Could California demand separate maximum security deposits from three limited partnerships sharing the same general partner?

Plain-English summary

California legal staff concluded that three limited partnerships sharing the same general partner could each be required to post the maximum security deposit then allowed by section 6701.

Each partnership was a separate “person” under section 6005 and the actual seller's-permit holder. The result did not change merely because Board staff displayed only the common general partner's name on each permit.

The memorandum therefore allowed a separate historical maximum of $10,000 for each partnership account.

Common questions

Was the common general partner the permit holder?

No. Staff treated each partnership as the permit holder.

Could California demand security from all three?

Yes.

Is the $10,000 cap current?

The source states that cap for 1985; this page does not present it as current.

Citations and references

• California Revenue and Taxation Code section 6005 — separate “person” definition discussed
• California Revenue and Taxation Code section 6701 — historical security authority and cap discussed

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/170-0079.pdf

Original ruling text

State of California

Board of Equalization

Legal Division

170.0079

Memorandum
To:

Mr. P. K. Taylor

From:

Donald J. Hennessy

Date:

December 10, 1985

Security Demanded of a General Partner Common to
Three Different Limited Partnerships

Subject:

Your memorandum of November 4, 1985 relays to us the following question from our Santa Rosa District Office. “Even though a general partner is the only named taxpayer on three different seller’s permits, in his capacity as general partner on each of the permits he represents different limited partnerships. May the Board demand the maximum of $10,000 from each account pursuant to Revenue and Taxation Code Section 6701?” Our answer is yes. The Board may demand the maximum $10,000 security from each limited partnership pursuant to Revenue and Taxation Code Section 6701. Such section states that the Board, whenever it deems it necessary to ensure compliance, may require any “person” to post security in the maximum amount of $10,000. Each limited partnership is a different “person” within Revenue and Taxation Code Section 6005, notwithstanding that the general partner may be the same in different limited partnerships, and each limited partnership may be required to post $10,000 security. This result is not changed by the method the Board staff chooses to identify the limited partnership on the face of the seller’s permit. Such permit is issued to the “person” of the limited partnership not to the general partner. DJH:rar cc:

R. L. Dick