Local and District Tax Petitions for Local Jurisdictions and Districts

To avoid an incorrect allocation of revenue, local jurisdictions and districts should notify our Local Revenue Branch (LRB) as soon as possible whenever local and district tax allocations are questioned and/or are inaccurate. You may learn more about the local and district tax petition process below.

Responsibility of Local Revenue Branch

LRB’s Allocation Group (AG) is responsible for processing inquiries of incorrect distributions of local or district tax (otherwise known as "petitions"). These petitions are submitted by local jurisdictions and district officials or their representatives to question or dispute local and district tax allocations. Our AG team members may be contacted by email at LRB-PetitionInquiry@cdtfa.ca.gov or by telephone at 1-916-309-5843.

Date of Knowledge for Reallocation of Local and District Tax

In cases of improper distribution, we may reallocate local or district tax for the quarter in which CDTFA obtains knowledge and documents the improper distribution (otherwise referred to as the "date of knowledge," or "DOK") and the two previous quarters.

For example, City A submits a valid petition to CDTFA on March 15, 2022, which states a retailer opened a business in City A in February 2021. However, no tax was allocated to the business location in City A. CDTFA investigates City A’s petition and finds that a misallocation occurred as the retailer’s local tax was improperly allocated to City B.

We will redistribute local tax from City B to City A starting with the first quarter of 2022, which is the quarter we received a valid petition which established a DOK. We will also redistribute local tax for the amounts originally distributed in the two previous quarters, the third and fourth quarters of 2021. Amounts originally distributed in the third quarter of 2021 and fourth quarter of 2021, generally include amounts reported and paid by retailers on their returns filed for the second quarter of 2021 and third quarter of 2021, respectively.

The DOK of improper distribution can be established using either of the following two methods:

1. We receive a valid petition for a local or district tax reallocation for investigation, or
2. A CDTFA team member discovers sufficient factual information supporting the probability that an erroneous allocation of local or district tax may have occurred and the CDTFA team member questions and documents that suspected erroneous allocation. The date the CDTFA team member documents that the distribution was questioned is considered the operationally documented DOK

Petition Overview

A "petition" is a written request from a jurisdiction of district official for investigation of suspected incorrect distribution of local or district tax submitted to the LRB’s Allocation Group (AG). The petition must* contain sufficient factual data to support the probability that local or district tax was incorrectly distributed.

Sufficient factual data must include the following for each business location being questioned.

1. Taxpayer name, including owner name and fictitious business name or DBA (doing business as) designation.
2. Taxpayer’s seller’s permit number or a notation stating, "no seller’s permit number."
3. Complete business address of the taxpayer.
4. Complete description of the taxpayer’s business activity or activities.
5. Specific reasons and evidence why the taxpayer’s allocation is questioned. If the petition alleges that an incorrect distribution occurred because the location of the sale is an unregistered location, you must include evidence that the questioned unregistered location is a selling location or is a place of business**. If the petition alleges that an incorrect distribution occurred because the tax for a sale shipped from an out-of-state location was sales tax and not use tax, you must include evidence that there was participation in the sale by an in-state office of the retailer and that title to the goods passed to the purchaser inside California.
6. Name, title, and phone number of the contact person.
7. The tax reporting periods involved.

*See Regulation 35056, Petition for Redistribution of Local or District Tax.

**See Regulation 1802, Place of Sale and Use for Purposes of Bradley-Burns Uniform Local Sales and Use Taxes.

Petitioning a Written Notification from our Local Revenue Branch

A "petition" may also include a jurisdiction’s written objection to a notification from LRB regarding the reallocation of local or district taxes believed to be incorrectly allocated.

Substantially affected local jurisdictions and districts will be notified in writing of a potential redistribution when the amount reallocated from their local jurisdiction or district exceeds their established notification threshold amount.

Submitting a Petition for Redistribution

You may submit a "petition" by completing the appropriate form and sending it by email to LRB-PetitionInquiry@cdtfa.ca.gov. You may also email us a written objection to a written notification letter which constitutes a petition.

Petition Forms

Two forms are available to submit a petition:

• CDTFA-549-L, Claimed Incorrect Distribution of Local Tax - Long Form – used for complex local tax redistribution issues such as sales tax versus use tax, place of sale, or other complex issues where more information is needed.
• CDTFA-549-S, Claimed Incorrect Distribution of Local Tax - Short Form – used for simple tax redistribution questions having to do with taxpayers’ business addresses or other less complex matters.

Petition Process

Our AG receives incoming local and district tax petitions, reviews whether they are valid, acknowledges receipt, and reviews local and/or district tax issues.

After our AG reviews a petition, they will issue a written decision to the petition and any other substantially impacted jurisdictions or districts to grant or deny the request and include the basis for that decision. The written decision will also disclose the date of knowledge (DOK) and include the basis for the DOK.

If our AG does not issue a written decision within six months of receiving a petition, the petitioner or any notified jurisdiction may request our AG issue a supplemental decision without regard to the status of its investigation. Our AG will issue a supplemental decision based on the information in its possession within 90 days of receiving such a request.

Appeals

A local jurisdiction or district that submits a petition (petitioner) or any notified jurisdiction may appeal a written decision by submitting a written objection within 30 days from the mailing date of the decision. The appeal must* state the basis for the objection and include all additional information in the petitioner or notified jurisdiction’s possession that supports their position.

The petitioner or any notified jurisdiction may request a 30-day extension to submit a written objection to our AG’s decision. This request must provide a reasonable explanation for the inability to submit the objection within 30 days, and our AG must receive the request for extension within 30 days of the date of mailing of their decision.

Within five days of receiving the request, our AG will notify the petitioner and all notified jurisdictions whether the request for extension is granted or denied. If the request for extension is denied, the time for petitioner and any notified jurisdiction to file a written objection to the decision is extended to ten days after the mailing of the letter denying the extension. If the extension is granted, the time for the petitioner and notified jurisdictions to submit a written objection to the decision is extended to the 60th day after the date the decision is mailed.

If no timely objection is submitted, the decision of our AG is final as to the petitioner and all notified jurisdictions.

Mitigation

Mitigation (the reallocation of local or district tax on an installment basis) may be available on local tax reallocations. Please contact the Local Revenue Branch to discuss your specific case.

Supplemental Decisions

If a timely objection to the AG’s decision is filed, the AG will issue a supplemental decision. If AG has not provided a supplemental decision within three months of the receipt of the timely objection to its decision, the petitioner or any notified jurisdiction may request that the supplemental decision without regard to the status of its investigation. Although, AG’s decision may remain the same when required to issue a supplemental decision when they have not completed their review, the petitioner or any notified jurisdiction may decide this is beneficial to them as it will speed up the process in which the case will go to the Office of Tax Appeals.

Within 60 days of receiving such a request, AG will issue its supplemental decision. The timeframes for objecting to our AG’s supplemental decision are the same as for decisions. If a timely objection to its supplemental decision is submitted, our AG will forward the file to the Appeals Bureau within 30 days of receipt of the objection. A conference will be scheduled before the Appeals Bureau for the petitioner, all notified jurisdictions, and any other jurisdiction that would be substantially affected if the petition were granted.

More information on the local and district tax appeals process, including information and timelines for supplemental decisions, may be found in our Compliance Policy and Procedures Manual, Chapter 9, Miscellaneous, and Regulation 35056, Petition for Redistribution of Local or District Tax.

*See Regulation 35056, Petition for Redistribution of Local or District Tax.