Laws, Regulations and Annotations

Search

Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations


A    B    C    D    E    F    G    H    I    J    L    M    N    O    P    R    S    T    U    V    W    X   


C


170.0000 Collection of Tax by Board

Annotation 170.0005

(a) In General

170.0005 Conditional Endorsements on Payment Checks. A check is received by the Board from a taxpayer which has a conditional endorsement on the back and /or is accompanied by correspondence stating the check is tended in full satisfaction of the tax obligation and the taxpayer considers the cashing of the check to be a settlement of the dispute. The amount of the check is less than the amount owed by the taxpayer and the taxpayer's compromised offer under sections 7093 and 7393.5 had not been accepted by the Board.

Under California law, the acceptance of a check made out for an amount less than that which is owed and which is endorsed as being for payment in full discharges the maker's liability only when there is accord and satisfaction. (Civil Code section 1521, 1523.) Accord is an agreement by a creditor to accept less than what is owed and a satisfaction is the payment of the lesser amount. Accord and satisfaction is a remedy to extinguish an obligation based on contract.

Sierra etc. P. Co. v. Universal Elect. Eng. Co. ((1925) 197 Cal. 376,387 [241P. 76].) In this situation, accord was not present. In any event, the states power to tax is derived from its sovereign authority, not from agreement with the taxpayer. Thus, collection of a tax obligation is not subject to a defense based on the law of contracts.

Accordingly, such remedies as a taxpayer may have must be found in statutes. The Legislature provided for settlement of sales and use tax dispute in sections 7093 and 7093.5. These statutes do not permit settlement by conditional endorsement on a check. Therefore, such attempts to settle a sales tax case is invalid as not being authorized by statute. 1/25/94.