(a) When Duty to Withhold Purchase Price
Arises. The requirement that a successor or purchaser of a business or stock of
goods withhold a sufficient amount of the purchase price to cover the tax
liability of the seller arises only in the case of the purchase and sale of a
business or stock of goods under a contract which provides for the payment to
be made to the seller or to a person designated by the seller of a purchase
price consisting of money, property or the assumption of liabilities or a
combination of forms of consideration. The liability of the successor can be no
more than the amount of the purchase price. This requirement does not arise in
connection with other transfers of a business such as assignments for the
benefit of creditors, foreclosures of mortgages, or sales by trustees in
bankruptcy.
(b) Amounts to Which
Liability Extends. The liability of the successor or purchaser of a business or
stock of goods extends to taxes incurred with reference to the operation of the
business by the predecessor or any former owner, including the sale thereof,
even though not then determined against the former owner, to interest thereon
to the date of payment of the taxes, to penalties for nonpayment of taxes, and
to penalties for negligence or intentional disregard of the Use Fuel Tax Law or
authorized rules and regulations, or for fraud or an intent to evade the tax
determined and unpaid at the time of sale.
(c) Release from Obligation. The purchaser of
the business or stock of goods will be released from further obligation to
withhold the purchase price if the purchaser obtains a certificate from the
board stating that no taxes, interest, or penalties are due from a predecessor.
The purchaser will also be released if he or she makes a written request to the
board for a certificate and if the board does not issue the certificate or
mails to the purchaser a notice of the amount of the tax, interest, and
penalties that must be paid as a condition of issuing the certificate within 60
days after the latest of the following dates:
(1) The date the board receives a written
request from the purchaser for a certificate.
(2) The date of the sale of the business or
stock of goods.
(3) The date the
former owner's records are made available for audit.
The certificate may be issued after the payment of all
amounts due under the Use Fuel Tax Law, according to the records of the board
as of the date of the certificate, or after the payment of the amounts,
including amounts not yet ascertained, is secured to the satisfaction of the
board.
(d)
Enforcement of Obligation. The liability is enforced by service of a notice of
successor liability not later than three years after the date the board
receives written notice of the purchase of the business or stock of goods. The
successor may petition the Board for reconsideration of the liability within 30
days after service. The liability becomes final, and the amount due and
payable, in the same manner as determinations and redeterminations of other use
fuel tax liability.
(e) Separate
Business Locations. Where one person operates several business establishments,
each at a separate location, each establishment is a separate "business" and
has a separate "stock of goods" for purposes of determining the liability of a
successor. A purchaser of the business or stock of goods of any such
establishment is subject to liability as a successor with respect to that
establishment even if he or she does not purchase the business or stock of
goods of all the establishments.
(f) Purchase of a Portion of a Business. A
person who purchases a portion of a business or stock of goods may become
liable as successor. For example, the purchaser may be liable where he or she
purchases substantially all of the business or stock of goods or where the
business or stock of goods is purchased by two or more persons. In cases of
doubt as to possible liability, the purchaser should obtain a certificate as
provided in (c) above.
Notes
Cal. Code
Regs. Tit. 18, §
1334
1. New
section filed 3-16-89; operative 4-15-89 (Register 89, No. 11). For history of
former section, see Register 63, No. 22.
2. Amendment filed 7-1-92;
operative 7-31-92 (Register 92, No. 28).
3. Editorial correction of
subsection (a) (Register 95, No. 48).
Note: Authority cited: Section
9251,
Revenue and Taxation Code. Reference: Sections
9021,
9022,
9023
and
9024,
Revenue and Taxation Code.
1. New section filed
3-16-89; operative 4-15-89 (Register 89, No. 11). For history of former
section, see Register 63, No. 22.
2. Amendment filed 7-1-92;
operative 7-31-92 (Register 92, No. 28).
3. Editorial correction of
subsection (a) (Register 95, No. 48) .