Proposal to Amend Revenue and Taxation Code Section 19255 to Avoid Extension of the 20-Year Statute of Limitations by Unilateral Action of the California Franchise Tax Board1
By Andrew D. Allen2
Prior to 2006, California did not have a statute of limitations providing for a specified amount of time to collect a due and payable outstanding tax liability. Apart from limited discretion authorizing certain state agencies to discharge small amounts of taxes, licenses, or fees if the debts were deemed uncollectible, or did not exceed a very low threshold amount, there were no time restrictions placed on the California Franchise Tax Board from collecting stale outstanding liabilities.
In 2005, California passed Assembly Bill 911 which became section 19255 of the California Revenue & Taxation Code.3 In short, Section 19255 prohibits the collection of an outstanding tax liability after the passage of 20 years from the date the tax liability becomes "due and payable."