Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2021
Sales And Use Tax Law
CHAPTER 7. OVERPAYMENTS AND REFUNDS
Article 1. Claim for Refund
6901. Credits and refunds. If the board determines that any amount, penalty, or interest has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in the records of the board and shall certify the amount collected in excess of the amount legally due and the person from whom it was collected or by whom paid. The excess amount collected or paid shall be credited by the board on any amounts then due and payable from the person from whom the excess amount was collected or by whom it was paid under this part, and the balance shall be refunded to the person, or his or her successors, administrators, or executors if a determination by the board is made in any of the following cases:
(a) An amount of tax, interest, or penalty was not required to be paid.
(b) Any amount of prepayment of sales tax, interest, or penalty paid pursuant to Article 1.5 (commencing with Section 6480) of Chapter 5 was not required to be paid.
(c) Any amount that is approved as a settlement pursuant to Section 7093.5.
Any overpayment of the use tax by a purchaser to a retailer who is required to collect the tax and who gives the purchaser a receipt therefor pursuant to Article 1 (commencing with Section 6201) of Chapter 3 shall be credited or refunded by the state to the purchaser. Any proposed determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days prior to the effective date of that determination.
History—Stats. 1945, p. 1001, operative July 1, 1945, added "and payable" to first paragraph. Stats. 1949, p. 1166, operative July 1, 1949, added second paragraph. Stats. 1959, p. 4377, in effect September 18, 1959, substituted "one hundred dollars ($100)" for "twenty-five dollars ($25)." Stats. 1963, p. 3105, in effect September 20, 1963, added "by the board" and "from whom the excess amount was collected or by whom it was paid" in the second sentence of the first paragraph, and substituted "two hundred fifty dollars ($250)" for "one hundred dollars ($100)" in the second paragraph. Stats. 1965, p. 2052, in effect September 17, 1965, substituted "one thousand dollars ($1,000)" for "two hundred fifty dollars ($250)". Stats. 1977, Ch. 921, operative January 1, 1978, substituted "five thousand dollars ($5,000)" for "one thousand dollars ($1,000)". Stats. 1985, Ch. 591, effective January 1, 1986, substituted "fifteen" for "five" before "thousand" and "($15,000)" for "($5,000)" after "dollars" in the second paragraph. Stats. 1987, Ch. 210, effective July 23, 1987, added "or her" after "his" in first and second paragraphs, deleted first phrase of second paragraph, "In the case, however, of a determination by the board that an amount not exceeding fifteen thousand dollars ($15,000) was not required to be paid under this part", added "however" after "board" in second paragraph and added balance of sentence after "executors" and paragraphs (a) and (b). In third paragraph, deleted "Chapter 3 of this part" and substituted "(commencing with Section 6201) of Chapter 3". Stats. 1988, Ch. 1029, in effect January 1, 1989, substituted "fifty thousand dollars ($50,000)" for "fifteen thousand dollars ($15,000)" following "not exceeding" in subdivision (a). Stats. 1992, Ch. 708, in effect September 15, 1992, added subdivision (c). Stats. 1994, Ch. 726, in effect September 22, 1994, deleted "to the State Board of Control" after "and shall certify" in the first sentence; substituted "The" for "If approved by the State Board of Control the" at the beginning of the second sentence; added "if a determination … the following cases:" in the first paragraph; deleted the second paragraph which read: "The board, however, without obtaining approval of the State Board of Control may credit the amount on any amounts then due and payable under this part from the person by whom the amount was paid and may refund the balance to the person or his or her successors, administrators, or executors, if a determination by the board is made in either of the following cases:"; deleted "not exceeding fifty thousand dollars ($50,000)" after "or penalty" in subdivision (a); and added "Any proposed determination … of that determination." to the end of subdivision (c).
Unintentional overpayment.—Where a retail taxpayer erroneously collects and pays excessive sales taxes, the board is not required to make refunds directly to the retailer's customers, but may instead require as a condition of refund that the retailer repay such excess to its customers. Decorative Carpets, Inc. v. State Board of Equalization (1962) 58 Cal.2d 252.
Prior claim for refund by each member of class not required in class action suit for refund.—Where the complaint alleged that the named plaintiffs had filed a claim with the Board in behalf of themselves and all others similarly situated, and also alleged the existence of a well defined community of interest in questions of law and fact between the named plaintiffs and the other members of the class, it is not necessary that the complaint also allege that the unnamed plaintiffs had filed claims for refund as required by law. Santa Barbara Optical Co., Inc. v. State Board of Equalization (1975) 47 Cal.App.3d 244 [disapproved to the extent inconsistent with Woosley v. State of California (1992) 3 Cal.4th 758].
Joinder of Board in suit for refund by consumer against retailers.—Where a consumer brings a class action for refund of sales tax reimbursement against retailers who have failed or refused to apply for tax refunds to which they are entitled, the consumer may join the Board as a party in the suit. Javor v. State Board of Equalization (1974) 12 Cal.3d 790.
Note.—See Section 34 which authorizes, under certain conditions, payment directly to local governments of amounts paid to a state agency which can be identified as intended as payment of a locally administered tax.
Credit for Bad Debts in Bankruptcy Reorganization.—See Section 6055.
Refund of Excess Tax Reimbursement for Repayment to Consumer.—The board may not offset amounts owed to it by retailer against refunds of excess sales tax reimbursement required as the result of a class action by consumers against the retailers and the board. Javor v. State Board of Equalization (1977) 73 Cal.App.3d 939 [disapproved to the extent inconsistent with Woosley v. State of California (1992) 3 Cal.4th 758].
Class action permitted only to the extent authorized by the Legislature.—Class actions for refunds of sales tax were not authorized by the Legislature prior to amendment to section 6904 adopted in 1987, and this amendment authorized a class action only where each member of the class expressly authorizes and signs the claim (disapproving previous appellate decisions inconsistent with this decision). Woosley v. State of California (1992) 3 Cal.4th 758.
Setoffs of overpayments against underpayments.—The Board may properly credit and set off underpayment of taxes barred by the statute of limitations in one quarter against an overpayment of taxes in another quarter, so long as both setoffs and overpayments occurred during the period put at issue by the taxpayer's claim for refund. Sprint Communications Company v. State Board of Equalization (1995) 40 Cal.App.4th 1254.
Consumer Action Against Retailer for Refund of Excess Sales Tax Reimbursement Barred.—A consumer could not maintain a cause of action against a retailer for a refund of alleged excess sales tax reimbursement collected by that retailer because there must first be a prior legal determination by the CDTFA that excess sales tax reimbursement was collected and that a refund was owed. McClain v. Sav-On Drugs (2019) 6 Cal.5th 951.