Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 170.0198


170.0198 Statutory Lien. A taxpayer operated a mini-market and became indebted for sales taxes arising from the operations of this business. On September 12, 1995, the taxpayer, with knowledge of his tax liability to the Board, conveyed to a third party an undivided one-half interest in certain real property in which the taxpayer had held a 100% interest. The grant deed conveying this interest indicated that no documentary transfer tax was paid on the transfer. The grant deed was recorded on September 21, 1995. On March 1996, the taxpayer conveyed all his remaining interest in the real property (that is, his remaining half interest) to the same third party. The grant deed indicated that "no consideration" was paid for the transfer and no documentary transfer tax was paid.

When the taxpayer failed to pay the sales taxes due by him, a statutory lien arose for those taxes pursuant to Revenue and Taxation Code section 6757 and Government Code section 7170(a). The lien attached to all property and right to property real or personal, tangible or intangible, including all after-acquired property and rights to property, belonging to the taxpayer and located in this state.

The statutory lien attached to the real property in question at the time that the taxpayer owned the property. The taxpayer transferred this property to the third party in violation of Civil Code sections 3439.04 and 3449.05. The lien that the Board recorded was intended to put successors of the taxpayer's interest in the property on notice of the Board's statutory lien and that those successors would take title to the property subject to that lien. In the present matter, the third party took the property subject to the Board's lien. 7/2/96.