Was a taxpayer entitled to refunds because a county lien release supposedly ended California's collection period?

Plain-English summary

California legal staff concluded that no refund was due merely because the county-recorded notice had been released, where the file appeared to show that a separate Secretary of State tax-lien filing remained unreleased.

The Board filed a notice with the Secretary of State on January 23, 1987 and recorded a copy with the county four days later. The county notice was released in March 1987, but the file did not show release of the Secretary of State filing.

Under the ten-year rules then in effect, staff said no refund was due for payments made within ten years after the liability became due and payable. If the Secretary of State notice remained filed and unreleased, payments within ten years after that filing also were not refundable.

Common questions

Was every lien filing shown as released?

No. The file did not show release of the Secretary of State filing.

Did staff apply a three-year collection period?

No. It applied the historical ten-year lien rules.

Was a refund due?

No, under the facts and periods described.

Citations and references

• California Revenue and Taxation Code section 6757 — lien creation when tax becomes due and payable discussed
• California Government Code section 7172 — historical ten-year lien duration and refiling rules discussed
• January 23, 1987 Secretary of State filing — unreleased notice identified in the file

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/170-0190.pdf

Original ruling text

State of California

Board of Equalization
Legal Division

Memorandum
To:

Mr. Rick Slater
Supervisor of Collections - MIC:55

From:

Thomas Cooke, Tax Counsel
Legal Division - MIC:82

Subject:

The M--- Company
Account No. SR -- XX-XXXXXX

170.0190
Date:

October 15, 1993

The taxpayer has written a letter to Warren Klomp dated July 19, 1993 in which the taxpayer states that the Board did not lien the assets and property of the M--- Company. The taxpayer claims that the only lien ever recorded against the M--- Company was released on March 23, 1987. The taxpayer contends that since, without the 10-year life span of a lien, the three-year statute of limitations applies. Taxpayer therefore requests a refund of all moneys paid to the Board after the expiration of the three-year statute of limitations. The taxpayer’s letter and other materials has been referred to the Legal Division for an opinion. Initially, it appears that on January 23, 1987, a Notice of State Tax Lien was recorded in the California Secretary of State’s office. Another copy of this Notice of State Tax Lien was then recorded in the Los Angeles Recorder’s office on January 27, 1987. On March 27, 1987, a Release of Lien was recorded in the Los Angeles Recorder’s office. The file does not show that the Notice of Tax Lien filed in the California Secretary of State’s office was ever released. Revenue and Taxation Code section 6757 provides that if any person fails to pay any amount imposed under the California Sales and Use Tax Law at the time that it becomes due and payable, the amount shall thereupon be a perfected and enforceable state tax lien. For nonjeopardy determinations, “due and payable” means the date that the determination becomes final. Revenue and Taxation Code section 6757 states that a state tax lien is subject to the provisions of Government Code section 7150 et ff. Government Code section 7172 provides that a state tax lien continues in effect for 10 years from the date of its creation unless it is sooner released or otherwise discharged, and is extinguished 10 years from the date of its creation unless a Notice of State Tax Lien is recorded or filed. When a Notice of a State Tax Lien is recorded or filed, the lien continues in effect for 10 years from the date of recording or filing. The recorded or filed lien is then extinguished unless a new Notice of State Tax Lien is recorded or filed for another 10-year period.

Mr. Rick Slater

-2-

October 15, 1993
170.0190

It is the opinion of the Legal Division that no refund is due to the taxpayer on any payments made by the taxpayer to the Board within a 10-year period after the tax liability became “due and payable.” If a Notice of State Tax Lien was filed with the Secretary of State’s office (and was not released), no refund is due to the taxpayer on payments made to the Board within a 10-year period after the tax liability became “due and payable” or within a 10-year period after the Notice of State Tax Lien was filed.

TJC:plh

cc:

Mr. Gordon Adelman - MIC:82
Petitions Section - MIC:38
Refunds Section - MIC:39

Mr. Rick Slater

bc:

Arcadia District Administrator - AP

-3-

October 15, 1993
170.0190