of
subdivision (b) of Section 19271 relating to collection of child
support delinquencies, plus 60 days thereafter.
(B) The period during which the Franchise Tax Board is prohibited
by reason of a bankruptcy case from collecting, plus six months
thereafter.
(C) The period described under subdivision (d) of Section 19008
relating to installment payment agreements.
(D) The period during which collection is postponed by operation
of law under Section 18571, related to postponement by reason of
service in a combat zone, or under Section 18572, related to
postponement by reason of presidentially declared disaster or
terroristic or military action.
(E) During any other period during which collection of a tax is
suspended, postponed, or extended by operation of law.
(2) A suspension of the period of limitation under this
subdivision shall apply with respect to both parties of any liability
that is joint and several.
(f) This section shall be applied on and after July 1, 2006, to
any liability "due and payable" before, on, or after that date.
The Franchise Tax Board may, in the allowance of any amount
as a credit or refund, or in the collection of any amount as a
deficiency or underpayment, of any tax imposed by Part 10 (commencing
with Section 17001) or Part 11 (commencing with Section 23001),
disregard a fractional part of a dollar unless it amounts to fifty
cents ($0.50) or more, in which case it shall be increased to one
dollar ($1).
(a) At any time within which an action can be brought to
collect any delinquent amounts as provided in Article 2 (commencing
with Section 19371) of Chapter 6, the Franchise Tax Board may collect
the tax, together with penalties and interest, in the following
manner: The Franchise Tax Board shall seize any personal property
owned by the taxpayer against whom the tax is assessed, and
thereafter sell at public auction the property so seized, or a
sufficient portion thereof, to pay the tax due hereunder, together
with any interest, and any penalty or penalties imposed hereby for
that delinquency, and any and all costs that may have been incurred
on account of the seizure and sale. Notice of the intended sale and
the time and place thereof, shall be given to the delinquent taxpayer
and to all persons appearing of record to have an interest in the
property, in writing, at least 10 days before the date set for the
sale by enclosing the notice in an envelope addressed to the taxpayer
at its last known place of business in this state if any, and, in
the case of any person appearing of record to have an interest in the
property, addressed to that person at the last known place of
residence, if any, and depositing the same in the United States mail,
postage prepaid, and by publication for at least 10 days before the
date set for the sale in a newspaper of general circulation published
in the county in which the property seized is to be sold; provided,
however, that if there be no newspaper of general circulation in that
county then by the posting of the notice in three public places in
the county for the 10-day period. The notice shall contain a
description of the property to be sold, together with a statement of
the amount of the taxes, interest, penalties, and costs, the name of
the taxpayer, and the further statement that, unless the taxes,
interest, penalties, and costs are paid on or before the time fixed
in the notice for the sale, the property, or so much thereof as may
be necessary, will be sold in accordance with law and the notice.
(b) For purposes of this section, the term tax shall include any
liability imposed pursuant to Article 7 (commencing with Section
19131) of Chapter 4, and any interest imposed thereon.
At any sale authorized by Section 19262, the property shall
be sold by the Franchise Tax Board or its duly authorized agent in
accordance with law and the notice of sale, and the Franchise Tax
Board shall deliver to the purchaser a bill of sale for the property
so sold and the bill of sale shall vest title in the purchaser. The
unsold portion of any property so seized may be left at the place of
sale at the risk of the taxpayer. If, upon any sale, the moneys so
received exceed the amount of all taxes, interest, penalties and
costs due the state from the taxpayer, any excess shall be returned
to the taxpayer and a receipt therefor obtained. However, if any
person having an interest in or lien upon the property has filed with
the Franchise Tax Board prior to any sale notice of the interest or
lien, the Franchise Tax Board shall withhold any excess pending a
determination of the rights of the respective parties thereto by a
court of competent jurisdiction.
If, for any reason, the receipt of the taxpayer is not available,
the Franchise Tax Board shall deposit the excess moneys with the
Treasurer, as trustee for the owner, subject to the order of the
taxpayer or his or her trust or estate, or in the case of a
corporation, its successor through reorganization, merger, or
consolidation, or its stockholders upon dissolution.
(a) Notwithstanding Sections 706.071 and 706.080 of the Code
of Civil Procedure, the Franchise Tax Board shall establish a pilot
program to issue earnings withholding orders for taxes and any other
notice or document required to be served or provided in connection
with an earnings withholding order, pursuant to Article 4 (commencing
with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part
2 of the Code of Civil Procedure, to government and private employers
by magnetic media, electronic transmission, or other electronic
technology. The purpose of the pilot program is to study the
feasibility and cost-effectiveness of the Franchise Tax Board issuing
earnings withholding orders to employers using magnetic media,
electronic transmission, or other electronic technology.
(b) The pilot program shall apply to any earnings withholding
order for taxes and any other notice or document required to be
served or provided in accordance with subdivision (a) on or after
January 1, 1997, and before January 1, 1999, to an employer who
agrees to participate in the pilot program.
(c) For purposes of the pilot program, the Franchise Tax Board
shall identify and work with employers who agree to be served as
authorized by subdivision (a).
(d) The pilot program shall be successful if the Franchise Tax
Board can demonstrate all of the following:
(1) The Franchise Tax Board's time to prepare and serve earnings
withholding orders by magnetic media, electronic transmission, or
other electronic technology, as authorized by subdivision (a), will
be reduced by at least two days when compared to orders that would
otherwise be prepared and served under Article 4 (commencing with
Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of
the Code of Civil Procedure.
(2) The Franchise Tax Board's administrative cost to prepare and
serve earnings withholding orders by magnetic media, electronic
transmission, or other electronic technology, as authorized by
subdivision (a), will be less than the cost to prepare and serve
orders as specified under Article 4 (commencing with Section 706.070)
of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil
Procedure.
(3) The employer's time and administrative costs to receive and
comply with orders served in accordance with subdivision (a) do not
exceed the time and administrative costs when compared to receiving
and complying with orders served in accordance with Article 4
(commencing with Section 706.070) of Chapter 5 of Division 2 of Title
9 of Part 2 of the Code of Civil Procedure.
(e) If the Franchise Tax Board determines that the pilot program
is successful based on the criteria stated in subdivision (d), the
Franchise Tax Board may continue to issue earnings withholding orders
for taxes and any other notice or document required to be served or
provided in connection with an earnings withholding order, pursuant
to Article 4 (commencing with Section 706.070) of Chapter 5 of
Division 2 of Title 9 of Part 2 of the Code of Civil Procedure, to
government and private employers who agree to accept service by
magnetic media, electronic transmission, or other electronic
technology.
(f) This section shall apply in the same manner and with the same
force and effect and to the full extent as if this section had been
incorporated in full into Article 4 (commencing with Section 706.070)
of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil
Procedure.
(a) (1) The Franchise Tax Board, in coordination with
financial institutions doing business in this state, shall operate a
Financial Institution Record Match System utilizing automated data
exchanges to the maximum extent feasible.
(2) The Franchise Tax Board shall prescribe any rules and
regulations that may be necessary or appropriate to implement this
section. These rules and regulations shall include all of the
following:
(A) A structure by which financial institutions, or their
designated data-processing agents, shall receive from the Franchise
Tax Board the file or files of delinquent debtors that the
institution shall match with its own list of accountholders to
identify delinquent tax debtor accountholders at the institution.
(B) An option by which financial institutions without the
technical ability to process the data exchange, or without the
ability to employ a third-party data processor to process the data
exchange, may forward to the Franchise Tax Board a list of all
accountholders and their social security numbers or other taxpayer
identification numbers, so that the Franchise Tax Board shall match
that list with the file or files of delinquent tax debtors.
(C) Authority for the Franchise Tax Board to exempt a financial
institution from the requirements of this section if the Franchise
Tax Board determines that the financial institution participation
would not generate sufficient revenue to be cost effective for the
Franchise Tax Board.
(D) Authority for the Franchise Tax Board to temporarily suspend
the requirements of this section for a financial institution if the
financial institution provides the Franchise Tax Board with a written
notice from its supervisory banking authority that it is determined
to be undercapitalized, significantly undercapitalized, or critically
undercapitalized as defined by FDIC Regulation 325.103(b)(3), (4),
and (5) or NCUA Regulation 702.102. The notice provided pursuant to
this subparagraph shall be subject to the protections of Section
19542.
(b) The Financial Institution Record Match System shall not be
subject to any limitation set forth in Chapter 20 (commencing with
Section 7460) of Division 7 of Title 1 of the Government Code.
However, any use of the information, other than information relating
to an address, provided pursuant to this section for any purpose
other than the collection of amounts identified in paragraphs (1),
(2), and (3) shall be a violation of Section 19542.
(1) Delinquent amounts due the board, as imposed under Part 1
(commencing with Section 6001), Part 1.5 (commencing with Section
7200), Part 1.6 (commencing with Section 7251), Part 1.7 (commencing
with Section 7280), Part 3 (commencing with Section 8601), Part 3.5
(commencing with Section 9401), Part 6 (commencing with Section
11201), Part 13 (commencing with Section 30001), Part 14 (commencing
with Section 32001), Part 18.5 (commencing with Section 38101), Part
19 (commencing with Section 40001), Part 20 (commencing with Section
41001), Part 22 (commencing with Section 43001), Part 22.5
(commencing with Section 44000), Part 23 (commencing with Section
45001), Part 24 (commencing with Section 46001), Part 26 (commencing
with Section 50101), Part 30 (commencing with Section 55001), or Part
31 (commencing with Section 60001).
(2) Delinquent amounts due the Employment Development Department,
as imposed under the Unemployment Insurance Code, or other debts or
penalty assessments referred to the Employment Development Department
for collection.
(3) Delinquent franchise or income tax or other debts referred to
the Franchise Tax Board for collection, as imposed under Part 5
(commencing with Section 10701), Part 10 (commencing with Section
17001), this part, or Part 11 (commencing with Section 23001).
(c) (1) To effectuate the Financial Institution Record Match
System, financial institutions subject to this section shall provide
to the Franchise Tax Board on a quarterly basis the name, record
address, and other addresses, social security number or other
taxpayer identification number, and other identifying information for
each delinquent tax debtor, as identified by the Franchise Tax Board
by name and social security number or other taxpayer identification
number, who maintains an account at the institution.
(2) The first data file created by the Franchise Tax Board for
purposes of matching tax debtor records to financial institution
accountholder records shall be limited to 600,000 tax debtor records.
The number of tax debtor records included in a subsequent data file
created by the Franchise Tax Board may be increased by no more than
600,000 tax debtor records greater than the number of tax debtor
records included in the immediately preceding data file until all
eligible tax debtor records are included in the data match file.
(d) Unless otherwise required by law, a financial institution
furnishing a report or providing information to the Franchise Tax
Board pursuant to this section shall not disclose to a depositor or
an accountholder, or a codepositor or coaccountholder, that the name,
address, social security number or other taxpayer identification
number, or other identifying information of that delinquent tax
debtor has been received from or furnished to the Franchise Tax
Board.
(e) A financial institution shall incur no obligation or liability
to any person arising from any of the following:
(1) Furnishing information to the Franchise Tax Board as required
by this section.
(2) Failing to disclose to a depositor or accountholder that the
name, address, social security number or other taxpayer
identification number, or other identifying information of that
delinquent tax debtor was included in the data exchange with the
Franchise Tax Board required by this section.
(3) Any other action taken in good faith to comply with the
requirements of this section.
(f) The Franchise Tax Board may institute civil proceedings to
enforce this section.
(g) Any financial institution that willfully fails to comply with
the rules and regulations promulgated by the Franchise Tax Board for
the administration of delinquent tax collections, unless it is shown
to the satisfaction of the Franchise Tax Board that the failure is
due to reasonable cause, shall be assessed a penalty upon notice and
demand of the Franchise Tax Board and collected in the same manner as
tax. The penalty imposed under this section shall be in an amount
equal to fifty dollars ($50) for each record not provided, but the
total imposed on that financial institution for all such failures
during any calendar year shall not exceed one hundred thousand
dollars ($100,000).
(h) For purposes of this section:
(1) "Account" means a demand deposit account, share or share draft
account, checking or negotiable withdrawal order account, savings
account, time deposit account, or money market mutual fund account,
regardless of whether the account bears interest.
(2) "Financial institution" means:
(A) A depository institution, as defined in Section 1813(c) of
Title 12 of the United States Code.
(B) An institution-affiliated party, as defined in Section 1813(u)
of Title 12 of the United States Code.
(C) A federal credit union or state credit union, as defined in
Section 1752 of Title 12 of the United States Code, including an
institution-affiliated party of a credit union, as defined in Section
1786(r) of Title 12 of the United States Code.
(D) A benefit association, insurance company, safe deposit
company, money-market fund, or similar entity authorized to do
business in this state.
(3) "Delinquent tax debtor" means any of the following:
(A) Any person liable for any tax, fee, or surcharge amounts, and
any penalty, interest, or other amounts required to be paid to the
board, where the liability remains unpaid after 30 days from demand
for payment by the board, and the person is not making current timely
installment payments on the liability under an installment payment
agreement as provided by law.
(B) Any person liable for any amounts required to be paid to the
Employment Development Department or for any debts or penalty
assessments referred to the Employment Development Department for
collection and the person is not making current timely installment
payments on the liability under an approved installment payment
agreement as provided by law.
(C) Any person liable for any income or franchise tax or other
debt referred to the Franchise Tax Board for collection as imposed
under Part 5 (commencing with Section 10701), Part 10 (commencing
with Section 17001), this part, or Part 11 (commencing with Section
23001), including tax, penalties, interest, and fees, where the tax
or debt, including the amount, if any, referred to the Franchise Tax
Board for collection remains unpaid after 30 days from demand for
payment by the Franchise Tax Board, and the person is not making
current timely installment payments on the liability under an
agreement pursuant to Section 19008.
(i) A financial institution shall be reimbursed by the Franchise
Tax Board for actual costs incurred to implement this section. Upon
receipt of an invoice from the financial institution, cost
reimbursement by the Franchise Tax Board shall be limited to the
following:
(1) For one-time startup costs of a financial institution, no more
than two thousand five hundred dollars ($2,500).
(2) For data matching costs of a financial institution, other than
one-time startup costs, no more than two hundred fifty dollars
($250) per calendar quarter.
(j) The first data exchange for purposes of matching tax debtor
records to financial institution accountholder records shall occur no
earlier than April 1, 2012.
(k) This section shall be operative 120 days after the effective
date of Chapter 14 of the Statutes of 2011 and shall apply with
respect to persons that are delinquent tax debtors on and after that
date.
(1) Notwithstanding any other law, on or after January 1, 2013,
and on a quarterly basis thereafter, the board and the Employment
Development Department shall, in the format and manner specified by
the Franchise Tax Board, provide their respective delinquent tax
debtor information to the Franchise Tax Board for inclusion in the
Financial Institution Record Match System.
(2) The Franchise Tax Board shall include the delinquent tax
debtor information provided by the board and the Employment
Development Department in its data file used to match delinquent tax
debtor records to financial institution accountholder records.
(3) The Franchise Tax Board shall provide the board or the
Employment Development Department, as applicable, with any matched
financial institution accountholder record information resulting from
the delinquent tax debtor information provided by the board or the
Employment Development Department.
(4) The board and the Employment Development Department shall
reimburse the Franchise Tax Board for any costs incurred by the
Franchise Tax Board related to the implementation and administration
of this section with respect to delinquent tax debtors described in
subparagraph (A) or (B), respectively, of paragraph (3) of
subdivision (h).
(l) The amendments to this section by the act adding this
subdivision shall apply to information provided pursuant to this
section before, on, and after the effective date of that act.