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Business Taxes Law Guide—Revision 2024

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California Department of Tax and Fee Administration

Title 18. Public Revenues
Division 5. California Department of Tax and Fee Administration

Chapter 1. Appeals

Article 1. Application, Definitions, Burden, and Notice

35001 Application
35002 Definitions
35003 Burden of Proof
35004 Notice Requirements

35001. Application.

Reference: Section 22970.2, Business and Professions Code; Sections 15570.22 and 15570.24, Government Code; Sections 25215.45, 105190 and 105310, Health and Safety Code; Sections 4629.5, 42464.2, 42882 and 71215, Public Resources Code; Section 893, Public Utilities Code; Sections 20, 20.5, 7051, 7202, 7270, 8251, 9251, 30451, 34013, 38701, 40171, 41128, 42020, 42103, 43501, 44003, 45851, 46601, 50152, 55301 and 60601, Revenue and Taxation Code; Section 1537, Water Code.

This chapter applies to appeals filed under the following laws that are administered by the California Department of Tax and Fee Administration:

(a) Sales and Use Tax Law (pt. 1 of div. 2 of the Rev. and Tax. Code).

(b) Uniform Local Sales and Use Tax Law (pt. 1.5 of div. 2 of the Rev. and Tax. Code).

(c) Transactions and Use Tax Law (pt. 1.6 of div. 2 of the Rev. and Tax. Code), and additional local taxes (pt. 1.7 of div. 2 of the Rev. and Tax. Code).

(d) Motor Vehicle Fuel Tax Law (pt. 2 of div. 2 of the Rev. and Tax. Code).

(e) Use Fuel Tax Law (pt. 3 of div. 2 of the Rev. and Tax. Code).

(f) Cigarette and Tobacco Products Tax Law (pt. 13 of div. 2 of the Rev. and Tax. Code).

(g) Cannabis Tax (pt. 14.5 of div. 2 of the Rev. and Tax. Code).

(h) Timber Yield Tax Law (pt. 18.5 of div. 2 of the Rev. and Tax. Code).

(i) Energy Resources Surcharge Law (pt. 19 of div. 2 of the Rev. and Tax. Code).

(j) Emergency Telephone Users Surcharge Act (pt. 20 of div. 2 of the Rev. and Tax. Code).

(k) Prepaid Mobile Telephony Services Surcharge Collection Act (pt. 21 of div. 2 of the Rev. and Tax Code).

(l) Local Prepaid Mobile Telephony Services Collection Act (pt. 21.1 of div. 2 of the Rev. and Tax Code).

(m) Hazardous Substances Tax Law, which is also applicable to the Childhood Lead Poisoning Prevention Fee and Occupational Lead Poisoning Prevention Fee (pt. 22 of div. 2 of the Rev. and Tax. Code).

(n) Marine Invasive Species Fee Collection Law (pt. 22.5 of div. 2 of the Rev. and Tax. Code).

(o) Integrated Waste Management Fee Law (pt. 23 of div. 2 of the Rev. and Tax. Code).

(p) Oil Spill Response, Prevention, and Administration Fees Law (pt. 24 of div. 2 of the Rev. and Tax. Code).

(q) Underground Storage Tank Maintenance Fee Law (pt. 26 of div. 2 of the Rev. and Tax. Code).

(r) Fee Collection Procedures Law (pt. 30 of div. 2 of the Rev. and Tax. Code).

(s) Diesel Fuel Tax Law (pt. 31 of div. 2 of the Rev. and Tax. Code).

(t) Cigarette and Tobacco Products Licensing Act of 2003 (div. 8.6 of the Bus. and Prof. Code).

(u) Lead-Acid Battery Recycling Act of 2016, which imposes lead-acid battery fees (art. 10.5 of ch. 6.5 of div. 20 of the Health and Saf. Code).

(v) Lumber Products Assessment (art. 9.5 of ch. 8 of pt. 2 of div. 4 of the Pub. Resources Code).

(w) Covered Electronic Waste Recycling Fee (art. 3 of ch. 8.5 of pt. 3 of div. 30 of the Pub. Resources Code).

(x) California Tire Recycling Act, which imposes the California Tire Fee (ch. 17 of pt. 3 of div. 30 of the Pub. Resources Code).

(y) Marine Invasive Species Act, which imposes the Marine Invasive Species Fee (div. 36 of the Pub. Resources Code).

(z) Natural Gas Surcharge (art. 10 of ch. 4. of pt. 1 of div. 1 of the Pub. Util. Code).

(aa) Water Right Fees (ch. 8 of pt. 2 of div. 2 of the Water Code).

History—New division 5 (chapters 1 and 2, regulations 35001-35067 and 35101), chapter 1 (articles 1-8, regulations 35001-35067), article 1 (regulations 35001-35004) and regulation filed March 19, 2018, as an emergency; effective and operative March 19, 2018. Division, chapter, article, and regulation refiled September 17, 2018, as an emergency; effective and operative September 17, 2018. Division, chapter, article, and regulation refiled December 17, 2018, as an emergency; effective and operative December 17, 2018. Certificate of Compliance transmitted to OAL on February 20, 2019 and filed March 19, 2019. When the regulation was refiled September 17, 2018, subdivision (bb) was deleted, which referred to "Organizational Clearance Certificates for Welfare and Veterans' Organization Exemptions," and the reference to Revenue and Taxation Code section 254.6 was deleted from the regulation's reference note. (The regulations in chapter 1 of division 5 supersede the regulations in chapter 2 of division 2.1 with respect to appeals filed under the laws listed in regulation 35001.)

Note.—Authority cited: Section 22971.2, Business and Professions Code; Sections 15570.40 and 15606, Government Code; Section 25215.74, Health and Safety Code; Sections 7051, 7202, 7203, 7261, 7262, 8251, 9251, 30451, 34013, 38701, 40171, 41128, 42020, 42103, 43501, 45851, 46601, 50152, 55301 and 60601, Revenue and Taxation Code.

35002. Definitions.

Reference: Section 11, Business and Professions Code; Sections 8, 6707, 15606, 15570, and 15671, Government Code; Sections 8, 19, 20, 20.5, 6456, 6538, 6538.5, 6562, 6592, 6593, 6593.5, 6596, 6901, 6902, 6906, 6981, 7202, 7203, 7209, 7223, 7261, 7262, 7269, 7657, 7657.1, 7657.5, 7658, 7658.1, 7700, 7700.5, 7711, 8126, 8128, 8191, 8828, 8828.5, 8852, 8877, 8878, 8878.5, 8879, 8880, 9151, 9152, 9196, 30175, 30176, 30176.1, 30176.2, 30177, 30178, 30178.1, 30243, 30243.5, 30262, 30282, 30283, 30283.5, 30284, 30285, 30361, 30362, 30365, 30421, 38433, 38435, 38443, 38452, 38453, 38454, 38454.5, 38455, 38601, 38602, 38605, 38631, 40093, 40102, 40103, 40103.5, 40104, 40105, 40111, 40112, 40115, 40121, 41087, 41096, 41097, 41097.5, 41098, 41099, 41100, 41101, 41104, 41107, 43157, 43158, 43158.5, 43159, 43159.1, 43159.2, 43303, 43351, 43352, 43451, 43452, 43454, 43491, 45155, 45156, 45156.5, 45157, 45158, 45303, 45352, 45353, 45651, 45652, 45654, 45801, 46156, 46157, 46157.5, 46158, 46159, 46302, 46303, 46353, 46501, 46502, 46505, 46551, 50112.2, 50112.3, 50112.4, 50112.5, 50112.6, 50116, 50120.2, 50120.3, 50139, 50140, 50142, 50151, 55044, 55045, 55045.1, 55046, 55046.5, 55083, 55102, 55103, 55221, 55222, 55224, 55281, 60209, 60210, 60210.5, 60211, 60212, 60332, 60333, 60352, 60501, 60502, 60506, 60507, 60521, 60522 and 60581, Revenue and Taxation Code; Section 1537, Water Code.

The following definitions apply to this chapter:

(a) "Appeal" means:

(1) A petition, including a petition for redetermination and a petition for reconsideration of successor liability;

(2) Administrative protest;

(3) Claim for refund;

(4) Application for administrative hearing;

(5) A request for relief of taxes, interest, or penalties; or

(6) Any other matter for which this chapter provides for review by the Appeals Bureau of the California Department of Tax and Fee Administration, if warranted.

(b) "Appeals Bureau" means the Appeals Bureau of the California Department of Tax and Fee Administration's Legal Division.

(c) "Assigned section" means the division, bureau, section, branch, unit, or group within the California Department of Tax and Fee Administration which is assigned the initial duty and responsibility of reviewing, or managing the review of, an appeal.

(d) "BTFD" means the Business Tax and Fee Division of the California Department of Tax and Fee Administration.

(e) "CDTFA" means the California Department of Tax and Fee Administration.

(f) "CDTFA staff" means an employee or employees of CDTFA.

(g) "Deputy Director" means the Deputy Director of BTFD, or any person to whom the Deputy Director delegates his or her official duties.

(h) "File" or "filed" means a written submission provided to CDTFA. If the last day for filing a written submission falls on a Saturday, Sunday, or holiday, the time for filing such written submission is extended to the next business day.

(i) "Mail" means mailing by United States Postal Service and by other carriers and also means electronic transmission such as by email, but email containing confidential taxpayer information will be sent by CDTFA only with the taxpayer's written consent. In the absence of other evidence, the mailing date is the date of receipt for electronic submissions and the mailing date is the post-mark date or the date of delivery to the carrier for all other submissions.

(j) "Party" means a taxpayer or other person filing an appeal with CDTFA, and also means BTFD or applicable bureau of CDTFA, and any other state agency with a role in administering the subject tax program that notifies CDTFA it will actively participate in the appeal.

(k) "Person" has the same meaning as set forth in Revenue and Taxation Code section 19.

(l) "Regulation" means a section of title 18 of the California Code of Regulations, except when specified otherwise.

(m) "Representative" is any person who is at least 18 years of age that the taxpayer chooses to represent the taxpayer before CDTFA.

(1) CDTFA will recognize as a taxpayer's representative any person who is at least 18 years of age for whom the taxpayer provides a written power of attorney to CDTFA authorizing that person to act as the taxpaye's representative.

(2) A person authorized by a taxpayer to act as the taxpayer's representative will be permitted to receive the taxpayer's confidential information related to the appeal and to perform any act on the taxpayer's behalf that the taxpayer could perform in connection with the taxpayer's appeal before CDTFA.

(3) A person authorized to act as a taxpayer's representative will maintain that status, and the right to receive the taxpayer's confidential information and act on the taxpayer's behalf, until the taxpayer notifies CDTFA in writing that the person is no longer authorized to act as the taxpayer's representative.

(n) "Tax" means any tax, fee, surcharge, or assessment administered by CDTFA.

(o) "Taxpayer" means a person that pays or is assessed a tax administered by CDTFA, or any other person who files an appeal with CDTFA. "Taxpayer" also means, where appropriate, a taxpayer's authorized representative.

(p) "Writing" or "written" means text, whether recorded on paper or electronically.

History—New regulation filed March 19, 2018, as an emergency; effective and operative March 19, 2018. Regulation refiled September 17, 2018, as an emergency; effective and operative September 17, 2018. Regulation refiled December 17, 2018, as an emergency; effective and operative December 17, 2018. Certificate of Compliance transmitted to OAL on February 20, 2019 and filed March 19, 2019. When the regulation was refiled September 17, 2018, the second sentences were added to subdivisions (h) and (i), and the reference to Government Code section 6707 was added to and the reference to Revenue and Taxation Code section 254.6 was deleted from the regulation's reference note. (The regulation incorporates provisions from regulations 5511, 5523, and 5571 in division 2.1.)

35003. Burden of Proof.

Reference: Section 22970.2, Business and Professions Code; Sections 15570.22, 15570.24 and 15606, Government Code; Sections 25215.45, 105190 and 105310, Health and Safety Code; Sections 4629.5, 42464.2, 42882 and 71215, Public Resources Code; Section 893, Public Utilities Code; Sections 7051, 7202, 7270, 8251, 9251, 30451, 34013, 38701, 40171, 41128, 42020, 42103, 43501, 44003, 45851, 46601, 50152, 55301 and 60601, Revenue and Taxation Code; Section 1537, Water Code.

(a) Except as otherwise specifically provided by law, the burden of proof is upon the taxpayer to prove all issues of fact by a preponderance of evidence.

(b) Where an appeal involves the issue of fraud with intent to evade tax, the burden of proof is upon BTFD or, if applicable, other state agency to prove fraud with intent to evade tax by clear and convincing evidence.

History—New regulation filed March 19, 2018, as an emergency; effective and operative March 19, 2018. Regulation refiled September 17, 2018, as an emergency; effective and operative September 17, 2018. Regulation refiled December 17, 2018, as an emergency; effective and operative December 17, 2018. Certificate of Compliance transmitted to OAL on February 20, 2019 and filed March 19, 2019. When the regulation was refiled September 17, 2018, the reference to Revenue and Taxation Code section 254.6 was deleted from the regulation's reference note. (The regulation incorporates provisions from regulation 5541 in division 2.1.)

35004. Notice Requirements.

Reference: Section 22971.5, Business and Professions Code; Sections 6486, 7202, 7203, 7261, 7262, 7671, 8781, 30206, 38416, 40076, 41075, 43201, 45201, 46202, 50113, 55061 and 60311, Revenue and Taxation Code.

Any notice given under this chapter must be served personally or by mail in the manner prescribed by statute for service of notice of a deficiency determination.

History—New regulation filed March 19, 2018, as an emergency; effective and operative March 19, 2018. Regulation refiled September 17, 2018, as an emergency; effective and operative September 17, 2018. Regulation refiled December 17, 2018, as an emergency; effective and operative December 17, 2018. Certificate of Compliance transmitted to OAL on February 20, 2019 and filed March 19, 2019. When the regulation was refiled September 17, 2018, the reference to Revenue and Taxation Code section 254.6 was deleted from the regulation's reference note. (The regulation incorporates provisions from regulation 5202 in division 2.1.)

Note.—Authority cited: Section 22971.2, Business and Professions Code; Sections 15570.40 and 15606, Government Code; Section 25215.74, Health and Safety Code; Section 893, Public Utilities Code; Sections 7051, 7202, 7203, 7261, 7262, 8251, 9251, 30451, 34013, 38701, 40171, 41128, 42020, 42103, 43501, 45851, 46601, 50152, 55301 and 60601, Revenue and Taxation Code.