Article 1 - Security for Fee

California Revenue and Taxation Code — §§ 46401-46407

Sections (7)

Added by Stats. 1991, Ch. 300, Sec. 6. Effective August 1, 1991.

(a)The board, whenever it determines it to be necessary to ensure compliance with this part, may require any person subject to this part to place with it such security as the board may determine to be reasonable, taking into account the circumstances of that person. Any security in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions shall be held by the board in trust to be used solely in the manner provided by this section. The board may sell the security at public auction if it becomes necessary to do so in order to recover any fee or any amount required to

be collected, including any interest or penalty due. Notice of the sale shall be served upon the person who placed the security personally or by mail.

(b)If service is made by mail, service shall be addressed to the person at his or her address as it appears in the records of the board. Service shall be made at least 30 days prior to the sale in the case of personal service, and at least 40 days prior to the sale in the case of service by mail. Security in the form of a bearer bond issued by the United States or the State of California which has a prevailing market price may, however, be sold by the board at private sale at a price not lower than the prevailing market price thereof. Upon any sale, any surplus above the amounts due shall be returned to the person who placed the security.

§ 46402

Added by Stats. 1991, Ch. 300, Sec. 6. Effective August 1, 1991.

If any feepayer is delinquent in the payment of any obligations imposed by this part, or in the event a determination has been made against the feepayer which remains unpaid, the board may, not later than three years after the payment becomes delinquent, or the last recording or filing of a notice of state tax lien under Section 7171 of the Government Code, give notice thereof, personally or by first-class mail, to all persons, including any officer or department of the state or any political subdivision or agency of the state, having in their possession or under their control any credits or other personal property belonging

to the feepayer, or owing any debts to the feepayer. In the case of any state officer, department, or agency, the notice shall be given to the officer, department, or agency prior to the time it presents the claim of the delinquent taxpayer to the Controller.

§ 46403

Added by Stats. 1991, Ch. 300, Sec. 6. Effective August 1, 1991.

After receiving the notice, the person so notified shall neither transfer nor make any other disposition of the credits, other personal property, or debts in their possession or under their control at the time they receive the notice until the board consents to a transfer or disposition or until 60 days elapse after the receipt of the notice, whichever period expires first.

§ 46404

Added by Stats. 1991, Ch. 300, Sec. 6. Effective August 1, 1991.

All persons so notified shall immediately, after receipt of the notice, advise the board of all credits, other personal property, or debts in their possession, under their control, or owing by them. If the notice seeks to prevent the transfer or other disposition of a deposit in a bank or other credits or personal property in the possession or under the control of a bank, the notice, to be effective, shall state the amount, interest, and penalty due from the person and shall be delivered or mailed to the branch or office of the bank at which the deposit is carried at which the credits or personal property is held.

Notwithstanding any other provision, with respect to a deposit in a bank or other credits or personal property in the possession or under the control of a bank, the notice shall only be effective with respect to an amount not in excess of the amount, interest, and penalty due from the person.

§ 46405

Added by Stats. 1991, Ch. 300, Sec. 6. Effective August 1, 1991.

If, during the effective period of the notice to withhold, any person so notified makes any transfer or disposition of the property or debts required to be withheld, to the extent of the value of the property or the amount of the debts thus transferred or paid, he or she shall be liable to the state for any indebtedness due under this part from the person with respect to whose obligation the notice was given, if solely by reason of that transfer or disposition, the state is unable to recover the indebtedness of the person with respect to whose obligation the notice was given.

§ 46406

Amended by Stats. 2022, Ch. 474, Sec. 84. (SB 1496) Effective January 1, 2023.

(a)The department may, by notice of levy, served personally, by first-class mail, or by electronic transmission or other electronic technology, require all persons having in their possession, or under their control, any payments, credits other than payments, or other personal property belonging to a feepayer or other person liable for any amount under this part to withhold from those credits or other personal property the amount of any fee, interest, or penalties due from that feepayer or other person, or the amount of any liability incurred by them under this part, and to transmit the amount withheld to the department at the time it may designate. The notice of levy shall have the same effect as a levy pursuant to a writ of execution except for the continuing effect of the levy, as

provided in subdivision (b).

(b)The person served shall continue to withhold pursuant to the notice of levy until the amount specified in the notice, including accrued interest, has been paid in full, until the notice is withdrawn, or until one year from the date the notice is received, whichever occurs first.

(c)The amount required to be withheld is the lesser of the following:

(1)The amount due stated on the notice.

(2)The sum of both of the following:

(A)The amount of the payments, credits other than payments, or personal property described above and under the person’s possession or control when the notice of levy is served on the person.

(B)The amount of each payment that becomes due following service of the notice of levy on the person and prior to the expiration of the levy.

(d)For the purposes of this section, the term “payments” does not include earnings as that term is defined in subdivision (a) of Section 706.011 of the Code of Civil Procedure or funds in a deposit account as defined in paragraph (29) of subdivision (a) of Section 9102 of the Commercial Code. The term “payments” does include any of the following:

(1)Payments due for services of independent contractors, dividends, rents, royalties, residuals, patent rights, or mineral or other natural rights.

(2)Payments or credits due or becoming due periodically as a result of an enforceable obligation to the feepayer or other

person liable for the fee.

(3)Any other payments or credits due or becoming due the feepayer or other person liable as the result of written or oral contracts for services or sales whether denominated as wages, salary, commission, bonus, or otherwise.

(e)In the case of a financial institution, to be effective, the notice shall state the amount due from the feepayer and shall be delivered, mailed, or served by electronic transmission or other electronic technology to the branch or office of the financial institution where the credits or other property is held, unless another branch or office is designated by the financial institution to receive the notice.

§ 46407

Added by Stats. 2000, Ch. 1052, Sec. 74. Effective January 1, 2001.

(a)Notwithstanding Article 7 (commencing with Section 706.151) of Chapter 5 of Title 9 of Part 2 of the Code of Civil Procedure, if the board determines, upon receiving information from a fee payer or other person liable for any amount under this part, that the person’s employer withheld earnings for taxes pursuant to Section 46406 and failed to remit the withheld earnings to the board, the employer shall be liable for the amount not remitted. The board’s determination shall be based on payroll documents or other substantiating evidence

furnished by the person liable for the tax.

(b)Upon its determination, the board shall mail notice to the employer at its last known address that upon failure to remit the withheld earnings to the board within 15 days of the date of its notice to the employer, the employer shall be liable for that amount which was withheld and not remitted.

(c)If the employer fails to remit the amount withheld to the board upon notice, that amount for which the employer is liable shall be determined, collected, and paid as though it were a tax deficiency. The amount may be assessed at any time prior to seven years from the first day that the unremitted amount, in the aggregate, was first withheld. Interest shall accrue on that amount from the first day that the unremitted amount, in the aggregate, was first withheld.

(d)When the

determination against the employer is final and due and payable, the person’s account shall be immediately credited with an amount equal to that determined amount as though it were a payment received by the board on the first date that the unremitted amount, in the aggregate, was first withheld by the employer.

(e)Collection against the person liable for the tax is stayed for both the following amount and period:

(1)An amount equal to the amount determined by the board under subdivision (a).

(2)The earlier of the time the credit is applied to the person’s account pursuant to subdivision (d) or the determination against the employer is withdrawn or revised and the person is notified by the board thereof.

(f)If under this section an amount that was

withheld and not remitted to the board is final and due and payable by the employer and credited to the person’s account, this remedy shall be the exclusive remedy for the person to recover that amount from the employer.

(g)This section shall apply to determinations made by the board on or after the effective date of the act adding this section.