State Codes and Statutes

Statutes > California > Rtc > 18661-18677

REVENUE AND TAXATION CODE
SECTION 18661-18677



18661.  When necessary to make effective the provisions of this
article or Article 4 (commencing with Section 18631), the name,
address, social security number, or other taxpayer identification
number of the recipient of income shall be furnished upon demand of
the person paying the income.



18662.  (a) The Franchise Tax Board may, by regulation, require any
person, in whatever capacity acting, including lessees or mortgagors
of real or personal property, fiduciaries, employers, and any officer
or department of the state, or any political subdivision or agency
of the state, or any city organized under a freeholder's charter, or
any political body not a subdivision or agency of the state, having
the control, receipt, custody, disposal, or payment of items of
income specified in subdivision (b), to withhold an amount,
determined by the Franchise Tax Board to reasonably represent the
amount of tax due when the items of income are included with other
income of the taxpayer, and to transmit the amount withheld to the
Franchise Tax Board at the time as it may designate.
   (b) The items of income referred to in subdivision (a) are
interest, dividends, rents, prizes and winnings, premiums, annuities,
emoluments, compensation for services, including bonuses,
partnership income or gains, and other fixed or determinable annual
or periodical gains, profits, and income.
   (c) The Franchise Tax Board may authorize the tax under
subdivision (a) to be deducted and withheld from the interest upon
any securities the owners of which are not known to the withholding
agent.
   (d) Any person that fails to withhold from any payments any
amounts required to be withheld by this section or fails to remit the
taxes withheld is liable for the amount specified in Section 18668.
   (e) (1) This subdivision applies to any disposition of a
California real property interest by:
   (A) Any person, other than either of the following:
   (i) Except as otherwise provided in this subdivision, a
corporation, including an entity classified for tax purposes as a
corporation under Part 11 (commencing with Section 23001).
   (ii) Except as otherwise provided in this subdivision, a
partnership, as determined in accordance with Subchapter K of Chapter
1 of Subtitle A of the Internal Revenue Code, including an entity
classified as a partnership for tax purposes under Part 10
(commencing with Section 17001).
   (B) A corporation or partnership, if that corporation or
partnership immediately after the transfer of the title to the
California real property has no permanent place of business in
California. For purposes of this subdivision, a corporation or
partnership has no permanent place of business in California if all
of the following apply:
   (i) It is not organized and existing under the laws of California.
   (ii) It does not qualify with the office of the Secretary of State
to transact business in California.
   (iii) It does not maintain and staff a permanent office in
California.
   (2) (A) Except as provided in subparagraph (B), in the case of any
disposition of a California real property interest by a transferor
described in paragraph (1), the transferee, including for this
purpose any intermediary or accommodator in a deferred exchange, is
required to withhold an amount equal to 3 1/3 percent of the sales
price of the California real property conveyed.
   (B) If the transferor makes an election under this subparagraph,
the transferee, including any intermediary or accommodator in a
deferred exchange, is required to withhold an amount equal to an
amount certified by the transferor in writing under penalty of
perjury. The amount certified shall not be less than the gain
required to be recognized under Part 10 (commencing with Section
17001) and Part 11 (commencing with Section 23001) on the disposition
of the California real property multiplied by the rate specified in
either Section 23151 or Section 23186, as applicable, for transferors
that are corporations, or the highest rate specified in Section
17041 for transferors other than corporations. For purposes of
applying the previous sentence, the following shall apply:
   (i) The highest rate specified in Section 17041 is determined
without regard to any other tax rate specified under Part 10
(commencing with Section 17001) irrespective of whether the
applicable statute provides that tax shall be treated as if imposed
under Section 17041.
   (ii) For corporations that are "S" corporations subject to the
modified tax rate specified in Section 23802, the rate shall be the
sum of the rate specified in subdivision (b) of Section 23802 and the
highest rate specified in Section 17041, as described in clause (i).
   (C) (i) The written certification required by subparagraph (B)
shall be in a form, as prescribed by the Franchise Tax Board. The
form shall provide as follows:

   "Title and escrow persons and exchange accommodators are not
authorized to provide legal or accounting advice for purposes of
determining withholding amounts. Transferors are strongly encouraged
to consult with a competent tax professional for this purpose."

   (ii) The Franchise Tax Board shall make this form available
electronically on its Web site in a format that allows a transferor
to complete and print the form. The Franchise Tax Board shall also
provide electronic means to enable the transferor to estimate the
amount of gain required to be recognized by the transferor in the
transaction. Any form or worksheet, electronic or otherwise,
developed for this purpose shall provide as follows:

   "Title and escrow persons and exchange accommodators are not
authorized to provide legal or accounting advice for purposes of
determining withholding amounts. Transferors are strongly encouraged
to consult with a competent tax professional for this purpose."

   (3) Notwithstanding any other provision of this subdivision, all
of the following shall apply:
   (A) No transferee is required to withhold any amount under this
subdivision unless the sales price of the California real property
conveyed exceeds one hundred thousand dollars ($100,000).
   (B) No transferee, other than an intermediary or an accommodator
in a deferred exchange, is required to withhold any amount under this
subdivision unless written notification of the withholding
requirements of this subdivision has been provided by the real estate
escrow person.
   (C) (i) No transferee, trustee under a deed of trust, or mortgagee
under a mortgage with a power of sale is required to withhold under
this subdivision when the transferee has acquired California real
property at a sale pursuant to a power of sale under a mortgage or
deed of trust or a sale pursuant to a decree of foreclosure or has
acquired the property by a deed in lieu of foreclosure.
   (ii) No transferee is required to withhold under this subdivision
when the transferor is a bank acting as trustee other than a trustee
of a deed of trust.
   (D) No transferee, including for this purpose any intermediary or
accommodator in a deferred exchange, is required to withhold any
amount under this subdivision if the transferee, in good faith and
based on all the information of which he or she has knowledge, relies
on a written certificate executed by the transferor, certifying,
under penalty of perjury, one of the following:
   (i) (I) The California real property being conveyed is the seller'
s or decedent's principal residence, within the meaning of Section
121 of the Internal Revenue Code.
   (II) The last use of the property being conveyed was use by the
transferor as the transferor's principal residence within the meaning
of Section 121 of the Internal Revenue Code.
   (ii) (I) The California real property being conveyed is being
exchanged, or will be exchanged, for property of like kind, within
the meaning of Section 1031 of the Internal Revenue Code, but only to
the extent of the amount of the gain not required to be recognized
for California income or franchise tax purposes under Section 1031 of
the Internal Revenue Code.
   (II) Subclause (I) may not apply if an exchange does not qualify
for nonrecognition treatment for California income or franchise tax
purposes under Section 1031 of the Internal Revenue Code, in whole or
in part, due to the failure of the transaction to comply with the
provisions of Section 1031(a)(3) of the Internal Revenue Code,
relating to the requirement that property be identified and that the
exchange be completed not more than 180 days after the transfer of
the exchanged property.
   (III) In any case where clause (ii) applies, the transferee,
including for this purpose any intermediary or accommodator in a
deferred exchange, is required to notify the Franchise Tax Board in
writing within 10 days of the expiration of the statutory periods
specified in Section 1031(a)(3) of the Internal Revenue Code and
thereafter remit the applicable withholding amounts determined under
this subdivision in accordance with paragraph (4).
   (iii) The California real property has been compulsorily or
involuntarily converted, within the meaning of Section 1033 of the
Internal Revenue Code, and the transferor intends to acquire property
similar or related in service or use so as to be eligible for
nonrecognition of gain for California income tax purposes under
Section 1033 of the Internal Revenue Code.
   (iv) The transaction will result in either a net loss or a net
gain not required to be recognized for California income or franchise
tax purposes.
   (v) The transferor is a corporation with a permanent place of
business in California.
   (E) (i) In the case of any transaction otherwise subject to this
subdivision that qualifies as an "installment sale," within the
meaning of Section 453(b) of the Internal Revenue Code, for
California income tax purposes, the provisions of this subdivision
shall be separately applied to each principal payment to be made
under the terms of the installment sale agreement between the
parties.
   (ii) For purposes of clause (i), subparagraph (A) of paragraph (3)
does not apply to each individual payment to be received under the
terms of the installment sale agreement.
   (4) (A) Amounts withheld and payments made in accordance with this
subdivision shall be reported and remitted to the Franchise Tax
Board in the form and manner and at the time specified by the
Franchise Tax Board. Notwithstanding the foregoing, funds withheld on
individual transactions by real estate escrow persons may, at the
option of the real estate escrow person, be remitted by the 20th day
of the month following the close of escrow for the individual
transaction, or may be remitted on a monthly basis in combination
with other transactions closed during that month.
   (B) The transferor shall submit a copy of the written certificate
and supporting documentation for the reduced withholding specified in
subparagraph (B) of paragraph (2) or subparagraph (D) of paragraph
(3), executed by the transferor, to the Franchise Tax Board upon
request.
   (5) For purposes of this subdivision, "California real property
interest" means an interest in real property located in California
and defined in Section 897(c)(1)(A)(i) of the Internal Revenue Code.
   (6) For purposes of this subdivision, "real estate escrow person"
means any of the following persons involved in the real estate
transaction:
   (A) The person, including any attorney, escrow company, or title
company, responsible for closing the transaction.
   (B) If no person described in subparagraph (A) is responsible for
closing the transaction, then any other person who receives and
disburses the consideration or value for the interest or property
conveyed.
   (7) (A) Unless the real estate escrow person provides "assistance,"
it shall be unlawful for any real estate escrow person to charge any
customer for complying with the requirements of this subdivision.
   (B) For purposes of this paragraph, "assistance" includes, but is
not limited to, helping the parties clarify with the Franchise Tax
Board the issue of whether withholding is required under this
subdivision or, upon request of the parties, withholding an amount
under this subdivision and remitting that amount to the Franchise Tax
Board.
   (C) For purposes of this paragraph, "assistance" does not include
providing the written notification of the withholding requirements of
this subdivision.
   (D) In a case where the real estate escrow person provides
"assistance" in complying with the withholding requirements of this
subdivision, it shall be unlawful for the real estate escrow person
to charge any customer a fee that exceeds forty-five dollars ($45).
   (8) For purposes of this subdivision, "sales price" means the sum
of all of the following:
   (A) The cash paid, or to be paid, but excluding for this purpose
any stated or unstated interest or original issue discount, as
determined under Sections 1271 through 1275, inclusive, of the
Internal Revenue Code.
   (B) The fair market value of other property transferred, or to be
transferred.
   (C) The outstanding amount of any liability assumed by the
transferee or to which the California real property interest is
subject immediately before and after the transfer.
   (9) The Franchise Tax Board may prescribe, by forms, instructions,
published notices, or regulations, any requirements necessary for
the efficient administration of this subdivision relating to the
treatment of "de minimis" amounts otherwise required under this
section.
   (f) Withholding is not required under this section with respect to
wages, salaries, fees, or other compensation paid by a corporation
for services performed in California for that corporation to a
nonresident corporate director for director services, including
attendance at a board of directors' meeting.
   (g) In the case of any payment described in subdivision (f), the
person making the payment shall do each of the following:
   (1) File a return with the Franchise Tax Board at the time and in
the form and manner specified by the Franchise Tax Board.
   (2) Provide the payee with a statement at the time and in the form
and manner specified by the Franchise Tax Board.
   (h) (1) The amendments to this section made by Chapter 488 of the
Statutes of 2002 apply to dispositions of California real property
interests that occur on or after January 1, 2003.
   (2) In the case of any payments received on or after January 1,
2003, pursuant to an installment sale agreement relating to a
disposition occurring before January 1, 2003, the amendments to this
section made by Chapter 488 of the Statutes of 2002 do not apply to
those payments.
   (i) (1) The amendments made to this section by the act adding this
subdivision shall apply to dispositions of California real property
interests that occur on or after January 1, 2009.
   (2) In the case of any payments received on or after January 1,
2009, pursuant to an installment sale agreement relating to a
disposition occurring before January 1, 2009, the amendments made to
this section by the act adding this subdivision do not apply to those
payments.


18663.  (a) (1) The Franchise Tax Board shall annually (or more
often if necessary) prepare and make available to the Employment
Development Department, wage withholding tables that shall be used by
every employer making payment of any wages to a resident employee
for services performed either within or without this state; or to a
nonresident employee for services performed in this state, to deduct
and withhold from those wages for each payroll period, a tax computed
in a manner as to produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that is substantially equivalent to the amount of tax reasonably
estimated to be due under Part 10 (commencing with Section 17001)
resulting from the inclusion in the gross income of the employee the
wages which were subject to withholding.
   (2) For wages paid on or after November 1, 2009, wage withholding
tables prepared by the Franchise Tax Board pursuant to this
subdivision shall produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that will significantly prevent underwithholding by using an
amount equal to 10 percent more than the sum described in paragraph
(1).
   (b) (1) (A) For supplemental wages paid on or after January 1,
1992, the rate of withholding that may be applied to supplemental
wages in lieu of the wage withholding tables specified in subdivision
(a) shall be 6 percent.
   (B) For supplemental wages paid on or after November 1, 2009, the
rate of withholding shall be 6.6 percent.
   (2) For purposes of this subdivision, "supplemental wages"
includes, but is not limited to, bonus payments, overtime payments,
commissions, sales awards, back pay including retroactive wage
increases, and reimbursements for nondeductible moving expenses that
are paid for the same or a different period, or without regard to a
particular period.
   (c) (1) For stock options and bonus payments that constitute wages
paid on or after January 1, 2002, the rate of withholding that may
be applied to those stock options and bonus payments in lieu of the
wage withholding tables specified in subdivision (a) shall,
notwithstanding subdivision (b), be 9.3 percent.
   (2) For stock options and bonus payments that constitute wages
paid on or after November 1, 2009, the rate of withholding shall be
10.23 percent.



18664.  (a) (1) Section 3406 of the Internal Revenue Code, relating
to the backup withholding, shall apply, except as otherwise provided.
   (2) For purposes of this section, the term "reportable payment,"
as defined in Section 3406(b) of the Internal Revenue Code, shall
include payments of items of income as defined in Section 18662, and
any regulations thereunder, with respect to rents, prizes and
winnings, compensation for services, including bonuses, and other
fixed or determinable annual or periodic gains, profits, and income.
   (3) This section shall not apply to either of the following:
   (A) Payment of interest and dividends.
   (B) Any release of loan funds made by a financial institution in
the normal course of business.
   (4) For the purposes of subparagraph (B) of paragraph (3),
"financial institution" means any of the following:
   (A) A depository institution, as defined in Section 1813(c) of
Title 12 of the United States Code.
   (B) An institution-affiliated party, as defined in Section 1813(u)
of Title 12 of the United States Code.
   (C) Any federal credit union or state credit union, as defined in
Section 1752 of Title 12 of the United States Code, including an
institution-affiliated party of a credit union, as defined in Section
1786(r) of Title 12 of the United States Code.
   (b) The amount of tax to be withheld shall be computed by applying
a rate of 7 percent to the reportable payment.
   (c) Where withholding under both this section and other provisions
of this article would otherwise be required, withholding shall only
be required under this section.
   (d) Any payer required to withhold tax pursuant to this section
shall notify the payee of such withholding at a time and in a manner
as may be prescribed in forms and instructions by the Franchise Tax
Board.
   (e) This section shall apply to payments made on or after January
1, 2010.


18665.  Unless otherwise specifically provided, the provisions of
any law effecting changes in withholding shall apply to withholding
in the calendar year succeeding the year the provision was chaptered,
or in the calendar year the provision is operative, whichever is
later.



18666.  (a) Section 1446 of the Internal Revenue Code shall apply to
the extent that the amounts represent income from California
sources, except as otherwise provided.
   (b) (1) The rate of tax referred to in Section 1446(b)(2)(A) of
the Internal Revenue Code shall be the maximum tax rate specified in
Section 17041, rather than the rate specified in Section 1 of the
Internal Revenue Code.
   (2) The rate of tax referred to in Section 1446(b)(2)(B) of the
Internal Revenue Code shall be the rate specified in Section 23151,
23181, or 23183, as applicable, rather than the rate specified in
Section 11 of the Internal Revenue Code.


18667.  The Franchise Tax Board may require employers to submit
copies of income tax withholding exemption certificates. If the
Franchise Tax Board determines that a certificate is invalid for
state income tax purposes, the Franchise Tax Board shall notify the
employer and the affected employee of its determination. An employee
who disagrees with the Franchise Tax Board's determination may
request review of the determination by filing a written petition in
the form and within the time prescribed by the Franchise Tax Board.
After review, the Franchise Tax Board shall give written notification
of its decision to both the employer and the employee.




18668.  (a) Every person required under this article to deduct and
withhold any tax is hereby made liable for that tax, to the extent
provided by this section. Any amount required to be deducted and paid
to the Franchise Tax Board under this article shall be considered
the tax of that person. Unless it is shown that the failure is due to
reasonable cause, any person who fails to withhold from any payments
any amount required to be withheld under this article or who fails
to transmit the withheld amounts to the Franchise Tax Board on or
before the due date required by regulations is liable for the amount
actually withheld, or the amount of taxes due from the taxpayer to
whom the payments are made, whichever is greater, but not in excess
of the amount required to be withheld.
   (b) If any amount required to be withheld under this article is
not paid to the Franchise Tax Board on or before the due date
required by regulations, interest shall be assessed at the adjusted
annual rate established pursuant to Section 19521, computed from the
due date to the date paid.
   (c) Whenever any person has withheld any amount pursuant to this
article, the amount so withheld shall be held to be a special fund in
trust for the State of California.
   (d) In lieu of the amount provided for in subdivision (a), unless
it is shown that the failure to withhold is due to reasonable cause,
whenever any transferee is required to withhold any amount pursuant
to subdivision (e) of Section 18662, the transferee is liable for the
greater of the following amounts for failure to withhold only after
the transferee, as specified, is notified in writing of the
requirements under subdivision (e) of Section 18662:
   (1) Five hundred dollars ($500).
   (2) Ten percent of the amount required to be withheld under
subdivision (e) of Section 18662.
   (e) (1) Unless it is shown that the failure to notify is due to
reasonable cause, the real estate escrow person is liable for the
amount specified in subdivision (d), when written notification of the
withholding requirements of subdivision (e) of Section 18662 is not
provided to the transferee, other than a transferee that is an
intermediary or accommodator in a deferred exchange, and the
California real property disposition is subject to withholding under
subdivision (e) of Section 18662.
   (2) The real estate escrow person shall provide written
notification to the transferee (other than a transferee that is an
intermediary or accommodator in a deferred exchange) in substantially
the same form as follows:

   "In accordance with Section 18662 of the Revenue and Taxation
Code, a buyer may be required to withhold an amount equal to 3 1/3
percent of the sales price or the amount that is specified in a
written certificate executed by the transferor in the case of a
disposition of California real property interest by either:
   1. A seller who is an individual, trust, or estate or when the
disbursement instructions authorize the proceeds to be sent to a
financial intermediary of the seller, OR
   2. A corporate or partnership seller that has no permanent place
of business in California immediately after the transfer of title to
the California real property.
   The buyer may become subject to penalty for failure to withhold an
amount equal to the greater of 10 percent of the amount required to
be withheld or five hundred dollars ($500).
   However, notwithstanding any other provision included in the
California statutes referenced above, no buyer will be required to
withhold any amount or be subject to penalty for failure to withhold
if:
   1. The sales price of the California real property conveyed does
not exceed one hundred thousand dollars ($100,000), OR
   2. The seller executes a written certificate, under the penalty of
perjury, certifying that the seller is a corporation or a
partnership with a permanent place of business in California, OR
   3. The seller, who is an individual, trust, estate, partnership,
or a corporation without a permanent place of business in California
executes a written certificate, under the penalty of perjury, of any
of the following:
   A. The California real property being conveyed is the seller's or
decedent's principal residence, within the meaning of Section 121 of
the Internal Revenue Code.
   B. The last use of the property being conveyed was use by the
transferor as the transferor's principal residence within the meaning
of Section 121 of the Internal Revenue Code.
   C. The California real property being conveyed is or will be
exchanged for property of like kind, within the meaning of Section
1031 of the Internal Revenue Code, but only to the extent of the
amount of gain not required to be recognized for California income
tax purposes under Section 1031 of the Internal Revenue Code.
   D. The California real property has been compulsorily or
involuntarily converted, within the meaning of Section 1033 of the
Internal Revenue Code, and that the seller intends to acquire
property similar or related in service or use so as to be eligible
for nonrecognition of gain for California income tax purposes under
Section 1033 of the Internal Revenue Code.
   E. The California real property transaction will result in a loss
or a net gain not required to be recognized for California income tax
purposes.
   The seller is subject to penalty for knowingly filing a fraudulent
certificate for the purpose of avoiding the withholding requirement."


   (3) The real estate escrow person is not liable under this
subdivision if the tax due as a result of the disposition of
California real property is paid by the original or extended due date
of the transferor's return for the taxable year in which the
disposition occurred.
   (4) The real estate escrow person or transferee is not liable
under paragraph (1) or subdivision (d), if the failure to withhold is
the result of his or her reliance, based on good faith and on all
the information of which he or she has knowledge, upon a written
certificate executed by the transferor under penalty of perjury
pursuant to subparagraph (D) of paragraph (3) of subdivision (e) of
Section 18662.
   (5) Any transferor who for the purpose of avoiding the withholding
requirements of subdivision (e) of Section 18662 knowingly executes
a false certificate pursuant to that section is liable for twice the
amount specified in subdivision (d).
   (f) The amount of tax required to be deducted, withheld, and
remitted under this article shall be assessed, collected, and paid
upon notice and demand. Article 3 (commencing with Section 19031),
relating to deficiency assessments, shall not apply with respect to
the assessment or collection of any amount due under this article.




18669.  (a) Whenever any payer required to deduct and withhold tax
under this article sells, transfers, dissolves, withdraws,
terminates, or otherwise disposes of the business or a substantial
portion of its assets, the successors (including assigns, purchasers,
heirs, distributees, beneficiaries, or other persons acquiring
either a substantial portion of the assets or the business) shall
withhold in trust a sufficient part of the purchase price or set
aside in trust money or property to cover the amount of the taxes
required to be withheld and any interest or penalties with respect
thereto which are due or unpaid by the payer. The money, property or
portion of the purchase price shall be held in trust until a
certificate is issued by the Franchise Tax Board stating that no
amount of such tax, interest, or penalties are due or unpaid from the
payer.
   (b) Upon written request by the successor, the Franchise Tax Board
shall, within 60 days, issue a certificate or a statement showing
the amount of tax, interest, and penalties due from the payer. Except
as provided in subdivision (c), failure to issue a certificate or
statement within the 60-day period shall be deemed equivalent to the
issuance of a certificate stating that no tax, interest, or penalties
are due. If the Franchise Tax Board issues a statement showing that
taxes, interest, and penalties are claimed to be due, the amount
stated therein (not in excess of the fair market value of the assets
or business acquired) shall be paid by the successor to the Franchise
Tax Board within (1) 30 days after the statement is mailed or
delivered to the successor, or (2) on the day the business or assets
are acquired, whichever occurs last. If a request for a certificate
is not made by the successor, the amount of tax, interest, or
penalties due or unpaid by the payer shall be paid by the successor
to the Franchise Tax Board on the day the business or assets are
acquired. If a successor fails to pay the amount required by this
section by the time prescribed in this subdivision, a penalty of 10
percent of the amount payable shall be levied.
   (c) The issuance of a certificate stating that no taxes, interest,
and penalties are due, or the failure to issue the certificate or
statement within the period of 60 days shall not release the payer
from liability on account of any taxes, interest, and penalties then
or thereafter determined to be due from him or her, but shall release
the successor from any further liability on account of any such
taxes, interest, and penalties. Payment by the successor pursuant to
subdivision (b) shall not release the payer from liability except to
the extent of the amount paid by the successor.
   (d) Any successor that fails to withhold money or other property
or fails to pay the amount or value of the property withheld as
provided in this section shall be personally liable for the payment
of the taxes, interest, and penalties due from the payer up to but
not exceeding the fair market value of the assets or business
acquired. The Franchise Tax Board shall have all of the remedies for
collection against any successor that acquires the business or
substantially all the assets thereof of a payer as provided by this
part against any payer liable for taxes, interest, and penalties. The
time within which the obligation may be enforced against the
successor acquiring the business or substantially all the assets
thereof of a payer shall commence from (1) the date the successor
acquires the assets or business, (2) the date an assessment against
the successor payer becomes final, or (3) 31 days after the statement
is mailed or delivered to the successor if a certificate is
requested by the successor as provided in subdivision (b), whichever
of the three events is later.



18670.  (a) The Franchise Tax Board may by notice, served personally
or by first-class mail, require any employer, person, officer or
department of the state, political subdivision or agency of the
state, including the Regents of the University of California, a city
organized under a freeholders' charter, or a political body not a
subdivision or agency of the state, having in their possession, or
under their control, any credits or other personal property or other
things of value, belonging to a taxpayer or to an employer or person
who has failed to withhold and transmit amounts due pursuant to this
article, to withhold, from the credits or other personal property or
other things of value, the amount of any tax, interest, or penalties
due from the taxpayer or the amount of any liability incurred by that
employer or person for failure to withhold and transmit amounts due
from a taxpayer under this part and to transmit the amount withheld
to the Franchise Tax Board at the times that it may designate.
However, in the case of a depository institution, as defined in
Section 19(b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)
(A)), amounts due from a taxpayer under this part shall be
transmitted to the Franchise Tax Board not less than 10 business days
from receipt of the notice. To be effective, the notice shall state
the amount due from the taxpayer and shall be delivered or mailed to
the branch or office reported in information returns filed with the
Franchise Tax Board, or the branch or office where the credits or
other property is held, unless another branch or office is designated
by the employer, person, officer or department of the state,
political subdivision or agency of the state, including the Regents
of the University of California, a city organized under a freeholders'
charter or a political body not a subdivision or agency of the
state.
   (b) (1) At least 45 days before sending a notice to withhold to
the address indicated on the information return, the Franchise Tax
Board shall request a depository institution to do either of the
following:
   (A) Verify that the address on its information return is its
designated address for receiving notices to withhold.
   (B) Provide the Franchise Tax Board with a designated address for
receiving notices to withhold.
   (2) Once the depository institution has specified a designated
address pursuant to paragraph (1), the Franchise Tax Board shall send
all notices to that address unless the depository institution
provides notification of another address. The Franchise Tax Board
shall send all notices to withhold to a new designated address 30
days after notification.
   (3) Failure to verify or provide a designated address within 30
days of receiving the request shall be deemed verification of the
address on the information return as the depository institution's
designated address.
   (c) (1) Notwithstanding Section 8112 of the Commercial Code and
Section 700.130 of the Code of Civil Procedure, when the Franchise
Tax Board, pursuant to this section or Section 18670.5, issues a levy
upon, or requires by notice, any person, financial institution, or
securities intermediary, as applicable, to withhold all, or a portion
of, a financial asset for the purpose of collecting a delinquent tax
liability, the person, financial institution, or securities
intermediary, as defined in Section 8102 of the Commercial Code, that
maintains, administers, or manages that asset on behalf of the
taxpayer, or has the legal authority to accept instructions from the
taxpayer as to the disposition of that asset, shall liquidate the
financial asset in a commercially reasonable manner within 90 days of
the issuance of the order to withhold. Within five days of
liquidation, the person, financial institution, or securities
intermediary, as applicable, shall remit to the Franchise Tax Board
the proceeds of the liquidation, less any reasonable commissions or
fees, or both, which are charged in the normal course of business.
   (2) If the value of the financial assets to be liquidated exceeds
the tax liability, the taxpayer may, within 60 days after the service
of the order to withhold upon the person, financial institution, or
securities intermediary, instruct the person, financial institution,
or securities intermediary as to which financial assets are to be
sold to satisfy the tax liability. If the taxpayer does not provide
instructions for liquidation, the person, financial institution, or
securities intermediary shall liquidate the financial assets in a
commercially reasonable manner and in an amount sufficient to cover
the tax liability, and any reasonable commissions or fees, or both,
which are charged in the normal course of business, beginning with
the financial assets purchased most recently.
   (3) For purposes of this section, a financial asset shall include,
but not be limited to, an uncertificated security, certificated
security, or security entitlement as defined in Section 8102 of the
Commercial Code, a security as defined in Section 8103 of the
Commercial Code, or a securities account as defined in Section 8501
of the Commercial Code.
   (d) Any corporation or person failing to withhold the amounts due
from any taxpayer and transmit them to the Franchise Tax Board after
service of the notice shall be liable for those amounts. However, in
the case of a depository institution, if a notice to withhold is
mailed to the branch where the account is located or principal
banking office, the depository institution shall be liable for a
failure to withhold only to the extent that the accounts can be
identified in information normally maintained at that location in the
ordinary course of business.



18670.5.  (a) The Franchise Tax Board may by notice, served by
magnetic media, electronic transmission, or other electronic
technology, require any depository institution, as defined in Section
19 (b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)(A)),
that the Franchise Tax Board, in its sole discretion, has reason to
believe may have in its possession, or under its control, any credits
or other personal property or other things of value, belonging to a
taxpayer, to withhold, from the credits or other personal property or
other things of value, the amount of any tax, interest, or penalties
due from the taxpayer and transmit that amount withheld to the
Franchise Tax Board at the times that it may designate, but not less
than 10 business days from receipt of the notice. The notice shall
state the amount due from the taxpayer and shall be delivered or
transmitted to the branch or office reported in the information
returns filed with the Franchise Tax Board, or the branch or office
where the credits or other property is held, or other address
designated by that depository institution for purposes of the
Franchise Tax Board serving notice by magnetic media, electronic
transmission, or other electronic technology.
   (b) Any depository institution failing to withhold the amount due
from the taxpayer and to transmit that amount to the Franchise Tax
Board after the Franchise Tax Board provides notice to the depository
institution as authorized by subdivision (a) shall be liable for
those amounts only to the extent that the depository institution can
identify the account by magnetic media, electronic transmission, or
other electronic technology.
   (c) For purposes of this section, the term "address" shall include
telephone or modem number, facsimile number, or any other number
designated by the depository institution to receive data by
electronic means.



18671.  (a) Subject to the limitations in subdivisions (b) and (c),
the Franchise Tax Board, may, by notice, served personally or by
first-class mail, require any person, officer, department of the
state, or political subdivision or agency of the state including the
Regents of the University of California, a city organized under a
freeholder's charter, or a political body not a subdivision or agency
of the state, to withhold the amount of any tax, interest, or
penalties due from a taxpayer, or the amount due from an employer or
person who has failed to withhold and transmit amounts due pursuant
to this article, from any payments due the taxpayer, employer, or
person and from any payments becoming due the taxpayer, employer, or
person after receipt of the notice. The amounts withheld shall be
transmitted to the Franchise Tax Board at those times as it may
designate.
   (b) The effect of a levy made pursuant to subdivision (a) shall be
continuous from the date the notice is received until the amount due
stated on the notice has been withheld, until the notice has been
withdrawn, or until one year after the date the notice is received,
whichever occurs first.
   (c) The amount required to be withheld pursuant to a notice issued
under subdivision (a) is the lesser of the amount due stated on the
notice, or either of the following:
   (1) If the taxpayer, employer, or person is not a natural person,
100 percent of the amount of each payment due or becoming due the
taxpayer, employer, or person during the period the levy is in effect
as provided in subdivision (b).
   (2) If the taxpayer, employer, or person is a natural person, 25
percent of the amount of each payment due or becoming due the
taxpayer, employer, or person during the period the levy is in effect
as provided in subdivision (b).
   (d) For purposes of this section, the term "payments" does not
include earnings as defined in subdivision (a) of Section 706.011 of
the Code of Civil Procedure or funds in a deposit account as defined
in paragraph (29) of subdivision (a) of Section 9102 of the
Commercial Code. The term "payments" does include any of the
following:
   (1) Payments due for services of independent contractors,
dividends, rents, royalties, residuals, patent rights, or mineral or
other natural resource rights.
   (2) Payments or credits due or becoming due as a result of written
or oral contracts for services or sales whether denominated as
wages, salary, commission, bonus, or otherwise.
   (3) Any other payments or credits due or becoming due periodically
as a result of an enforceable obligation to the taxpayer, employer,
or person.



18672.  Any employer or person failing to withhold the amount due
from any taxpayer and to transmit the same to the Franchise Tax Board
after service of a notice pursuant to Section 18670 or 18671 is
liable for those amounts.


18673.  (a) Notwithstanding Article 7 (commencing with Section
706.151) of Chapter 5 of Title 9 of Part II of the Code of Civil
Procedure, if the Franchise Tax Board determines upon receiving
information from the taxpayer that his or her employer withheld
earnings for taxes pursuant to Article 4 (commencing with Section
19251) of Chapter 5 and failed to remit the withheld earnings to the
Franchise Tax Board, the employer shall be liable for the amount not
remitted. The Franchise Tax Board's determination shall be based on
payroll documents or other substantiating evidence furnished by the
taxpayer.
   (b) Upon its determination, the Franchise Tax Board shall mail
notice to the employer at its last known address that upon failure to
remit the withheld earnings to the Franchise Tax Board within 15
days of the date of its notice to the employer, the employer shall be
liable for that amount which was withheld and not remitted.
   (c) If the employer fails to remit the amount withheld to the
Franchise Tax Board upon notice, that amount for which the employer
is liable shall be assessed, collected, and paid as though it were a
tax deficiency. The amount may be assessed at any time prior to seven
years from the first day that the unremitted amount, in the
aggregate, was first withheld. Interest shall accrue on that amount
from the first day that the unremitted amount, in the aggregate, was
first withheld.
   (d) When the assessment against the employer is final and due and
payable, the taxpayer's account shall be immediately credited with an
amount equal to that assessed amount as though it were a payment
received by the Franchise Tax Board on the first date that the
unremitted amount, in the aggregate, was first withheld by the
employer.
   (e) Collection against the taxpayer is stayed for both the
following amount and period:
   (1) An amount equal to the amount determined by the Franchise Tax
Board under subdivision (a).
   (2) The earlier of the time the credit is applied to the taxpayer'
s account pursuant to subdivision (d) or the assessment against the
employer is withdrawn or revised and the taxpayer is notified by the
Franchise Tax Board thereof.
   (f) If under this section an amount that was withheld and not
remitted to the Franchise Tax Board is final and due and payable by
the employer and credited to the taxpayer's account, this remedy
shall be the exclusive remedy for the taxpayer to recover that amount
from the employer.
   (g) This section shall not apply to debts, obligations, or other
amounts for which an earnings withholding order or assignment is
issued by the Franchise Tax Board pursuant to Article 5, 5.5, or 6 of
Chapter 5 or Section 10878.
   (h) This section shall apply to determinations made by the
Franchise Tax Board on or after the effective date of the act adding
this section.


18674.  (a) Any employer or person required to withhold and transmit
any amount pursuant to this article shall comply with the
requirement without resort to any legal or equitable action in a
court of law or equity. Any employer or person paying to the
Franchise Tax Board any amount required by it to be withheld is not
liable therefor to the person from whom withheld unless the amount
withheld is refunded to the withholding agent. However, if a
depository institution, as defined in 12 U.S.C. Sec. 461(b)(1)(A)
withholds and pays to the Franchise Tax Board pursuant to this
article any moneys held in a deposit account in which the delinquent
taxpayer and another person or persons have an interest, or in an
account held in the name of a third party or parties in which the
delinquent taxpayer is ultimately determined to have no interest, the
depository institution paying those moneys to the Franchise Tax
Board is not liable therefor to any of the persons who have an
interest in the account, unless the amount withheld is refunded to
the withholding agent.
   (b) In the case of a deposit account or accounts for which this
notice to withhold applies, the depository institution shall send a
notice by first-class mail to each person named on the account or
accounts included in the notice from the Franchise Tax Board,
provided that a current address for each person is available to the
institution. This notice shall inform each person as to the reason
for the hold placed on the account or accounts, the amount subject to
being withheld, and the date by which this amount is to be remitted
to the Franchise Tax Board. An institution may assess the account or
accounts of each person receiving this notice a reasonable service
charge not to exceed three dollars ($3).
   (c) Any employer or person required under this article to withhold
payments from a taxpayer may file an action in interpleader when a
bona fide dispute has arisen as to priority of lien between the tax
levied under this part and that of a federal taxing agency.



18675.  Any person from whom a tax is collected by withholding under
this article or under Section 13020 of the Unemployment Insurance
Code is entitled to the remedies set forth in Articles 1 (commencing
with Section 19301) and 3 (commencing with Section 19381) of Chapter
6. Any refund of the tax under Chapter 6 (commencing with Section
19301) shall be made to the withholding agent instead of directly to
the taxpayer, if requested in writing by the withholding agent at the
time the amounts refundable were transmitted to the Franchise Tax
Board.


18676.  Whenever, under any provision of this article, service is
authorized upon the state of any notice to withhold, unless expressly
exempted from the provisions of this section, the service to be
effective must, in addition to any other requirements, be made on the
state agency owing the obligation prior to the time the agency
presents the claim for payment thereof to the Controller.



18677.  (a) For purposes of this article, if a lender, surety, or
other person, who is not an employer under those sections with
respect to an employee or group of employees, pays wages directly to
such an employee or group of employees, employed by one or more
employers, or to an agent on behalf of the employee or employees, the
lender, surety, or other person shall be liable in his or her own
person and estate to this state in a sum equal to the taxes (together
with interest) required to be deducted and withheld from the wages
by the employer.
   (b) If a lender, surety, or other person supplies funds to or for
the account of an employer for the specific purpose of paying wages
of the employees of the employer, with actual notice or knowledge
that the employer does not intend to or will not be able to make
timely payment or deposit of the amounts of tax required by this part
to be deducted and withheld by the employer from those wages, the
lender, surety, or other person shall be liable in his or her own
person and estate to the State of California in a sum equal to the
taxes (together with interest) which are not paid over to this state
by the employer with respect to the wages. However, the liability of
the lender, surety, or other person shall be limited to an amount
equal to 25 percent of the amount so supplied to or for the account
of the employer for that purpose.
   (c) Any amounts paid to this state pursuant to this section shall
be credited against the liability of the employer.

State Codes and Statutes

Statutes > California > Rtc > 18661-18677

REVENUE AND TAXATION CODE
SECTION 18661-18677



18661.  When necessary to make effective the provisions of this
article or Article 4 (commencing with Section 18631), the name,
address, social security number, or other taxpayer identification
number of the recipient of income shall be furnished upon demand of
the person paying the income.



18662.  (a) The Franchise Tax Board may, by regulation, require any
person, in whatever capacity acting, including lessees or mortgagors
of real or personal property, fiduciaries, employers, and any officer
or department of the state, or any political subdivision or agency
of the state, or any city organized under a freeholder's charter, or
any political body not a subdivision or agency of the state, having
the control, receipt, custody, disposal, or payment of items of
income specified in subdivision (b), to withhold an amount,
determined by the Franchise Tax Board to reasonably represent the
amount of tax due when the items of income are included with other
income of the taxpayer, and to transmit the amount withheld to the
Franchise Tax Board at the time as it may designate.
   (b) The items of income referred to in subdivision (a) are
interest, dividends, rents, prizes and winnings, premiums, annuities,
emoluments, compensation for services, including bonuses,
partnership income or gains, and other fixed or determinable annual
or periodical gains, profits, and income.
   (c) The Franchise Tax Board may authorize the tax under
subdivision (a) to be deducted and withheld from the interest upon
any securities the owners of which are not known to the withholding
agent.
   (d) Any person that fails to withhold from any payments any
amounts required to be withheld by this section or fails to remit the
taxes withheld is liable for the amount specified in Section 18668.
   (e) (1) This subdivision applies to any disposition of a
California real property interest by:
   (A) Any person, other than either of the following:
   (i) Except as otherwise provided in this subdivision, a
corporation, including an entity classified for tax purposes as a
corporation under Part 11 (commencing with Section 23001).
   (ii) Except as otherwise provided in this subdivision, a
partnership, as determined in accordance with Subchapter K of Chapter
1 of Subtitle A of the Internal Revenue Code, including an entity
classified as a partnership for tax purposes under Part 10
(commencing with Section 17001).
   (B) A corporation or partnership, if that corporation or
partnership immediately after the transfer of the title to the
California real property has no permanent place of business in
California. For purposes of this subdivision, a corporation or
partnership has no permanent place of business in California if all
of the following apply:
   (i) It is not organized and existing under the laws of California.
   (ii) It does not qualify with the office of the Secretary of State
to transact business in California.
   (iii) It does not maintain and staff a permanent office in
California.
   (2) (A) Except as provided in subparagraph (B), in the case of any
disposition of a California real property interest by a transferor
described in paragraph (1), the transferee, including for this
purpose any intermediary or accommodator in a deferred exchange, is
required to withhold an amount equal to 3 1/3 percent of the sales
price of the California real property conveyed.
   (B) If the transferor makes an election under this subparagraph,
the transferee, including any intermediary or accommodator in a
deferred exchange, is required to withhold an amount equal to an
amount certified by the transferor in writing under penalty of
perjury. The amount certified shall not be less than the gain
required to be recognized under Part 10 (commencing with Section
17001) and Part 11 (commencing with Section 23001) on the disposition
of the California real property multiplied by the rate specified in
either Section 23151 or Section 23186, as applicable, for transferors
that are corporations, or the highest rate specified in Section
17041 for transferors other than corporations. For purposes of
applying the previous sentence, the following shall apply:
   (i) The highest rate specified in Section 17041 is determined
without regard to any other tax rate specified under Part 10
(commencing with Section 17001) irrespective of whether the
applicable statute provides that tax shall be treated as if imposed
under Section 17041.
   (ii) For corporations that are "S" corporations subject to the
modified tax rate specified in Section 23802, the rate shall be the
sum of the rate specified in subdivision (b) of Section 23802 and the
highest rate specified in Section 17041, as described in clause (i).
   (C) (i) The written certification required by subparagraph (B)
shall be in a form, as prescribed by the Franchise Tax Board. The
form shall provide as follows:

   "Title and escrow persons and exchange accommodators are not
authorized to provide legal or accounting advice for purposes of
determining withholding amounts. Transferors are strongly encouraged
to consult with a competent tax professional for this purpose."

   (ii) The Franchise Tax Board shall make this form available
electronically on its Web site in a format that allows a transferor
to complete and print the form. The Franchise Tax Board shall also
provide electronic means to enable the transferor to estimate the
amount of gain required to be recognized by the transferor in the
transaction. Any form or worksheet, electronic or otherwise,
developed for this purpose shall provide as follows:

   "Title and escrow persons and exchange accommodators are not
authorized to provide legal or accounting advice for purposes of
determining withholding amounts. Transferors are strongly encouraged
to consult with a competent tax professional for this purpose."

   (3) Notwithstanding any other provision of this subdivision, all
of the following shall apply:
   (A) No transferee is required to withhold any amount under this
subdivision unless the sales price of the California real property
conveyed exceeds one hundred thousand dollars ($100,000).
   (B) No transferee, other than an intermediary or an accommodator
in a deferred exchange, is required to withhold any amount under this
subdivision unless written notification of the withholding
requirements of this subdivision has been provided by the real estate
escrow person.
   (C) (i) No transferee, trustee under a deed of trust, or mortgagee
under a mortgage with a power of sale is required to withhold under
this subdivision when the transferee has acquired California real
property at a sale pursuant to a power of sale under a mortgage or
deed of trust or a sale pursuant to a decree of foreclosure or has
acquired the property by a deed in lieu of foreclosure.
   (ii) No transferee is required to withhold under this subdivision
when the transferor is a bank acting as trustee other than a trustee
of a deed of trust.
   (D) No transferee, including for this purpose any intermediary or
accommodator in a deferred exchange, is required to withhold any
amount under this subdivision if the transferee, in good faith and
based on all the information of which he or she has knowledge, relies
on a written certificate executed by the transferor, certifying,
under penalty of perjury, one of the following:
   (i) (I) The California real property being conveyed is the seller'
s or decedent's principal residence, within the meaning of Section
121 of the Internal Revenue Code.
   (II) The last use of the property being conveyed was use by the
transferor as the transferor's principal residence within the meaning
of Section 121 of the Internal Revenue Code.
   (ii) (I) The California real property being conveyed is being
exchanged, or will be exchanged, for property of like kind, within
the meaning of Section 1031 of the Internal Revenue Code, but only to
the extent of the amount of the gain not required to be recognized
for California income or franchise tax purposes under Section 1031 of
the Internal Revenue Code.
   (II) Subclause (I) may not apply if an exchange does not qualify
for nonrecognition treatment for California income or franchise tax
purposes under Section 1031 of the Internal Revenue Code, in whole or
in part, due to the failure of the transaction to comply with the
provisions of Section 1031(a)(3) of the Internal Revenue Code,
relating to the requirement that property be identified and that the
exchange be completed not more than 180 days after the transfer of
the exchanged property.
   (III) In any case where clause (ii) applies, the transferee,
including for this purpose any intermediary or accommodator in a
deferred exchange, is required to notify the Franchise Tax Board in
writing within 10 days of the expiration of the statutory periods
specified in Section 1031(a)(3) of the Internal Revenue Code and
thereafter remit the applicable withholding amounts determined under
this subdivision in accordance with paragraph (4).
   (iii) The California real property has been compulsorily or
involuntarily converted, within the meaning of Section 1033 of the
Internal Revenue Code, and the transferor intends to acquire property
similar or related in service or use so as to be eligible for
nonrecognition of gain for California income tax purposes under
Section 1033 of the Internal Revenue Code.
   (iv) The transaction will result in either a net loss or a net
gain not required to be recognized for California income or franchise
tax purposes.
   (v) The transferor is a corporation with a permanent place of
business in California.
   (E) (i) In the case of any transaction otherwise subject to this
subdivision that qualifies as an "installment sale," within the
meaning of Section 453(b) of the Internal Revenue Code, for
California income tax purposes, the provisions of this subdivision
shall be separately applied to each principal payment to be made
under the terms of the installment sale agreement between the
parties.
   (ii) For purposes of clause (i), subparagraph (A) of paragraph (3)
does not apply to each individual payment to be received under the
terms of the installment sale agreement.
   (4) (A) Amounts withheld and payments made in accordance with this
subdivision shall be reported and remitted to the Franchise Tax
Board in the form and manner and at the time specified by the
Franchise Tax Board. Notwithstanding the foregoing, funds withheld on
individual transactions by real estate escrow persons may, at the
option of the real estate escrow person, be remitted by the 20th day
of the month following the close of escrow for the individual
transaction, or may be remitted on a monthly basis in combination
with other transactions closed during that month.
   (B) The transferor shall submit a copy of the written certificate
and supporting documentation for the reduced withholding specified in
subparagraph (B) of paragraph (2) or subparagraph (D) of paragraph
(3), executed by the transferor, to the Franchise Tax Board upon
request.
   (5) For purposes of this subdivision, "California real property
interest" means an interest in real property located in California
and defined in Section 897(c)(1)(A)(i) of the Internal Revenue Code.
   (6) For purposes of this subdivision, "real estate escrow person"
means any of the following persons involved in the real estate
transaction:
   (A) The person, including any attorney, escrow company, or title
company, responsible for closing the transaction.
   (B) If no person described in subparagraph (A) is responsible for
closing the transaction, then any other person who receives and
disburses the consideration or value for the interest or property
conveyed.
   (7) (A) Unless the real estate escrow person provides "assistance,"
it shall be unlawful for any real estate escrow person to charge any
customer for complying with the requirements of this subdivision.
   (B) For purposes of this paragraph, "assistance" includes, but is
not limited to, helping the parties clarify with the Franchise Tax
Board the issue of whether withholding is required under this
subdivision or, upon request of the parties, withholding an amount
under this subdivision and remitting that amount to the Franchise Tax
Board.
   (C) For purposes of this paragraph, "assistance" does not include
providing the written notification of the withholding requirements of
this subdivision.
   (D) In a case where the real estate escrow person provides
"assistance" in complying with the withholding requirements of this
subdivision, it shall be unlawful for the real estate escrow person
to charge any customer a fee that exceeds forty-five dollars ($45).
   (8) For purposes of this subdivision, "sales price" means the sum
of all of the following:
   (A) The cash paid, or to be paid, but excluding for this purpose
any stated or unstated interest or original issue discount, as
determined under Sections 1271 through 1275, inclusive, of the
Internal Revenue Code.
   (B) The fair market value of other property transferred, or to be
transferred.
   (C) The outstanding amount of any liability assumed by the
transferee or to which the California real property interest is
subject immediately before and after the transfer.
   (9) The Franchise Tax Board may prescribe, by forms, instructions,
published notices, or regulations, any requirements necessary for
the efficient administration of this subdivision relating to the
treatment of "de minimis" amounts otherwise required under this
section.
   (f) Withholding is not required under this section with respect to
wages, salaries, fees, or other compensation paid by a corporation
for services performed in California for that corporation to a
nonresident corporate director for director services, including
attendance at a board of directors' meeting.
   (g) In the case of any payment described in subdivision (f), the
person making the payment shall do each of the following:
   (1) File a return with the Franchise Tax Board at the time and in
the form and manner specified by the Franchise Tax Board.
   (2) Provide the payee with a statement at the time and in the form
and manner specified by the Franchise Tax Board.
   (h) (1) The amendments to this section made by Chapter 488 of the
Statutes of 2002 apply to dispositions of California real property
interests that occur on or after January 1, 2003.
   (2) In the case of any payments received on or after January 1,
2003, pursuant to an installment sale agreement relating to a
disposition occurring before January 1, 2003, the amendments to this
section made by Chapter 488 of the Statutes of 2002 do not apply to
those payments.
   (i) (1) The amendments made to this section by the act adding this
subdivision shall apply to dispositions of California real property
interests that occur on or after January 1, 2009.
   (2) In the case of any payments received on or after January 1,
2009, pursuant to an installment sale agreement relating to a
disposition occurring before January 1, 2009, the amendments made to
this section by the act adding this subdivision do not apply to those
payments.


18663.  (a) (1) The Franchise Tax Board shall annually (or more
often if necessary) prepare and make available to the Employment
Development Department, wage withholding tables that shall be used by
every employer making payment of any wages to a resident employee
for services performed either within or without this state; or to a
nonresident employee for services performed in this state, to deduct
and withhold from those wages for each payroll period, a tax computed
in a manner as to produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that is substantially equivalent to the amount of tax reasonably
estimated to be due under Part 10 (commencing with Section 17001)
resulting from the inclusion in the gross income of the employee the
wages which were subject to withholding.
   (2) For wages paid on or after November 1, 2009, wage withholding
tables prepared by the Franchise Tax Board pursuant to this
subdivision shall produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that will significantly prevent underwithholding by using an
amount equal to 10 percent more than the sum described in paragraph
(1).
   (b) (1) (A) For supplemental wages paid on or after January 1,
1992, the rate of withholding that may be applied to supplemental
wages in lieu of the wage withholding tables specified in subdivision
(a) shall be 6 percent.
   (B) For supplemental wages paid on or after November 1, 2009, the
rate of withholding shall be 6.6 percent.
   (2) For purposes of this subdivision, "supplemental wages"
includes, but is not limited to, bonus payments, overtime payments,
commissions, sales awards, back pay including retroactive wage
increases, and reimbursements for nondeductible moving expenses that
are paid for the same or a different period, or without regard to a
particular period.
   (c) (1) For stock options and bonus payments that constitute wages
paid on or after January 1, 2002, the rate of withholding that may
be applied to those stock options and bonus payments in lieu of the
wage withholding tables specified in subdivision (a) shall,
notwithstanding subdivision (b), be 9.3 percent.
   (2) For stock options and bonus payments that constitute wages
paid on or after November 1, 2009, the rate of withholding shall be
10.23 percent.



18664.  (a) (1) Section 3406 of the Internal Revenue Code, relating
to the backup withholding, shall apply, except as otherwise provided.
   (2) For purposes of this section, the term "reportable payment,"
as defined in Section 3406(b) of the Internal Revenue Code, shall
include payments of items of income as defined in Section 18662, and
any regulations thereunder, with respect to rents, prizes and
winnings, compensation for services, including bonuses, and other
fixed or determinable annual or periodic gains, profits, and income.
   (3) This section shall not apply to either of the following:
   (A) Payment of interest and dividends.
   (B) Any release of loan funds made by a financial institution in
the normal course of business.
   (4) For the purposes of subparagraph (B) of paragraph (3),
"financial institution" means any of the following:
   (A) A depository institution, as defined in Section 1813(c) of
Title 12 of the United States Code.
   (B) An institution-affiliated party, as defined in Section 1813(u)
of Title 12 of the United States Code.
   (C) Any federal credit union or state credit union, as defined in
Section 1752 of Title 12 of the United States Code, including an
institution-affiliated party of a credit union, as defined in Section
1786(r) of Title 12 of the United States Code.
   (b) The amount of tax to be withheld shall be computed by applying
a rate of 7 percent to the reportable payment.
   (c) Where withholding under both this section and other provisions
of this article would otherwise be required, withholding shall only
be required under this section.
   (d) Any payer required to withhold tax pursuant to this section
shall notify the payee of such withholding at a time and in a manner
as may be prescribed in forms and instructions by the Franchise Tax
Board.
   (e) This section shall apply to payments made on or after January
1, 2010.


18665.  Unless otherwise specifically provided, the provisions of
any law effecting changes in withholding shall apply to withholding
in the calendar year succeeding the year the provision was chaptered,
or in the calendar year the provision is operative, whichever is
later.



18666.  (a) Section 1446 of the Internal Revenue Code shall apply to
the extent that the amounts represent income from California
sources, except as otherwise provided.
   (b) (1) The rate of tax referred to in Section 1446(b)(2)(A) of
the Internal Revenue Code shall be the maximum tax rate specified in
Section 17041, rather than the rate specified in Section 1 of the
Internal Revenue Code.
   (2) The rate of tax referred to in Section 1446(b)(2)(B) of the
Internal Revenue Code shall be the rate specified in Section 23151,
23181, or 23183, as applicable, rather than the rate specified in
Section 11 of the Internal Revenue Code.


18667.  The Franchise Tax Board may require employers to submit
copies of income tax withholding exemption certificates. If the
Franchise Tax Board determines that a certificate is invalid for
state income tax purposes, the Franchise Tax Board shall notify the
employer and the affected employee of its determination. An employee
who disagrees with the Franchise Tax Board's determination may
request review of the determination by filing a written petition in
the form and within the time prescribed by the Franchise Tax Board.
After review, the Franchise Tax Board shall give written notification
of its decision to both the employer and the employee.




18668.  (a) Every person required under this article to deduct and
withhold any tax is hereby made liable for that tax, to the extent
provided by this section. Any amount required to be deducted and paid
to the Franchise Tax Board under this article shall be considered
the tax of that person. Unless it is shown that the failure is due to
reasonable cause, any person who fails to withhold from any payments
any amount required to be withheld under this article or who fails
to transmit the withheld amounts to the Franchise Tax Board on or
before the due date required by regulations is liable for the amount
actually withheld, or the amount of taxes due from the taxpayer to
whom the payments are made, whichever is greater, but not in excess
of the amount required to be withheld.
   (b) If any amount required to be withheld under this article is
not paid to the Franchise Tax Board on or before the due date
required by regulations, interest shall be assessed at the adjusted
annual rate established pursuant to Section 19521, computed from the
due date to the date paid.
   (c) Whenever any person has withheld any amount pursuant to this
article, the amount so withheld shall be held to be a special fund in
trust for the State of California.
   (d) In lieu of the amount provided for in subdivision (a), unless
it is shown that the failure to withhold is due to reasonable cause,
whenever any transferee is required to withhold any amount pursuant
to subdivision (e) of Section 18662, the transferee is liable for the
greater of the following amounts for failure to withhold only after
the transferee, as specified, is notified in writing of the
requirements under subdivision (e) of Section 18662:
   (1) Five hundred dollars ($500).
   (2) Ten percent of the amount required to be withheld under
subdivision (e) of Section 18662.
   (e) (1) Unless it is shown that the failure to notify is due to
reasonable cause, the real estate escrow person is liable for the
amount specified in subdivision (d), when written notification of the
withholding requirements of subdivision (e) of Section 18662 is not
provided to the transferee, other than a transferee that is an
intermediary or accommodator in a deferred exchange, and the
California real property disposition is subject to withholding under
subdivision (e) of Section 18662.
   (2) The real estate escrow person shall provide written
notification to the transferee (other than a transferee that is an
intermediary or accommodator in a deferred exchange) in substantially
the same form as follows:

   "In accordance with Section 18662 of the Revenue and Taxation
Code, a buyer may be required to withhold an amount equal to 3 1/3
percent of the sales price or the amount that is specified in a
written certificate executed by the transferor in the case of a
disposition of California real property interest by either:
   1. A seller who is an individual, trust, or estate or when the
disbursement instructions authorize the proceeds to be sent to a
financial intermediary of the seller, OR
   2. A corporate or partnership seller that has no permanent place
of business in California immediately after the transfer of title to
the California real property.
   The buyer may become subject to penalty for failure to withhold an
amount equal to the greater of 10 percent of the amount required to
be withheld or five hundred dollars ($500).
   However, notwithstanding any other provision included in the
California statutes referenced above, no buyer will be required to
withhold any amount or be subject to penalty for failure to withhold
if:
   1. The sales price of the California real property conveyed does
not exceed one hundred thousand dollars ($100,000), OR
   2. The seller executes a written certificate, under the penalty of
perjury, certifying that the seller is a corporation or a
partnership with a permanent place of business in California, OR
   3. The seller, who is an individual, trust, estate, partnership,
or a corporation without a permanent place of business in California
executes a written certificate, under the penalty of perjury, of any
of the following:
   A. The California real property being conveyed is the seller's or
decedent's principal residence, within the meaning of Section 121 of
the Internal Revenue Code.
   B. The last use of the property being conveyed was use by the
transferor as the transferor's principal residence within the meaning
of Section 121 of the Internal Revenue Code.
   C. The California real property being conveyed is or will be
exchanged for property of like kind, within the meaning of Section
1031 of the Internal Revenue Code, but only to the extent of the
amount of gain not required to be recognized for California income
tax purposes under Section 1031 of the Internal Revenue Code.
   D. The California real property has been compulsorily or
involuntarily converted, within the meaning of Section 1033 of the
Internal Revenue Code, and that the seller intends to acquire
property similar or related in service or use so as to be eligible
for nonrecognition of gain for California income tax purposes under
Section 1033 of the Internal Revenue Code.
   E. The California real property transaction will result in a loss
or a net gain not required to be recognized for California income tax
purposes.
   The seller is subject to penalty for knowingly filing a fraudulent
certificate for the purpose of avoiding the withholding requirement."


   (3) The real estate escrow person is not liable under this
subdivision if the tax due as a result of the disposition of
California real property is paid by the original or extended due date
of the transferor's return for the taxable year in which the
disposition occurred.
   (4) The real estate escrow person or transferee is not liable
under paragraph (1) or subdivision (d), if the failure to withhold is
the result of his or her reliance, based on good faith and on all
the information of which he or she has knowledge, upon a written
certificate executed by the transferor under penalty of perjury
pursuant to subparagraph (D) of paragraph (3) of subdivision (e) of
Section 18662.
   (5) Any transferor who for the purpose of avoiding the withholding
requirements of subdivision (e) of Section 18662 knowingly executes
a false certificate pursuant to that section is liable for twice the
amount specified in subdivision (d).
   (f) The amount of tax required to be deducted, withheld, and
remitted under this article shall be assessed, collected, and paid
upon notice and demand. Article 3 (commencing with Section 19031),
relating to deficiency assessments, shall not apply with respect to
the assessment or collection of any amount due under this article.




18669.  (a) Whenever any payer required to deduct and withhold tax
under this article sells, transfers, dissolves, withdraws,
terminates, or otherwise disposes of the business or a substantial
portion of its assets, the successors (including assigns, purchasers,
heirs, distributees, beneficiaries, or other persons acquiring
either a substantial portion of the assets or the business) shall
withhold in trust a sufficient part of the purchase price or set
aside in trust money or property to cover the amount of the taxes
required to be withheld and any interest or penalties with respect
thereto which are due or unpaid by the payer. The money, property or
portion of the purchase price shall be held in trust until a
certificate is issued by the Franchise Tax Board stating that no
amount of such tax, interest, or penalties are due or unpaid from the
payer.
   (b) Upon written request by the successor, the Franchise Tax Board
shall, within 60 days, issue a certificate or a statement showing
the amount of tax, interest, and penalties due from the payer. Except
as provided in subdivision (c), failure to issue a certificate or
statement within the 60-day period shall be deemed equivalent to the
issuance of a certificate stating that no tax, interest, or penalties
are due. If the Franchise Tax Board issues a statement showing that
taxes, interest, and penalties are claimed to be due, the amount
stated therein (not in excess of the fair market value of the assets
or business acquired) shall be paid by the successor to the Franchise
Tax Board within (1) 30 days after the statement is mailed or
delivered to the successor, or (2) on the day the business or assets
are acquired, whichever occurs last. If a request for a certificate
is not made by the successor, the amount of tax, interest, or
penalties due or unpaid by the payer shall be paid by the successor
to the Franchise Tax Board on the day the business or assets are
acquired. If a successor fails to pay the amount required by this
section by the time prescribed in this subdivision, a penalty of 10
percent of the amount payable shall be levied.
   (c) The issuance of a certificate stating that no taxes, interest,
and penalties are due, or the failure to issue the certificate or
statement within the period of 60 days shall not release the payer
from liability on account of any taxes, interest, and penalties then
or thereafter determined to be due from him or her, but shall release
the successor from any further liability on account of any such
taxes, interest, and penalties. Payment by the successor pursuant to
subdivision (b) shall not release the payer from liability except to
the extent of the amount paid by the successor.
   (d) Any successor that fails to withhold money or other property
or fails to pay the amount or value of the property withheld as
provided in this section shall be personally liable for the payment
of the taxes, interest, and penalties due from the payer up to but
not exceeding the fair market value of the assets or business
acquired. The Franchise Tax Board shall have all of the remedies for
collection against any successor that acquires the business or
substantially all the assets thereof of a payer as provided by this
part against any payer liable for taxes, interest, and penalties. The
time within which the obligation may be enforced against the
successor acquiring the business or substantially all the assets
thereof of a payer shall commence from (1) the date the successor
acquires the assets or business, (2) the date an assessment against
the successor payer becomes final, or (3) 31 days after the statement
is mailed or delivered to the successor if a certificate is
requested by the successor as provided in subdivision (b), whichever
of the three events is later.



18670.  (a) The Franchise Tax Board may by notice, served personally
or by first-class mail, require any employer, person, officer or
department of the state, political subdivision or agency of the
state, including the Regents of the University of California, a city
organized under a freeholders' charter, or a political body not a
subdivision or agency of the state, having in their possession, or
under their control, any credits or other personal property or other
things of value, belonging to a taxpayer or to an employer or person
who has failed to withhold and transmit amounts due pursuant to this
article, to withhold, from the credits or other personal property or
other things of value, the amount of any tax, interest, or penalties
due from the taxpayer or the amount of any liability incurred by that
employer or person for failure to withhold and transmit amounts due
from a taxpayer under this part and to transmit the amount withheld
to the Franchise Tax Board at the times that it may designate.
However, in the case of a depository institution, as defined in
Section 19(b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)
(A)), amounts due from a taxpayer under this part shall be
transmitted to the Franchise Tax Board not less than 10 business days
from receipt of the notice. To be effective, the notice shall state
the amount due from the taxpayer and shall be delivered or mailed to
the branch or office reported in information returns filed with the
Franchise Tax Board, or the branch or office where the credits or
other property is held, unless another branch or office is designated
by the employer, person, officer or department of the state,
political subdivision or agency of the state, including the Regents
of the University of California, a city organized under a freeholders'
charter or a political body not a subdivision or agency of the
state.
   (b) (1) At least 45 days before sending a notice to withhold to
the address indicated on the information return, the Franchise Tax
Board shall request a depository institution to do either of the
following:
   (A) Verify that the address on its information return is its
designated address for receiving notices to withhold.
   (B) Provide the Franchise Tax Board with a designated address for
receiving notices to withhold.
   (2) Once the depository institution has specified a designated
address pursuant to paragraph (1), the Franchise Tax Board shall send
all notices to that address unless the depository institution
provides notification of another address. The Franchise Tax Board
shall send all notices to withhold to a new designated address 30
days after notification.
   (3) Failure to verify or provide a designated address within 30
days of receiving the request shall be deemed verification of the
address on the information return as the depository institution's
designated address.
   (c) (1) Notwithstanding Section 8112 of the Commercial Code and
Section 700.130 of the Code of Civil Procedure, when the Franchise
Tax Board, pursuant to this section or Section 18670.5, issues a levy
upon, or requires by notice, any person, financial institution, or
securities intermediary, as applicable, to withhold all, or a portion
of, a financial asset for the purpose of collecting a delinquent tax
liability, the person, financial institution, or securities
intermediary, as defined in Section 8102 of the Commercial Code, that
maintains, administers, or manages that asset on behalf of the
taxpayer, or has the legal authority to accept instructions from the
taxpayer as to the disposition of that asset, shall liquidate the
financial asset in a commercially reasonable manner within 90 days of
the issuance of the order to withhold. Within five days of
liquidation, the person, financial institution, or securities
intermediary, as applicable, shall remit to the Franchise Tax Board
the proceeds of the liquidation, less any reasonable commissions or
fees, or both, which are charged in the normal course of business.
   (2) If the value of the financial assets to be liquidated exceeds
the tax liability, the taxpayer may, within 60 days after the service
of the order to withhold upon the person, financial institution, or
securities intermediary, instruct the person, financial institution,
or securities intermediary as to which financial assets are to be
sold to satisfy the tax liability. If the taxpayer does not provide
instructions for liquidation, the person, financial institution, or
securities intermediary shall liquidate the financial assets in a
commercially reasonable manner and in an amount sufficient to cover
the tax liability, and any reasonable commissions or fees, or both,
which are charged in the normal course of business, beginning with
the financial assets purchased most recently.
   (3) For purposes of this section, a financial asset shall include,
but not be limited to, an uncertificated security, certificated
security, or security entitlement as defined in Section 8102 of the
Commercial Code, a security as defined in Section 8103 of the
Commercial Code, or a securities account as defined in Section 8501
of the Commercial Code.
   (d) Any corporation or person failing to withhold the amounts due
from any taxpayer and transmit them to the Franchise Tax Board after
service of the notice shall be liable for those amounts. However, in
the case of a depository institution, if a notice to withhold is
mailed to the branch where the account is located or principal
banking office, the depository institution shall be liable for a
failure to withhold only to the extent that the accounts can be
identified in information normally maintained at that location in the
ordinary course of business.



18670.5.  (a) The Franchise Tax Board may by notice, served by
magnetic media, electronic transmission, or other electronic
technology, require any depository institution, as defined in Section
19 (b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)(A)),
that the Franchise Tax Board, in its sole discretion, has reason to
believe may have in its possession, or under its control, any credits
or other personal property or other things of value, belonging to a
taxpayer, to withhold, from the credits or other personal property or
other things of value, the amount of any tax, interest, or penalties
due from the taxpayer and transmit that amount withheld to the
Franchise Tax Board at the times that it may designate, but not less
than 10 business days from receipt of the notice. The notice shall
state the amount due from the taxpayer and shall be delivered or
transmitted to the branch or office reported in the information
returns filed with the Franchise Tax Board, or the branch or office
where the credits or other property is held, or other address
designated by that depository institution for purposes of the
Franchise Tax Board serving notice by magnetic media, electronic
transmission, or other electronic technology.
   (b) Any depository institution failing to withhold the amount due
from the taxpayer and to transmit that amount to the Franchise Tax
Board after the Franchise Tax Board provides notice to the depository
institution as authorized by subdivision (a) shall be liable for
those amounts only to the extent that the depository institution can
identify the account by magnetic media, electronic transmission, or
other electronic technology.
   (c) For purposes of this section, the term "address" shall include
telephone or modem number, facsimile number, or any other number
designated by the depository institution to receive data by
electronic means.



18671.  (a) Subject to the limitations in subdivisions (b) and (c),
the Franchise Tax Board, may, by notice, served personally or by
first-class mail, require any person, officer, department of the
state, or political subdivision or agency of the state including the
Regents of the University of California, a city organized under a
freeholder's charter, or a political body not a subdivision or agency
of the state, to withhold the amount of any tax, interest, or
penalties due from a taxpayer, or the amount due from an employer or
person who has failed to withhold and transmit amounts due pursuant
to this article, from any payments due the taxpayer, employer, or
person and from any payments becoming due the taxpayer, employer, or
person after receipt of the notice. The amounts withheld shall be
transmitted to the Franchise Tax Board at those times as it may
designate.
   (b) The effect of a levy made pursuant to subdivision (a) shall be
continuous from the date the notice is received until the amount due
stated on the notice has been withheld, until the notice has been
withdrawn, or until one year after the date the notice is received,
whichever occurs first.
   (c) The amount required to be withheld pursuant to a notice issued
under subdivision (a) is the lesser of the amount due stated on the
notice, or either of the following:
   (1) If the taxpayer, employer, or person is not a natural person,
100 percent of the amount of each payment due or becoming due the
taxpayer, employer, or person during the period the levy is in effect
as provided in subdivision (b).
   (2) If the taxpayer, employer, or person is a natural person, 25
percent of the amount of each payment due or becoming due the
taxpayer, employer, or person during the period the levy is in effect
as provided in subdivision (b).
   (d) For purposes of this section, the term "payments" does not
include earnings as defined in subdivision (a) of Section 706.011 of
the Code of Civil Procedure or funds in a deposit account as defined
in paragraph (29) of subdivision (a) of Section 9102 of the
Commercial Code. The term "payments" does include any of the
following:
   (1) Payments due for services of independent contractors,
dividends, rents, royalties, residuals, patent rights, or mineral or
other natural resource rights.
   (2) Payments or credits due or becoming due as a result of written
or oral contracts for services or sales whether denominated as
wages, salary, commission, bonus, or otherwise.
   (3) Any other payments or credits due or becoming due periodically
as a result of an enforceable obligation to the taxpayer, employer,
or person.



18672.  Any employer or person failing to withhold the amount due
from any taxpayer and to transmit the same to the Franchise Tax Board
after service of a notice pursuant to Section 18670 or 18671 is
liable for those amounts.


18673.  (a) Notwithstanding Article 7 (commencing with Section
706.151) of Chapter 5 of Title 9 of Part II of the Code of Civil
Procedure, if the Franchise Tax Board determines upon receiving
information from the taxpayer that his or her employer withheld
earnings for taxes pursuant to Article 4 (commencing with Section
19251) of Chapter 5 and failed to remit the withheld earnings to the
Franchise Tax Board, the employer shall be liable for the amount not
remitted. The Franchise Tax Board's determination shall be based on
payroll documents or other substantiating evidence furnished by the
taxpayer.
   (b) Upon its determination, the Franchise Tax Board shall mail
notice to the employer at its last known address that upon failure to
remit the withheld earnings to the Franchise Tax Board within 15
days of the date of its notice to the employer, the employer shall be
liable for that amount which was withheld and not remitted.
   (c) If the employer fails to remit the amount withheld to the
Franchise Tax Board upon notice, that amount for which the employer
is liable shall be assessed, collected, and paid as though it were a
tax deficiency. The amount may be assessed at any time prior to seven
years from the first day that the unremitted amount, in the
aggregate, was first withheld. Interest shall accrue on that amount
from the first day that the unremitted amount, in the aggregate, was
first withheld.
   (d) When the assessment against the employer is final and due and
payable, the taxpayer's account shall be immediately credited with an
amount equal to that assessed amount as though it were a payment
received by the Franchise Tax Board on the first date that the
unremitted amount, in the aggregate, was first withheld by the
employer.
   (e) Collection against the taxpayer is stayed for both the
following amount and period:
   (1) An amount equal to the amount determined by the Franchise Tax
Board under subdivision (a).
   (2) The earlier of the time the credit is applied to the taxpayer'
s account pursuant to subdivision (d) or the assessment against the
employer is withdrawn or revised and the taxpayer is notified by the
Franchise Tax Board thereof.
   (f) If under this section an amount that was withheld and not
remitted to the Franchise Tax Board is final and due and payable by
the employer and credited to the taxpayer's account, this remedy
shall be the exclusive remedy for the taxpayer to recover that amount
from the employer.
   (g) This section shall not apply to debts, obligations, or other
amounts for which an earnings withholding order or assignment is
issued by the Franchise Tax Board pursuant to Article 5, 5.5, or 6 of
Chapter 5 or Section 10878.
   (h) This section shall apply to determinations made by the
Franchise Tax Board on or after the effective date of the act adding
this section.


18674.  (a) Any employer or person required to withhold and transmit
any amount pursuant to this article shall comply with the
requirement without resort to any legal or equitable action in a
court of law or equity. Any employer or person paying to the
Franchise Tax Board any amount required by it to be withheld is not
liable therefor to the person from whom withheld unless the amount
withheld is refunded to the withholding agent. However, if a
depository institution, as defined in 12 U.S.C. Sec. 461(b)(1)(A)
withholds and pays to the Franchise Tax Board pursuant to this
article any moneys held in a deposit account in which the delinquent
taxpayer and another person or persons have an interest, or in an
account held in the name of a third party or parties in which the
delinquent taxpayer is ultimately determined to have no interest, the
depository institution paying those moneys to the Franchise Tax
Board is not liable therefor to any of the persons who have an
interest in the account, unless the amount withheld is refunded to
the withholding agent.
   (b) In the case of a deposit account or accounts for which this
notice to withhold applies, the depository institution shall send a
notice by first-class mail to each person named on the account or
accounts included in the notice from the Franchise Tax Board,
provided that a current address for each person is available to the
institution. This notice shall inform each person as to the reason
for the hold placed on the account or accounts, the amount subject to
being withheld, and the date by which this amount is to be remitted
to the Franchise Tax Board. An institution may assess the account or
accounts of each person receiving this notice a reasonable service
charge not to exceed three dollars ($3).
   (c) Any employer or person required under this article to withhold
payments from a taxpayer may file an action in interpleader when a
bona fide dispute has arisen as to priority of lien between the tax
levied under this part and that of a federal taxing agency.



18675.  Any person from whom a tax is collected by withholding under
this article or under Section 13020 of the Unemployment Insurance
Code is entitled to the remedies set forth in Articles 1 (commencing
with Section 19301) and 3 (commencing with Section 19381) of Chapter
6. Any refund of the tax under Chapter 6 (commencing with Section
19301) shall be made to the withholding agent instead of directly to
the taxpayer, if requested in writing by the withholding agent at the
time the amounts refundable were transmitted to the Franchise Tax
Board.


18676.  Whenever, under any provision of this article, service is
authorized upon the state of any notice to withhold, unless expressly
exempted from the provisions of this section, the service to be
effective must, in addition to any other requirements, be made on the
state agency owing the obligation prior to the time the agency
presents the claim for payment thereof to the Controller.



18677.  (a) For purposes of this article, if a lender, surety, or
other person, who is not an employer under those sections with
respect to an employee or group of employees, pays wages directly to
such an employee or group of employees, employed by one or more
employers, or to an agent on behalf of the employee or employees, the
lender, surety, or other person shall be liable in his or her own
person and estate to this state in a sum equal to the taxes (together
with interest) required to be deducted and withheld from the wages
by the employer.
   (b) If a lender, surety, or other person supplies funds to or for
the account of an employer for the specific purpose of paying wages
of the employees of the employer, with actual notice or knowledge
that the employer does not intend to or will not be able to make
timely payment or deposit of the amounts of tax required by this part
to be deducted and withheld by the employer from those wages, the
lender, surety, or other person shall be liable in his or her own
person and estate to the State of California in a sum equal to the
taxes (together with interest) which are not paid over to this state
by the employer with respect to the wages. However, the liability of
the lender, surety, or other person shall be limited to an amount
equal to 25 percent of the amount so supplied to or for the account
of the employer for that purpose.
   (c) Any amounts paid to this state pursuant to this section shall
be credited against the liability of the employer.


State Codes and Statutes

State Codes and Statutes

Statutes > California > Rtc > 18661-18677

REVENUE AND TAXATION CODE
SECTION 18661-18677



18661.  When necessary to make effective the provisions of this
article or Article 4 (commencing with Section 18631), the name,
address, social security number, or other taxpayer identification
number of the recipient of income shall be furnished upon demand of
the person paying the income.



18662.  (a) The Franchise Tax Board may, by regulation, require any
person, in whatever capacity acting, including lessees or mortgagors
of real or personal property, fiduciaries, employers, and any officer
or department of the state, or any political subdivision or agency
of the state, or any city organized under a freeholder's charter, or
any political body not a subdivision or agency of the state, having
the control, receipt, custody, disposal, or payment of items of
income specified in subdivision (b), to withhold an amount,
determined by the Franchise Tax Board to reasonably represent the
amount of tax due when the items of income are included with other
income of the taxpayer, and to transmit the amount withheld to the
Franchise Tax Board at the time as it may designate.
   (b) The items of income referred to in subdivision (a) are
interest, dividends, rents, prizes and winnings, premiums, annuities,
emoluments, compensation for services, including bonuses,
partnership income or gains, and other fixed or determinable annual
or periodical gains, profits, and income.
   (c) The Franchise Tax Board may authorize the tax under
subdivision (a) to be deducted and withheld from the interest upon
any securities the owners of which are not known to the withholding
agent.
   (d) Any person that fails to withhold from any payments any
amounts required to be withheld by this section or fails to remit the
taxes withheld is liable for the amount specified in Section 18668.
   (e) (1) This subdivision applies to any disposition of a
California real property interest by:
   (A) Any person, other than either of the following:
   (i) Except as otherwise provided in this subdivision, a
corporation, including an entity classified for tax purposes as a
corporation under Part 11 (commencing with Section 23001).
   (ii) Except as otherwise provided in this subdivision, a
partnership, as determined in accordance with Subchapter K of Chapter
1 of Subtitle A of the Internal Revenue Code, including an entity
classified as a partnership for tax purposes under Part 10
(commencing with Section 17001).
   (B) A corporation or partnership, if that corporation or
partnership immediately after the transfer of the title to the
California real property has no permanent place of business in
California. For purposes of this subdivision, a corporation or
partnership has no permanent place of business in California if all
of the following apply:
   (i) It is not organized and existing under the laws of California.
   (ii) It does not qualify with the office of the Secretary of State
to transact business in California.
   (iii) It does not maintain and staff a permanent office in
California.
   (2) (A) Except as provided in subparagraph (B), in the case of any
disposition of a California real property interest by a transferor
described in paragraph (1), the transferee, including for this
purpose any intermediary or accommodator in a deferred exchange, is
required to withhold an amount equal to 3 1/3 percent of the sales
price of the California real property conveyed.
   (B) If the transferor makes an election under this subparagraph,
the transferee, including any intermediary or accommodator in a
deferred exchange, is required to withhold an amount equal to an
amount certified by the transferor in writing under penalty of
perjury. The amount certified shall not be less than the gain
required to be recognized under Part 10 (commencing with Section
17001) and Part 11 (commencing with Section 23001) on the disposition
of the California real property multiplied by the rate specified in
either Section 23151 or Section 23186, as applicable, for transferors
that are corporations, or the highest rate specified in Section
17041 for transferors other than corporations. For purposes of
applying the previous sentence, the following shall apply:
   (i) The highest rate specified in Section 17041 is determined
without regard to any other tax rate specified under Part 10
(commencing with Section 17001) irrespective of whether the
applicable statute provides that tax shall be treated as if imposed
under Section 17041.
   (ii) For corporations that are "S" corporations subject to the
modified tax rate specified in Section 23802, the rate shall be the
sum of the rate specified in subdivision (b) of Section 23802 and the
highest rate specified in Section 17041, as described in clause (i).
   (C) (i) The written certification required by subparagraph (B)
shall be in a form, as prescribed by the Franchise Tax Board. The
form shall provide as follows:

   "Title and escrow persons and exchange accommodators are not
authorized to provide legal or accounting advice for purposes of
determining withholding amounts. Transferors are strongly encouraged
to consult with a competent tax professional for this purpose."

   (ii) The Franchise Tax Board shall make this form available
electronically on its Web site in a format that allows a transferor
to complete and print the form. The Franchise Tax Board shall also
provide electronic means to enable the transferor to estimate the
amount of gain required to be recognized by the transferor in the
transaction. Any form or worksheet, electronic or otherwise,
developed for this purpose shall provide as follows:

   "Title and escrow persons and exchange accommodators are not
authorized to provide legal or accounting advice for purposes of
determining withholding amounts. Transferors are strongly encouraged
to consult with a competent tax professional for this purpose."

   (3) Notwithstanding any other provision of this subdivision, all
of the following shall apply:
   (A) No transferee is required to withhold any amount under this
subdivision unless the sales price of the California real property
conveyed exceeds one hundred thousand dollars ($100,000).
   (B) No transferee, other than an intermediary or an accommodator
in a deferred exchange, is required to withhold any amount under this
subdivision unless written notification of the withholding
requirements of this subdivision has been provided by the real estate
escrow person.
   (C) (i) No transferee, trustee under a deed of trust, or mortgagee
under a mortgage with a power of sale is required to withhold under
this subdivision when the transferee has acquired California real
property at a sale pursuant to a power of sale under a mortgage or
deed of trust or a sale pursuant to a decree of foreclosure or has
acquired the property by a deed in lieu of foreclosure.
   (ii) No transferee is required to withhold under this subdivision
when the transferor is a bank acting as trustee other than a trustee
of a deed of trust.
   (D) No transferee, including for this purpose any intermediary or
accommodator in a deferred exchange, is required to withhold any
amount under this subdivision if the transferee, in good faith and
based on all the information of which he or she has knowledge, relies
on a written certificate executed by the transferor, certifying,
under penalty of perjury, one of the following:
   (i) (I) The California real property being conveyed is the seller'
s or decedent's principal residence, within the meaning of Section
121 of the Internal Revenue Code.
   (II) The last use of the property being conveyed was use by the
transferor as the transferor's principal residence within the meaning
of Section 121 of the Internal Revenue Code.
   (ii) (I) The California real property being conveyed is being
exchanged, or will be exchanged, for property of like kind, within
the meaning of Section 1031 of the Internal Revenue Code, but only to
the extent of the amount of the gain not required to be recognized
for California income or franchise tax purposes under Section 1031 of
the Internal Revenue Code.
   (II) Subclause (I) may not apply if an exchange does not qualify
for nonrecognition treatment for California income or franchise tax
purposes under Section 1031 of the Internal Revenue Code, in whole or
in part, due to the failure of the transaction to comply with the
provisions of Section 1031(a)(3) of the Internal Revenue Code,
relating to the requirement that property be identified and that the
exchange be completed not more than 180 days after the transfer of
the exchanged property.
   (III) In any case where clause (ii) applies, the transferee,
including for this purpose any intermediary or accommodator in a
deferred exchange, is required to notify the Franchise Tax Board in
writing within 10 days of the expiration of the statutory periods
specified in Section 1031(a)(3) of the Internal Revenue Code and
thereafter remit the applicable withholding amounts determined under
this subdivision in accordance with paragraph (4).
   (iii) The California real property has been compulsorily or
involuntarily converted, within the meaning of Section 1033 of the
Internal Revenue Code, and the transferor intends to acquire property
similar or related in service or use so as to be eligible for
nonrecognition of gain for California income tax purposes under
Section 1033 of the Internal Revenue Code.
   (iv) The transaction will result in either a net loss or a net
gain not required to be recognized for California income or franchise
tax purposes.
   (v) The transferor is a corporation with a permanent place of
business in California.
   (E) (i) In the case of any transaction otherwise subject to this
subdivision that qualifies as an "installment sale," within the
meaning of Section 453(b) of the Internal Revenue Code, for
California income tax purposes, the provisions of this subdivision
shall be separately applied to each principal payment to be made
under the terms of the installment sale agreement between the
parties.
   (ii) For purposes of clause (i), subparagraph (A) of paragraph (3)
does not apply to each individual payment to be received under the
terms of the installment sale agreement.
   (4) (A) Amounts withheld and payments made in accordance with this
subdivision shall be reported and remitted to the Franchise Tax
Board in the form and manner and at the time specified by the
Franchise Tax Board. Notwithstanding the foregoing, funds withheld on
individual transactions by real estate escrow persons may, at the
option of the real estate escrow person, be remitted by the 20th day
of the month following the close of escrow for the individual
transaction, or may be remitted on a monthly basis in combination
with other transactions closed during that month.
   (B) The transferor shall submit a copy of the written certificate
and supporting documentation for the reduced withholding specified in
subparagraph (B) of paragraph (2) or subparagraph (D) of paragraph
(3), executed by the transferor, to the Franchise Tax Board upon
request.
   (5) For purposes of this subdivision, "California real property
interest" means an interest in real property located in California
and defined in Section 897(c)(1)(A)(i) of the Internal Revenue Code.
   (6) For purposes of this subdivision, "real estate escrow person"
means any of the following persons involved in the real estate
transaction:
   (A) The person, including any attorney, escrow company, or title
company, responsible for closing the transaction.
   (B) If no person described in subparagraph (A) is responsible for
closing the transaction, then any other person who receives and
disburses the consideration or value for the interest or property
conveyed.
   (7) (A) Unless the real estate escrow person provides "assistance,"
it shall be unlawful for any real estate escrow person to charge any
customer for complying with the requirements of this subdivision.
   (B) For purposes of this paragraph, "assistance" includes, but is
not limited to, helping the parties clarify with the Franchise Tax
Board the issue of whether withholding is required under this
subdivision or, upon request of the parties, withholding an amount
under this subdivision and remitting that amount to the Franchise Tax
Board.
   (C) For purposes of this paragraph, "assistance" does not include
providing the written notification of the withholding requirements of
this subdivision.
   (D) In a case where the real estate escrow person provides
"assistance" in complying with the withholding requirements of this
subdivision, it shall be unlawful for the real estate escrow person
to charge any customer a fee that exceeds forty-five dollars ($45).
   (8) For purposes of this subdivision, "sales price" means the sum
of all of the following:
   (A) The cash paid, or to be paid, but excluding for this purpose
any stated or unstated interest or original issue discount, as
determined under Sections 1271 through 1275, inclusive, of the
Internal Revenue Code.
   (B) The fair market value of other property transferred, or to be
transferred.
   (C) The outstanding amount of any liability assumed by the
transferee or to which the California real property interest is
subject immediately before and after the transfer.
   (9) The Franchise Tax Board may prescribe, by forms, instructions,
published notices, or regulations, any requirements necessary for
the efficient administration of this subdivision relating to the
treatment of "de minimis" amounts otherwise required under this
section.
   (f) Withholding is not required under this section with respect to
wages, salaries, fees, or other compensation paid by a corporation
for services performed in California for that corporation to a
nonresident corporate director for director services, including
attendance at a board of directors' meeting.
   (g) In the case of any payment described in subdivision (f), the
person making the payment shall do each of the following:
   (1) File a return with the Franchise Tax Board at the time and in
the form and manner specified by the Franchise Tax Board.
   (2) Provide the payee with a statement at the time and in the form
and manner specified by the Franchise Tax Board.
   (h) (1) The amendments to this section made by Chapter 488 of the
Statutes of 2002 apply to dispositions of California real property
interests that occur on or after January 1, 2003.
   (2) In the case of any payments received on or after January 1,
2003, pursuant to an installment sale agreement relating to a
disposition occurring before January 1, 2003, the amendments to this
section made by Chapter 488 of the Statutes of 2002 do not apply to
those payments.
   (i) (1) The amendments made to this section by the act adding this
subdivision shall apply to dispositions of California real property
interests that occur on or after January 1, 2009.
   (2) In the case of any payments received on or after January 1,
2009, pursuant to an installment sale agreement relating to a
disposition occurring before January 1, 2009, the amendments made to
this section by the act adding this subdivision do not apply to those
payments.


18663.  (a) (1) The Franchise Tax Board shall annually (or more
often if necessary) prepare and make available to the Employment
Development Department, wage withholding tables that shall be used by
every employer making payment of any wages to a resident employee
for services performed either within or without this state; or to a
nonresident employee for services performed in this state, to deduct
and withhold from those wages for each payroll period, a tax computed
in a manner as to produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that is substantially equivalent to the amount of tax reasonably
estimated to be due under Part 10 (commencing with Section 17001)
resulting from the inclusion in the gross income of the employee the
wages which were subject to withholding.
   (2) For wages paid on or after November 1, 2009, wage withholding
tables prepared by the Franchise Tax Board pursuant to this
subdivision shall produce, so far as practicable, with due regard to
the credits for personal exemptions allowable under Section 17054, a
sum that will significantly prevent underwithholding by using an
amount equal to 10 percent more than the sum described in paragraph
(1).
   (b) (1) (A) For supplemental wages paid on or after January 1,
1992, the rate of withholding that may be applied to supplemental
wages in lieu of the wage withholding tables specified in subdivision
(a) shall be 6 percent.
   (B) For supplemental wages paid on or after November 1, 2009, the
rate of withholding shall be 6.6 percent.
   (2) For purposes of this subdivision, "supplemental wages"
includes, but is not limited to, bonus payments, overtime payments,
commissions, sales awards, back pay including retroactive wage
increases, and reimbursements for nondeductible moving expenses that
are paid for the same or a different period, or without regard to a
particular period.
   (c) (1) For stock options and bonus payments that constitute wages
paid on or after January 1, 2002, the rate of withholding that may
be applied to those stock options and bonus payments in lieu of the
wage withholding tables specified in subdivision (a) shall,
notwithstanding subdivision (b), be 9.3 percent.
   (2) For stock options and bonus payments that constitute wages
paid on or after November 1, 2009, the rate of withholding shall be
10.23 percent.



18664.  (a) (1) Section 3406 of the Internal Revenue Code, relating
to the backup withholding, shall apply, except as otherwise provided.
   (2) For purposes of this section, the term "reportable payment,"
as defined in Section 3406(b) of the Internal Revenue Code, shall
include payments of items of income as defined in Section 18662, and
any regulations thereunder, with respect to rents, prizes and
winnings, compensation for services, including bonuses, and other
fixed or determinable annual or periodic gains, profits, and income.
   (3) This section shall not apply to either of the following:
   (A) Payment of interest and dividends.
   (B) Any release of loan funds made by a financial institution in
the normal course of business.
   (4) For the purposes of subparagraph (B) of paragraph (3),
"financial institution" means any of the following:
   (A) A depository institution, as defined in Section 1813(c) of
Title 12 of the United States Code.
   (B) An institution-affiliated party, as defined in Section 1813(u)
of Title 12 of the United States Code.
   (C) Any federal credit union or state credit union, as defined in
Section 1752 of Title 12 of the United States Code, including an
institution-affiliated party of a credit union, as defined in Section
1786(r) of Title 12 of the United States Code.
   (b) The amount of tax to be withheld shall be computed by applying
a rate of 7 percent to the reportable payment.
   (c) Where withholding under both this section and other provisions
of this article would otherwise be required, withholding shall only
be required under this section.
   (d) Any payer required to withhold tax pursuant to this section
shall notify the payee of such withholding at a time and in a manner
as may be prescribed in forms and instructions by the Franchise Tax
Board.
   (e) This section shall apply to payments made on or after January
1, 2010.


18665.  Unless otherwise specifically provided, the provisions of
any law effecting changes in withholding shall apply to withholding
in the calendar year succeeding the year the provision was chaptered,
or in the calendar year the provision is operative, whichever is
later.



18666.  (a) Section 1446 of the Internal Revenue Code shall apply to
the extent that the amounts represent income from California
sources, except as otherwise provided.
   (b) (1) The rate of tax referred to in Section 1446(b)(2)(A) of
the Internal Revenue Code shall be the maximum tax rate specified in
Section 17041, rather than the rate specified in Section 1 of the
Internal Revenue Code.
   (2) The rate of tax referred to in Section 1446(b)(2)(B) of the
Internal Revenue Code shall be the rate specified in Section 23151,
23181, or 23183, as applicable, rather than the rate specified in
Section 11 of the Internal Revenue Code.


18667.  The Franchise Tax Board may require employers to submit
copies of income tax withholding exemption certificates. If the
Franchise Tax Board determines that a certificate is invalid for
state income tax purposes, the Franchise Tax Board shall notify the
employer and the affected employee of its determination. An employee
who disagrees with the Franchise Tax Board's determination may
request review of the determination by filing a written petition in
the form and within the time prescribed by the Franchise Tax Board.
After review, the Franchise Tax Board shall give written notification
of its decision to both the employer and the employee.




18668.  (a) Every person required under this article to deduct and
withhold any tax is hereby made liable for that tax, to the extent
provided by this section. Any amount required to be deducted and paid
to the Franchise Tax Board under this article shall be considered
the tax of that person. Unless it is shown that the failure is due to
reasonable cause, any person who fails to withhold from any payments
any amount required to be withheld under this article or who fails
to transmit the withheld amounts to the Franchise Tax Board on or
before the due date required by regulations is liable for the amount
actually withheld, or the amount of taxes due from the taxpayer to
whom the payments are made, whichever is greater, but not in excess
of the amount required to be withheld.
   (b) If any amount required to be withheld under this article is
not paid to the Franchise Tax Board on or before the due date
required by regulations, interest shall be assessed at the adjusted
annual rate established pursuant to Section 19521, computed from the
due date to the date paid.
   (c) Whenever any person has withheld any amount pursuant to this
article, the amount so withheld shall be held to be a special fund in
trust for the State of California.
   (d) In lieu of the amount provided for in subdivision (a), unless
it is shown that the failure to withhold is due to reasonable cause,
whenever any transferee is required to withhold any amount pursuant
to subdivision (e) of Section 18662, the transferee is liable for the
greater of the following amounts for failure to withhold only after
the transferee, as specified, is notified in writing of the
requirements under subdivision (e) of Section 18662:
   (1) Five hundred dollars ($500).
   (2) Ten percent of the amount required to be withheld under
subdivision (e) of Section 18662.
   (e) (1) Unless it is shown that the failure to notify is due to
reasonable cause, the real estate escrow person is liable for the
amount specified in subdivision (d), when written notification of the
withholding requirements of subdivision (e) of Section 18662 is not
provided to the transferee, other than a transferee that is an
intermediary or accommodator in a deferred exchange, and the
California real property disposition is subject to withholding under
subdivision (e) of Section 18662.
   (2) The real estate escrow person shall provide written
notification to the transferee (other than a transferee that is an
intermediary or accommodator in a deferred exchange) in substantially
the same form as follows:

   "In accordance with Section 18662 of the Revenue and Taxation
Code, a buyer may be required to withhold an amount equal to 3 1/3
percent of the sales price or the amount that is specified in a
written certificate executed by the transferor in the case of a
disposition of California real property interest by either:
   1. A seller who is an individual, trust, or estate or when the
disbursement instructions authorize the proceeds to be sent to a
financial intermediary of the seller, OR
   2. A corporate or partnership seller that has no permanent place
of business in California immediately after the transfer of title to
the California real property.
   The buyer may become subject to penalty for failure to withhold an
amount equal to the greater of 10 percent of the amount required to
be withheld or five hundred dollars ($500).
   However, notwithstanding any other provision included in the
California statutes referenced above, no buyer will be required to
withhold any amount or be subject to penalty for failure to withhold
if:
   1. The sales price of the California real property conveyed does
not exceed one hundred thousand dollars ($100,000), OR
   2. The seller executes a written certificate, under the penalty of
perjury, certifying that the seller is a corporation or a
partnership with a permanent place of business in California, OR
   3. The seller, who is an individual, trust, estate, partnership,
or a corporation without a permanent place of business in California
executes a written certificate, under the penalty of perjury, of any
of the following:
   A. The California real property being conveyed is the seller's or
decedent's principal residence, within the meaning of Section 121 of
the Internal Revenue Code.
   B. The last use of the property being conveyed was use by the
transferor as the transferor's principal residence within the meaning
of Section 121 of the Internal Revenue Code.
   C. The California real property being conveyed is or will be
exchanged for property of like kind, within the meaning of Section
1031 of the Internal Revenue Code, but only to the extent of the
amount of gain not required to be recognized for California income
tax purposes under Section 1031 of the Internal Revenue Code.
   D. The California real property has been compulsorily or
involuntarily converted, within the meaning of Section 1033 of the
Internal Revenue Code, and that the seller intends to acquire
property similar or related in service or use so as to be eligible
for nonrecognition of gain for California income tax purposes under
Section 1033 of the Internal Revenue Code.
   E. The California real property transaction will result in a loss
or a net gain not required to be recognized for California income tax
purposes.
   The seller is subject to penalty for knowingly filing a fraudulent
certificate for the purpose of avoiding the withholding requirement."


   (3) The real estate escrow person is not liable under this
subdivision if the tax due as a result of the disposition of
California real property is paid by the original or extended due date
of the transferor's return for the taxable year in which the
disposition occurred.
   (4) The real estate escrow person or transferee is not liable
under paragraph (1) or subdivision (d), if the failure to withhold is
the result of his or her reliance, based on good faith and on all
the information of which he or she has knowledge, upon a written
certificate executed by the transferor under penalty of perjury
pursuant to subparagraph (D) of paragraph (3) of subdivision (e) of
Section 18662.
   (5) Any transferor who for the purpose of avoiding the withholding
requirements of subdivision (e) of Section 18662 knowingly executes
a false certificate pursuant to that section is liable for twice the
amount specified in subdivision (d).
   (f) The amount of tax required to be deducted, withheld, and
remitted under this article shall be assessed, collected, and paid
upon notice and demand. Article 3 (commencing with Section 19031),
relating to deficiency assessments, shall not apply with respect to
the assessment or collection of any amount due under this article.




18669.  (a) Whenever any payer required to deduct and withhold tax
under this article sells, transfers, dissolves, withdraws,
terminates, or otherwise disposes of the business or a substantial
portion of its assets, the successors (including assigns, purchasers,
heirs, distributees, beneficiaries, or other persons acquiring
either a substantial portion of the assets or the business) shall
withhold in trust a sufficient part of the purchase price or set
aside in trust money or property to cover the amount of the taxes
required to be withheld and any interest or penalties with respect
thereto which are due or unpaid by the payer. The money, property or
portion of the purchase price shall be held in trust until a
certificate is issued by the Franchise Tax Board stating that no
amount of such tax, interest, or penalties are due or unpaid from the
payer.
   (b) Upon written request by the successor, the Franchise Tax Board
shall, within 60 days, issue a certificate or a statement showing
the amount of tax, interest, and penalties due from the payer. Except
as provided in subdivision (c), failure to issue a certificate or
statement within the 60-day period shall be deemed equivalent to the
issuance of a certificate stating that no tax, interest, or penalties
are due. If the Franchise Tax Board issues a statement showing that
taxes, interest, and penalties are claimed to be due, the amount
stated therein (not in excess of the fair market value of the assets
or business acquired) shall be paid by the successor to the Franchise
Tax Board within (1) 30 days after the statement is mailed or
delivered to the successor, or (2) on the day the business or assets
are acquired, whichever occurs last. If a request for a certificate
is not made by the successor, the amount of tax, interest, or
penalties due or unpaid by the payer shall be paid by the successor
to the Franchise Tax Board on the day the business or assets are
acquired. If a successor fails to pay the amount required by this
section by the time prescribed in this subdivision, a penalty of 10
percent of the amount payable shall be levied.
   (c) The issuance of a certificate stating that no taxes, interest,
and penalties are due, or the failure to issue the certificate or
statement within the period of 60 days shall not release the payer
from liability on account of any taxes, interest, and penalties then
or thereafter determined to be due from him or her, but shall release
the successor from any further liability on account of any such
taxes, interest, and penalties. Payment by the successor pursuant to
subdivision (b) shall not release the payer from liability except to
the extent of the amount paid by the successor.
   (d) Any successor that fails to withhold money or other property
or fails to pay the amount or value of the property withheld as
provided in this section shall be personally liable for the payment
of the taxes, interest, and penalties due from the payer up to but
not exceeding the fair market value of the assets or business
acquired. The Franchise Tax Board shall have all of the remedies for
collection against any successor that acquires the business or
substantially all the assets thereof of a payer as provided by this
part against any payer liable for taxes, interest, and penalties. The
time within which the obligation may be enforced against the
successor acquiring the business or substantially all the assets
thereof of a payer shall commence from (1) the date the successor
acquires the assets or business, (2) the date an assessment against
the successor payer becomes final, or (3) 31 days after the statement
is mailed or delivered to the successor if a certificate is
requested by the successor as provided in subdivision (b), whichever
of the three events is later.



18670.  (a) The Franchise Tax Board may by notice, served personally
or by first-class mail, require any employer, person, officer or
department of the state, political subdivision or agency of the
state, including the Regents of the University of California, a city
organized under a freeholders' charter, or a political body not a
subdivision or agency of the state, having in their possession, or
under their control, any credits or other personal property or other
things of value, belonging to a taxpayer or to an employer or person
who has failed to withhold and transmit amounts due pursuant to this
article, to withhold, from the credits or other personal property or
other things of value, the amount of any tax, interest, or penalties
due from the taxpayer or the amount of any liability incurred by that
employer or person for failure to withhold and transmit amounts due
from a taxpayer under this part and to transmit the amount withheld
to the Franchise Tax Board at the times that it may designate.
However, in the case of a depository institution, as defined in
Section 19(b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)
(A)), amounts due from a taxpayer under this part shall be
transmitted to the Franchise Tax Board not less than 10 business days
from receipt of the notice. To be effective, the notice shall state
the amount due from the taxpayer and shall be delivered or mailed to
the branch or office reported in information returns filed with the
Franchise Tax Board, or the branch or office where the credits or
other property is held, unless another branch or office is designated
by the employer, person, officer or department of the state,
political subdivision or agency of the state, including the Regents
of the University of California, a city organized under a freeholders'
charter or a political body not a subdivision or agency of the
state.
   (b) (1) At least 45 days before sending a notice to withhold to
the address indicated on the information return, the Franchise Tax
Board shall request a depository institution to do either of the
following:
   (A) Verify that the address on its information return is its
designated address for receiving notices to withhold.
   (B) Provide the Franchise Tax Board with a designated address for
receiving notices to withhold.
   (2) Once the depository institution has specified a designated
address pursuant to paragraph (1), the Franchise Tax Board shall send
all notices to that address unless the depository institution
provides notification of another address. The Franchise Tax Board
shall send all notices to withhold to a new designated address 30
days after notification.
   (3) Failure to verify or provide a designated address within 30
days of receiving the request shall be deemed verification of the
address on the information return as the depository institution's
designated address.
   (c) (1) Notwithstanding Section 8112 of the Commercial Code and
Section 700.130 of the Code of Civil Procedure, when the Franchise
Tax Board, pursuant to this section or Section 18670.5, issues a levy
upon, or requires by notice, any person, financial institution, or
securities intermediary, as applicable, to withhold all, or a portion
of, a financial asset for the purpose of collecting a delinquent tax
liability, the person, financial institution, or securities
intermediary, as defined in Section 8102 of the Commercial Code, that
maintains, administers, or manages that asset on behalf of the
taxpayer, or has the legal authority to accept instructions from the
taxpayer as to the disposition of that asset, shall liquidate the
financial asset in a commercially reasonable manner within 90 days of
the issuance of the order to withhold. Within five days of
liquidation, the person, financial institution, or securities
intermediary, as applicable, shall remit to the Franchise Tax Board
the proceeds of the liquidation, less any reasonable commissions or
fees, or both, which are charged in the normal course of business.
   (2) If the value of the financial assets to be liquidated exceeds
the tax liability, the taxpayer may, within 60 days after the service
of the order to withhold upon the person, financial institution, or
securities intermediary, instruct the person, financial institution,
or securities intermediary as to which financial assets are to be
sold to satisfy the tax liability. If the taxpayer does not provide
instructions for liquidation, the person, financial institution, or
securities intermediary shall liquidate the financial assets in a
commercially reasonable manner and in an amount sufficient to cover
the tax liability, and any reasonable commissions or fees, or both,
which are charged in the normal course of business, beginning with
the financial assets purchased most recently.
   (3) For purposes of this section, a financial asset shall include,
but not be limited to, an uncertificated security, certificated
security, or security entitlement as defined in Section 8102 of the
Commercial Code, a security as defined in Section 8103 of the
Commercial Code, or a securities account as defined in Section 8501
of the Commercial Code.
   (d) Any corporation or person failing to withhold the amounts due
from any taxpayer and transmit them to the Franchise Tax Board after
service of the notice shall be liable for those amounts. However, in
the case of a depository institution, if a notice to withhold is
mailed to the branch where the account is located or principal
banking office, the depository institution shall be liable for a
failure to withhold only to the extent that the accounts can be
identified in information normally maintained at that location in the
ordinary course of business.



18670.5.  (a) The Franchise Tax Board may by notice, served by
magnetic media, electronic transmission, or other electronic
technology, require any depository institution, as defined in Section
19 (b) of the Federal Reserve Act (12 U.S.C.A. Sec. 461(b)(1)(A)),
that the Franchise Tax Board, in its sole discretion, has reason to
believe may have in its possession, or under its control, any credits
or other personal property or other things of value, belonging to a
taxpayer, to withhold, from the credits or other personal property or
other things of value, the amount of any tax, interest, or penalties
due from the taxpayer and transmit that amount withheld to the
Franchise Tax Board at the times that it may designate, but not less
than 10 business days from receipt of the notice. The notice shall
state the amount due from the taxpayer and shall be delivered or
transmitted to the branch or office reported in the information
returns filed with the Franchise Tax Board, or the branch or office
where the credits or other property is held, or other address
designated by that depository institution for purposes of the
Franchise Tax Board serving notice by magnetic media, electronic
transmission, or other electronic technology.
   (b) Any depository institution failing to withhold the amount due
from the taxpayer and to transmit that amount to the Franchise Tax
Board after the Franchise Tax Board provides notice to the depository
institution as authorized by subdivision (a) shall be liable for
those amounts only to the extent that the depository institution can
identify the account by magnetic media, electronic transmission, or
other electronic technology.
   (c) For purposes of this section, the term "address" shall include
telephone or modem number, facsimile number, or any other number
designated by the depository institution to receive data by
electronic means.



18671.  (a) Subject to the limitations in subdivisions (b) and (c),
the Franchise Tax Board, may, by notice, served personally or by
first-class mail, require any person, officer, department of the
state, or political subdivision or agency of the state including the
Regents of the University of California, a city organized under a
freeholder's charter, or a political body not a subdivision or agency
of the state, to withhold the amount of any tax, interest, or
penalties due from a taxpayer, or the amount due from an employer or
person who has failed to withhold and transmit amounts due pursuant
to this article, from any payments due the taxpayer, employer, or
person and from any payments becoming due the taxpayer, employer, or
person after receipt of the notice. The amounts withheld shall be
transmitted to the Franchise Tax Board at those times as it may
designate.
   (b) The effect of a levy made pursuant to subdivision (a) shall be
continuous from the date the notice is received until the amount due
stated on the notice has been withheld, until the notice has been
withdrawn, or until one year after the date the notice is received,
whichever occurs first.
   (c) The amount required to be withheld pursuant to a notice issued
under subdivision (a) is the lesser of the amount due stated on the
notice, or either of the following:
   (1) If the taxpayer, employer, or person is not a natural person,
100 percent of the amount of each payment due or becoming due the
taxpayer, employer, or person during the period the levy is in effect
as provided in subdivision (b).
   (2) If the taxpayer, employer, or person is a natural person, 25
percent of the amount of each payment due or becoming due the
taxpayer, employer, or person during the period the levy is in effect
as provided in subdivision (b).
   (d) For purposes of this section, the term "payments" does not
include earnings as defined in subdivision (a) of Section 706.011 of
the Code of Civil Procedure or funds in a deposit account as defined
in paragraph (29) of subdivision (a) of Section 9102 of the
Commercial Code. The term "payments" does include any of the
following:
   (1) Payments due for services of independent contractors,
dividends, rents, royalties, residuals, patent rights, or mineral or
other natural resource rights.
   (2) Payments or credits due or becoming due as a result of written
or oral contracts for services or sales whether denominated as
wages, salary, commission, bonus, or otherwise.
   (3) Any other payments or credits due or becoming due periodically
as a result of an enforceable obligation to the taxpayer, employer,
or person.



18672.  Any employer or person failing to withhold the amount due
from any taxpayer and to transmit the same to the Franchise Tax Board
after service of a notice pursuant to Section 18670 or 18671 is
liable for those amounts.


18673.  (a) Notwithstanding Article 7 (commencing with Section
706.151) of Chapter 5 of Title 9 of Part II of the Code of Civil
Procedure, if the Franchise Tax Board determines upon receiving
information from the taxpayer that his or her employer withheld
earnings for taxes pursuant to Article 4 (commencing with Section
19251) of Chapter 5 and failed to remit the withheld earnings to the
Franchise Tax Board, the employer shall be liable for the amount not
remitted. The Franchise Tax Board's determination shall be based on
payroll documents or other substantiating evidence furnished by the
taxpayer.
   (b) Upon its determination, the Franchise Tax Board shall mail
notice to the employer at its last known address that upon failure to
remit the withheld earnings to the Franchise Tax Board within 15
days of the date of its notice to the employer, the employer shall be
liable for that amount which was withheld and not remitted.
   (c) If the employer fails to remit the amount withheld to the
Franchise Tax Board upon notice, that amount for which the employer
is liable shall be assessed, collected, and paid as though it were a
tax deficiency. The amount may be assessed at any time prior to seven
years from the first day that the unremitted amount, in the
aggregate, was first withheld. Interest shall accrue on that amount
from the first day that the unremitted amount, in the aggregate, was
first withheld.
   (d) When the assessment against the employer is final and due and
payable, the taxpayer's account shall be immediately credited with an
amount equal to that assessed amount as though it were a payment
received by the Franchise Tax Board on the first date that the
unremitted amount, in the aggregate, was first withheld by the
employer.
   (e) Collection against the taxpayer is stayed for both the
following amount and period:
   (1) An amount equal to the amount determined by the Franchise Tax
Board under subdivision (a).
   (2) The earlier of the time the credit is applied to the taxpayer'
s account pursuant to subdivision (d) or the assessment against the
employer is withdrawn or revised and the taxpayer is notified by the
Franchise Tax Board thereof.
   (f) If under this section an amount that was withheld and not
remitted to the Franchise Tax Board is final and due and payable by
the employer and credited to the taxpayer's account, this remedy
shall be the exclusive remedy for the taxpayer to recover that amount
from the employer.
   (g) This section shall not apply to debts, obligations, or other
amounts for which an earnings withholding order or assignment is
issued by the Franchise Tax Board pursuant to Article 5, 5.5, or 6 of
Chapter 5 or Section 10878.
   (h) This section shall apply to determinations made by the
Franchise Tax Board on or after the effective date of the act adding
this section.


18674.  (a) Any employer or person required to withhold and transmit
any amount pursuant to this article shall comply with the
requirement without resort to any legal or equitable action in a
court of law or equity. Any employer or person paying to the
Franchise Tax Board any amount required by it to be withheld is not
liable therefor to the person from whom withheld unless the amount
withheld is refunded to the withholding agent. However, if a
depository institution, as defined in 12 U.S.C. Sec. 461(b)(1)(A)
withholds and pays to the Franchise Tax Board pursuant to this
article any moneys held in a deposit account in which the delinquent
taxpayer and another person or persons have an interest, or in an
account held in the name of a third party or parties in which the
delinquent taxpayer is ultimately determined to have no interest, the
depository institution paying those moneys to the Franchise Tax
Board is not liable therefor to any of the persons who have an
interest in the account, unless the amount withheld is refunded to
the withholding agent.
   (b) In the case of a deposit account or accounts for which this
notice to withhold applies, the depository institution shall send a
notice by first-class mail to each person named on the account or
accounts included in the notice from the Franchise Tax Board,
provided that a current address for each person is available to the
institution. This notice shall inform each person as to the reason
for the hold placed on the account or accounts, the amount subject to
being withheld, and the date by which this amount is to be remitted
to the Franchise Tax Board. An institution may assess the account or
accounts of each person receiving this notice a reasonable service
charge not to exceed three dollars ($3).
   (c) Any employer or person required under this article to withhold
payments from a taxpayer may file an action in interpleader when a
bona fide dispute has arisen as to priority of lien between the tax
levied under this part and that of a federal taxing agency.



18675.  Any person from whom a tax is collected by withholding under
this article or under Section 13020 of the Unemployment Insurance
Code is entitled to the remedies set forth in Articles 1 (commencing
with Section 19301) and 3 (commencing with Section 19381) of Chapter
6. Any refund of the tax under Chapter 6 (commencing with Section
19301) shall be made to the withholding agent instead of directly to
the taxpayer, if requested in writing by the withholding agent at the
time the amounts refundable were transmitted to the Franchise Tax
Board.


18676.  Whenever, under any provision of this article, service is
authorized upon the state of any notice to withhold, unless expressly
exempted from the provisions of this section, the service to be
effective must, in addition to any other requirements, be made on the
state agency owing the obligation prior to the time the agency
presents the claim for payment thereof to the Controller.



18677.  (a) For purposes of this article, if a lender, surety, or
other person, who is not an employer under those sections with
respect to an employee or group of employees, pays wages directly to
such an employee or group of employees, employed by one or more
employers, or to an agent on behalf of the employee or employees, the
lender, surety, or other person shall be liable in his or her own
person and estate to this state in a sum equal to the taxes (together
with interest) required to be deducted and withheld from the wages
by the employer.
   (b) If a lender, surety, or other person supplies funds to or for
the account of an employer for the specific purpose of paying wages
of the employees of the employer, with actual notice or knowledge
that the employer does not intend to or will not be able to make
timely payment or deposit of the amounts of tax required by this part
to be deducted and withheld by the employer from those wages, the
lender, surety, or other person shall be liable in his or her own
person and estate to the State of California in a sum equal to the
taxes (together with interest) which are not paid over to this state
by the employer with respect to the wages. However, the liability of
the lender, surety, or other person shall be limited to an amount
equal to 25 percent of the amount so supplied to or for the account
of the employer for that purpose.
   (c) Any amounts paid to this state pursuant to this section shall
be credited against the liability of the employer.