Did newspaper publication of a bulk-sale notice give the Board effective notice of partnership dissolution and end later sales-tax liability?

Plain-English summary

A partnership held a seller's permit for ladies' ready-to-wear, issued March 3, 1965. A permit-revocation notice was mailed December 28, 1965. In February 1966 B sold the partnership interest to L, and a bulk-sale-transfer notice was published in local newspapers late that month. The Board did not receive actual dissolution notice until an auditor learned of it July 14, 1966.

The partnership argued that newspaper publication gave the Board notice and ended liability for later tax. The Tax Counsel recommendation disagreed. Publication was not effective notice to the Board; actual notice was required before the taxpayer could obtain relief from taxes accruing after dissolution.

The letter relied on Credit Bureaus of Merced County v. Shipman, 167 Cal.App.2d 673, for placing the notice burden on a defendant relying on dissolution. Staff proposed recommending redetermination without adjustment for the June 1–July 14, 1966 liability period, but said official notice would follow after Board action. No later action or outcome is included.

Permit chronology, actual-notice rule, recommendation posture, and missing outcome

The letter answers a January 11, 1967 request addressed to Robert N. Zambelich concerning a petition for redetermination on behalf of unidentified clients. The request, petition, representatives, clients, partnership and account number are not included. The source repeatedly presents facts as staff's understanding, not as attached findings.

The partnership received its seller's permit March 3, 1965 for a women's ready-to-wear business. The Board mailed a permit-revocation notice December 28, 1965. The source supplies no permit application, permit, account, sales, returns, filing failures, revocation grounds, address, mailing evidence, receipt, effective date, protest, or later permit status.

In February 1966, B sold the partnership share to L. A bulk-sale-transfer notice was published in local newspapers late that month as legally required. The source supplies no partnership agreement, ownership percentages, interest-sale agreement, price, assets, liabilities, closing date, dissolution instrument, bulk-sale notice, newspaper, publication date, text, affidavit, statute, creditor, or successor-business record.

The Board did not obtain actual notice of partnership dissolution until one of its auditors learned of it July 14, 1966. No auditor, communication, document, method, time, recipient, agency log, or acknowledgment is included. The determination covered June 1 through July 14, but the source gives no taxable transactions, returns, gross receipts, tax type or amount, penalty, interest, assessment date, notice, or audit workpapers.

The representatives contended publication gave the Board notice and prevented partnership liability for sales and use taxes accruing afterward. Staff rejected publication as effective dissolution notice to the Board and required actual notice before post-dissolution relief. The letter does not define the required notice form, say whether a permit-closeout form existed, identify whom to notify, or decide liability after July 14.

Staff said its position appeared consistent with Credit Bureaus of Merced County v. Shipman, 167 Cal.App.2d 673, which it described as placing the burden on a defendant relying on dissolution to prove notice. The scanned source visibly prints that citation, and explicit-list legal research resolved it to the source-named Credit Bureaus of Merced County, Inc. v. Shipman. The letter does not reproduce the opinion or equate all of its facts with this tax dispute.

The closing posture is a proposal: we propose to recommend to the Board that a redetermination be issued without adjustment to tax. The representatives were to receive official notice after the Board acted. No recommendation memorandum, Board agenda, vote, decision, redetermination, official notice, later assessment, payment, claim, appeal, or outcome is supplied. The page therefore does not treat the proposal as final action.

The official PDF is a raster scan with an embedded OCR text layer. Visual inspection confirmed the citation and material dates, amounts and wording. The source itself prints Please accept our apology for our late replay; that apparent original typographical error is preserved in the original-text section rather than silently changed.

The live annotation preserves newspaper bulk-sale publication, ineffective notice, actual Board notice, relief condition, and April 26, 1967 date. It omits the January 11 request and petition; permit issue and revocation dates; February interest sale; July 14 auditor notice; June 1–July 14 period; case and burden; proposed-recommendation posture; promised later official notice; OCR/source details; missing records; and absent final outcome.

What this means for you

Dissolving partnerships

Public notice to creditors or bulk-sale publication may not replace actual notice required by a tax agency. Use the agency's current permit-closeout and dissolution channels and retain sent, received and effective-date proof.

Attorneys and tax professionals

Reconcile partner changes, entity dissolution, permit revocation, bulk-sale compliance, agency notice, tax periods and transactions, petitions, recommendation versus final action, and successor liability. Confirm the official decision rather than inferring it from staff's proposed recommendation.

Common questions

Q: Did the bulk-sale newspaper notice relieve the partnership?
A: No. The letter required actual notice to the Board.

Q: When did the Board receive actual notice?
A: July 14, 1966, when an auditor learned of the dissolution.

Q: What period remained assessed?
A: June 1 through July 14, 1966.

Q: Who bore the burden of proving notice?
A: The cited case said a defendant relying on dissolution had to prove notice; staff applied that reasoning to the taxpayers' notice contention.

Q: When was the seller's permit issued and revocation notice mailed?

A: The source says March 3 and December 28, 1965, respectively, but supplies neither record nor the revocation reason or effective date.

Q: Did the letter specify how actual notice had to be given?

A: No. It required actual Board notice but gives no form, recipient, filing method, or current procedure.

Q: Did staff finally redetermine without adjustment?

A: The letter only proposes that recommendation and promises official notice after Board action. No action or official notice is included.

Q: Was the printed case citation reliable despite OCR?

A: Yes. It was visually confirmed against the official scan and resolved to Credit Bureaus of Merced County, Inc. v. Shipman.

Q: How much tax remained due?

A: The source gives no gross receipts, tax, penalty, interest, payment, claim, appeal, or final outcome.

Citations and references

• Credit Bureaus of Merced County v. Shipman, 167 Cal.App.2d 673 — visually confirmed and resolved to the source-named case
• January 11, 1967 representative letter and petition for redetermination — described but not included
• Seller's permit and revocation; interest sale; partnership dissolution; bulk-sale notice and publications; auditor's actual-notice record; June 1–July 14 determination; tax computation; recommendation; Board action; official notice; payment; claim; appeal; and outcome — described or implicated but not included

Verbatim support

From the official April 26, 1967 scanned letter:

However, it was not until July 14, 1966 that the Board, through one of its auditors, received actual notice of the dissolution of the partnership.

It is the Board's position that it must have actual notice of the dissolution before a taxpayer would be entitled to such relief.

This case indicates that the burden is on a defendant relying on dissolution to prove notice of the dissolution.

In view of these circumstances, we propose to recommend to the Board that a redetermination be issued without adjustment to tax.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 395.2320
• Original supporting opinion: 395.2320 PDF

Original ruling text

395.2320

April 26, 1967

Gentlemen:
Your letter of January 11, 1967, addressed to Mr. Robert N. Zambe­ lich regarding the petition for redetermination filed on behalf of your clients has been referred to this office for consideration . Please accept our apology for our late replay. It is our understanding that your clients, a partnership, were is­ sued a seller's permit to sell "ladies' ready-to-wear" on March 3, 1965. On December 28, 1965, notice of revocation of the permit was mailed to the partnership. In February 1966, "B" sold his share of the partnership to "L". Notice of bulk sale transfer was published in the latter part of February 1966, in the local news­ papers as required by law. However, it was not until July 14, 1966 that the Board, through one of its auditors, received actual notice of the dissolution of the partnership. A notice of determination was issued against the partnership for the period June 1, 1966 to July 14, 1966.

)

It is your contention that the Board had notice of the transfer through the publication of the bulk sales transfer and, therefore , it cannot hold the partnership liable for sales and use taxes ac­ cruing after this period. We cannot agree with your contention. We do not consider the not­ ice of dissolution of a partnership through a bulk sales transfer publication to be effective in relieving the taxpayer from taxes accruing after the date of such publication. It is the Board's position that it must have actual notice of the dissolution before a taxpayer would be entitled to such relief. This position ap­ pears to be in conformity with the reasoning put forth in the case of Credit Bureaus of Merced County v. Shipman, 167 Cal. App. 2d

673. This case indicates that the burden is on a defendant rely­
     ing on dissolution to prove notice of the dissolution. In view of these circumstances, we propose to recommend to the Board that a redetermination be issued without adjustment to tax . You will receive official notice after the Board has acted upon our recommendation. Very truly yours, E. H. Stetson Tax Counsel Glenn L. Rigby GLR:kc

[lb]