2005 California Revenue and Taxation Code Sections 38561-38565 Successor\'s Liability

38561.  If any person liable for any amount under this part sells
out his or her business or quits the business, the person's
successors or assigns shall withhold sufficient of the purchase price
to cover the amount until the former owner produces a receipt from
the board showing that it has been paid or a certificate stating that
no amount is due.
38562.  If the purchaser of a business fails to withhold from the
purchase price as required, the purchaser becomes personally liable
for the payment of the amount required to be withheld by him or her
to the extent of the purchase price, valued in money.  Within 60 days
after receiving a written request from the purchaser for a
certificate, or within 60 days from the date the former owner's
records are made available for audit, whichever period expires the
later, but in any event not later than 90 days after receiving the
request, or 90 days from the date of the sale of the business,
whichever period expires later, the board shall either issue the
certificate or mail notice to the purchaser, at his or her address as
it appears on the records of the board, of the amount that must be
paid as a condition of issuing the certificate.  Failure of the board
to mail the notice will release the purchaser from any further
obligation to withhold from the purchase price as above provided.
The last date upon which the obligation of the successor may be
enforced shall be not later than three years after the date the board
is notified of the purchase of the business.
38563.  The certificate may be issued after the payment of all
amounts due under this part, according to the records of the board as
of the date of this certificate, or after the payment of the amounts
is secured to the satisfaction of the board.  This security is not
subject to the limitations contained in Section 38501.
38564.  The obligation of the successor shall be enforced by serving
a notice of successor liability on the person.  The notice shall be
served in the manner prescribed for service of a notice of a
deficiency determination, not later than three years after the date
the board is notified of the purchase of the business.  The successor
may petition for reconsideration in the manner provided in Article 5
(commencing with Section 38441) of Chapter 5.  The notice shall
become final and the amount due and payable in the manner provided in
that article except that no additional penalty shall apply if not
paid when due and payable.  The provisions of this chapter with
respect to the collection of any amount required to be paid under
this part shall apply when the notice becomes final.
38565.  If at the time a business is discontinued the board holds
security pursuant to Section 38501 in the form of cash, government
bonds, or insured deposits in banks or savings and loan institutions,
this security when applied to the account of the taxpayer shall be
deemed to be a payment on account of any liability of the taxpayer to
the board on the date the business is discontinued.