Did California have to send a third-party grantee the taxpayer's 30-day preliminary notice before recording a nominee lien?

Plain-English summary

California legal staff concluded that Revenue and Taxation Code section 7097 did not require the Board to send a third-party grantee the taxpayer's 30-day preliminary notice before recording a nominee lien against transferred real property.

The letter distinguished an ordinary state tax lien—which generally reaches all California property and rights to property belonging to the delinquent taxpayer—from a nominee lien. According to staff, the nominee lien attached only to the particular real property transferred to the grantee, did not reach the grantee's other property, and did not state that the grantee personally owed delinquent taxes.

Because section 7097 required the preliminary notice to be mailed “to the taxpayer,” staff found no legal requirement to give that notice to the third-party grantee.

Common questions

Did the nominee lien reach all property owned by the grantee?

No. The letter said it attached only to the transferred real property.

Did the lien say the grantee personally owed the tax?

No. Staff expressly said it did not indicate that the third party was delinquent.

Who was entitled to the section 7097 preliminary notice?

The delinquent taxpayer, under the memorandum's reading of the statute—not the third-party grantee.

Citations and references

• California Revenue and Taxation Code section 7097 — 30-day preliminary lien notice requirement discussed
• California Government Code section 7170(a) — general scope of a state tax lien quoted

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/170-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/170-0016.pdf

Original ruling text

170.0016

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
Telephone: (916) 445-6496
FAX: (916) 323-3387

DEAN ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego

June 12, 1996

BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

REDACTED TEXT
Re:

E. L. Sorensen, Jr.
Executive Director

Revenue and Taxation Code Section 7097

Dear REDACTED TEXT:
Gary Jugum has requested that I respond to your memorandum to him dated May 6, 1996 concerning the application of Revenue and Taxation Code section 7097. In your letter, you state that Revenue and Taxation Code section 7097 provides that at least 30 days prior to the filing or recording of a lien, the Board shall mail preliminary notice to the taxpayer that a lien could be filed. You ask, in the situation where the Board files a nominee lien against real property held in the name of a third party, does the third party have a right to a 30 day preliminary notice that a lien could be filed against their property? Revenue and Taxation Code section 7097 provides that: “. . . the notice shall specify the statutory authority of the board for filing or recording the lien, indicate the earliest date on which the lien may be filed or recorded, and state the remedies available to the taxpayer to prevent the filing or recording of the lien. In the event tax liens are filed for the same liability in multiple counties, only one preliminary notice shall be sent.” When the Board files a Notice of State Tax Lien for the delinquent taxes owed by a taxpayer, with the exceptions provided in Government Code section 7170(b) and (c), the lien “. . . attaches to all property and rights to property whether real or personal, tangible or intangible, including all after-acquired property and rights to property, belonging to the taxpayer and located in this state . . . .” (Government Code section 7170(a).) The intent of the Legislature in enacting Revenue and Taxation Code section 7097 was to provide the taxpayer with 30 days notice prior to the filing of the lien so that the taxpayer could take steps to reduce or eliminate the potential consequences of the filing of the lien.

REDACTED TEXT

-2-

June 12, 1996
170.0016

When the Board records a nominee lien against real property, the lien attaches only to the real property transferred. The lien does not attach to other real or personal property owned by the third party and the nominee lien does not indicate that the third party is delinquent in any taxes required to be paid. Since Revenue and Taxation Code section 7097 only requires that the Board mail the preliminary notice “to the taxpayer” and not a third party grantee, it is our opinion that there is no legal requirement that the Board give prior notice to a third party grantee before a nominee lien is recorded against real property previously transferred to him or her by the taxpayer. Very truly yours, Thomas J. Cooke Tax Counsel TJC/cmm