Request California Sales Tax Clearance Before Releasing Escrow

Identify the withholding question

CDTFA describes a buyer's duty to withhold enough of the purchase price to cover certain outstanding seller liabilities. The application depends on the transaction and accounts involved.

A Certificate of Payment can release the buyer from that withholding obligation. It is different from simply receiving a seller's statement that taxes have been paid.

CDTFA Regulation 1702 explains successor liability and the withholding requirement. Review it with the clearance guidance in Publication 74 and your escrow team.

Give escrow complete information

CDTFA's Publication 74 describes the information used for clearance, including buyer and seller details, business locations, purchase agreement and escrow information.

Ask who submits the request and tracks the response. A complete request helps, but clearance can still take time, especially if an audit or missing records delay review.

Model the cash you will receive

Amounts owed and tax on taxable equipment may reduce funds released to the seller. Clearance does not erase the seller's own liability for unpaid tax.

Have your CPA and escrow officer reconcile returns, balances and the asset allocation before relying on a net proceeds estimate.

Use a coordinated closing checklist

For your escrow clearance checklist, compare this task with Close a California Seller Permit After an Asset Sale and the agency filings hub.

This is general information, not tax or legal advice. Confirm your transaction's requirements with your CPA, attorney and the relevant agency.

Put your questions beside your numbers

Use the seller estimate form to describe your business and any escrow questions. You can ask about the paperwork that affects your sale before deciding whether to pursue a sale.

For a conversation, call (714) 555-0162.