If the buyer of a liquor license owes taxes to the Franchise Tax Board, the Employment Development Department, or the Board of Equalization, the escrow holder must

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The key idea is tax clearance from the agency that has the tax claim before the liquor-license transfer can close. When the buyer owes taxes to the Franchise Tax Board, the Employment Development Department, or the Board of Equalization, the escrow holder must obtain a written release from that department showing the taxes are satisfied or arranged to be satisfied. This release clears the agency’s lien or claim and allows the license transfer to proceed.

Rationale for the chosen approach: you don’t simply withhold funds or prepay withholdings as a routine closing step, because the release itself confirms the tax obligation is resolved and the agency authorizes the transfer. It’s the appropriate department’s document that guarantees the buyer isn’t inheriting an unpaid tax liability tied to the license. The department to whom the taxes are due is the one that must provide the release before closing, not ABC, and not a general holdback. This protects both parties and ensures a clean transfer of the license.