Code Section Group

Revenue and Taxation Code - RTC

DIVISION 2. OTHER TAXES [6001 - 61045]

  ( Heading of Division 2 amended by Stats. 1968, Ch. 279. )

PART 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS [18401 - 19802]

  ( Part 10.2 added by Stats. 1993, Ch. 31, Sec. 26. )

CHAPTER 5. Collection of Tax [19201 - 19291]

  ( Chapter 5 added by Stats. 1993, Ch. 31, Sec. 26. )

ARTICLE 4. Miscellaneous Provisions [19251 - 19266]
  ( Article 4 added by Stats. 1993, Ch. 31, Sec. 26. )

19251.
  

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.

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

19252.
  

In all proceedings under this chapter the Franchise Tax Board may act on behalf of the people of the State of California.

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

19253.
  

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.

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

19254.
  

(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), Part 32 (commencing with Section 61000), Title 25 (commencing with Section 100800) of the Government Code, 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.

(Amended by Stats. 2019, Ch. 38, Sec. 37. (SB 78) Effective June 27, 2019.)

19255.
  

(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 does not apply to amounts subject to collection by the Franchise Tax Board pursuant to Article 5.5 or 7 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 during which the Franchise Tax Board is prohibited by reason of a bankruptcy case from collecting, plus six months thereafter.

(B) The period described under subdivision (d) of Section 19008 relating to installment payment agreements.

(C) 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.

(D) 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 applies 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.

(Amended by Stats. 2016, Ch. 86, Sec. 286. (SB 1171) Effective January 1, 2017.)

19256.
  

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).

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

19262.
  

(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.

(Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

19263.
  

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.

(Amended by Stats. 1997, Ch. 605, Sec. 31. Effective January 1, 1998.)

19264.
  

(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.

(Amended by Stats. 2004, Ch. 193, Sec. 186. Effective January 1, 2005.)

19266.
  

(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.

(Amended by Stats. 2013, Ch. 200, Sec. 1. (AB 1411) Effective January 1, 2014.)

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