California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 18 - Administration-Miscellaneous › Section 1702 - Successor's Liability

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  When Duty to Withhold Purchase Price Arises. The requirement that a successor
				  or purchaser of a business or stock of goods withhold sufficient 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,
				  providing for the payment to the seller or person designated by him of a
				  purchase price in money or property or providing for the assumption of
				  liabilities and only to the extent thereof, and 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 amounts 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 him or her, which include
				  taxes, interest thereon to the date of payment of the taxes, and penalties
				  including penalties for nonpayment of taxes. Liability also extends to
				  penalties determined and unpaid at the time of sale for negligence or
				  intentional disregard of the Sales and Use Tax Law or authorized rules and
				  regulations, and fraud or intent to evade the Sales and Use Tax Law or
				  authorized rules and regulations.
(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 he obtains a certificate from the board stating
				  that no taxes, interest, or penalties are due from a predecessor. He will also
				  be released if he makes a written request to the board for a certificate and if
				  the board does not issue the certificate or mail 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 Sales and Use 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. Such security is not subject to the limitations contained in section
					 6701
					 of the Revenue and Taxation Code.