Cigarette and Tobacco Products – Citations / Appeal Process
The Investigations Division of the California Department of Tax and Fee Administration (CDTFA) is authorized to issue citations for violations of the California Cigarette and Tobacco Products Licensing Act of 2003 (CTPLA). Two types of citations may be issued: civil citations and criminal citations. The civil citation is processed by the CDTFA. The criminal citation is a Notice to Appear in court. Both types of citations are subject to civil penalties.
When a civil citation is issued, a copy of the citation is sent to the Business Taxes and Fees Division (BTFD) office of the CDTFA for processing and civil penalties assessed, if applicable. The CTPLA licensee cited has the right to appeal the citation with cause.
When a criminal citation is issued, it will first be processed through the criminal court system. Once the court proceeding is complete, the CDTFA will obtain the court's ruling. Depending on the violation(s) cited, the court may impose fines, jail time or both. In addition to any criminal penalties levied by the court, the CDTFA may also impose civil penalties. The CTPLA licensee criminally cited has the right to appeal any additional civil penalties imposed by the CDTFA. For more information about CDTFA civil penalties, see Publication 161, Criminal Citations Include a Civil Administrative Process.
Civil Appeals Process for Notices, Suspensions, Revocations, and Civil Fines
When BTFD receives their copy of a citation, BTFD will enter the violation(s) on the license record. Depending on the type of violation(s), a Warning Notice or a Notice of Violation will be sent to the licensee. A Warning Notice notifies the licensee that the listed violation(s) will be entered on the license record but there will be no civil fine, suspension, or revocation. A Notice of Violation notifies the licensee of the violation(s) that will be entered on the license record and the specific penalty(s) imposed. Both the Warning Notice and the Notice of Violation advise licensees of their appeal rights.
The licensee may appeal the violation(s) and/or penalties outlined in the Warning Notice or Notice of Violation. The procedures for requesting an appeal are outlined in the notices. The appeal must be filed within 10 days from the date of the notice, and must include the licensee's contentions and any supporting documentation. If no appeal is requested, the violation(s) are added to the licensee's permanent license record and applicable penalties are assessed.
If BTFD receives a timely request for appeal, a Notice of Conference will be sent to the licensee. This notice will provide a conference date, time, and telephone number to call (appeal conferences are conducted by telephone). The Response to Notice of Conference (on the back of the notice) must be completed and filed within 10 days from the date of the notice.
Designated CDTFA staff presides over the appeal conference. A member of the Investigations Division also attends to represent the department.
Approximately 4-6 weeks after the conference, BTFD will issue a Notice of First Decision to the licensee. A licensee who disagrees with this decision and wishes to appeal must complete the Request for Appeals Conference (on the back of the notice) and return that notice with any new contentions and any supporting documentation. The Request for Appeals Conference must be filed within 10 days from the date of the Notice of First Decision.
If timely filed, the CDTFA's Case Management Section will process the request and notify the licensee of the date, time and telephone number to call for the scheduled Appeals Conference. The Appeals Conference is conducted by a CDTFA Appeals Bureau attorney and incudes a member of the Investigations Division to represent the department.
After the Appeals Conference, the Appeals Bureau will notify the licensee of the outcome of the appeal in a Notice of Second Decision. If the violation(s) and penalties are dismissed, the violation(s) will be removed from the license record. If the violation(s) and/or penalties are upheld, and do not include a fine in excess of $2,500, BTFD will issue a Notice of Suspension or Warning Notice and/or a demand billing to the licensee for civil penalties, as applicable.
If the Appeals Bureau upholds the violation(s) and the penalties include a fine in excess of $2,500 or a revocation of a license, the licensee has one additional level of appeal available. The licensee may request a hearing before the Members of the Board of Equalization (BOE). The instructions for requesting a hearing before the BOE is outlined in the Notice of Second Decision.
After a hearing before the BOE, the BOE's Board Proceedings Division will notify BTFD of the outcome of the appeal. If the violation(s) and/or penalties are upheld, BTFD will issue a demand billing and a Notice of Suspension or Notice of Revocation in accordance with the BOE's decision. If the violation(s) and penalties are dismissed, the violation(s) will be removed from the license record.
Civil Fines and Penalties
The CDTFA will issue fines and penalties pursuant to its authority under Business and Professions Code Section 22974.7. This section provides:
In addition to any other civil or criminal penalties provided by law, upon a finding that a retailer has violated any provision of this division, the board1 may take the following actions:
- In the case of the first offense, the board may revoke or suspend the license or licenses of the retailer pursuant to the procedures applicable to the revocation of a license set forth in Section 30148 of the Revenue and Taxation Code.
- In the case of a second or any subsequent offense, in addition to the action authorized under subdivision (a), the board may impose a civil penalty in an amount not to exceed the greater of either of the following:
- Five times the retail value of the seized cigarettes or tobacco products.
- Five thousand dollars ($5,000).
The CDTFA may reduce civil fines by the amount of any criminal fine imposed by the court for the specific violation. The criminal fine is the statutory penalty imposed for the specific violation, and does not include any other court-imposed fees or costs.
Business and Professions Code § 22974.7 applies to retailers. Similar sections apply to distributors, wholesalers, manufacturers and importers (see Business and Professions Code §§ 22978.7 and 22979.7).