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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Emergency Telephone Users Surcharge Act > Chapter 4 > entire chapter

Emergency Telephone Users Surcharge Act

Revenue and Taxation Code

Division 2. Other Taxes
Part 20. Emergency Telephone Users Surcharge Act

Chapter 4. Determination of Surcharge.


Article 1. Due and Payable Dates

Article 1.1. Payment by Electronic Funds Transfer

Article 3. Deficiency Determinations

Article 4. Determinations If No Return Made

Article 5. Redeterminations

Article 6. Interest and Penalties

Article 1. Due and Payable Dates

41050. Surcharges due. (a) The surcharges imposed by subparagraph (A) of paragraph (1) of subdivision (a) of Section 41020 are imposed to each access line for which a service user has subscribed in any calendar month, whether or not the subscription covered all or part of any month.

(b) If a service user subscribes for service with one service supplier for a portion of a month and then subscribes for service with another service supplier for the remainder of the same month, the service user is liable for the surcharge to each of the access lines for which the service user has subscribed with the service supplier.

History—Stats. 2008, Ch. 17 (SB 1040), in effect May 21, 2008, added "charges for" after "at the time" and added "and VoIP service" after "intrastate telephone communication services". Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, lettered former paragraph as subdivision (a); added "subparagraph (A) of paragraph (1) of subdivision (a) of" after "imposed by", substituted " is imposed to each access line" for "attaches at the time charges" after "Section 41202", substituted "which a" for "the intrastate telephone communication services and VoIP service are billed by the service supplier to the" before "service user", and substituted "has subscribed in any calendar month, whether or not the subscription covered all or part of any month" for " and shall be paid by the service user when paying for such services" after "service user"; added subdivision (b). Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" after "The", substituted "are" for "is" after "Section 41020" in subdivision (a).

41051. Surcharge payable. The surcharges imposed by this part and the amounts thereof required to be collected are due monthly, and the amount of surcharge collected in one calendar month by the service supplier shall be remitted to the department on or before the last day of the second month following the month in which the surcharges were collected.

History—Added by Stats. 1976, Ch. 443, effective July 10, 1976. Stats. 1980, Ch. 676, effective January 1, 1981, added "and" after "quarterly,". Stats. 1985, Ch. 591, effective January 1, 1986, substituted "the last day … following" for "60 days after the close of." Stats. 1996, Ch. 432, in effect January 1, 1997, substituted "monthly" for "quarterly" after "collected are due", substituted "month" for "quarter" after "in one calendar", substituted "on or before" for "no later than" after "to the board", and substituted "the month in … February 15, 1997" for "a calendar quarter". Stats. 2019, Ch. 54 (SB 96), substituted "department" for "board". Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, deleted the second sentence from the paragraph.

41052. Return due. (a) On or before the last day of the second month following each month in which the surcharges were collected, a return for that month shall be filed by a service supplier with the department using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(b) The service supplier shall include a list of any service users who have refused to pay a cumulative total of three dollars ($3) or more of the surcharges imposed by this part with each return filing.

History—Stats. 1981, Ch. 947, in effect January 1, 1981, substituted "who have refused" for "refusing" before, and added "a cumulative total of three dollars ($3) or more of" after, "to pay" in the second paragraph. Stats. 1985, Ch. 591, effective January 1, 1986, substituted "last" for "60th", added "of the second month" after "day", and deleted "following" after "quarter" in the first paragraph. Stats. 1996, Ch. 432, in effect January 1, 1997, deleted "December 1, 1978, and" after "On or before" and substituted "following each month … for that month" for "of each calendar quarter, a return for the preceding quarter" in the first paragraph, and substituted "shall" for "will" after "The service supplier" in the second paragraph. Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003, substituted "in the form … electronic media" for "in such form as the board may prescribe" after "filed with the board" and added the second sentence to the first paragraph. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, lettered former first paragraph as subdivision (a); substituted "by a service supplier with the department using" for "with the board in the form as prescribed by the board, which may include, but not be limited to," after "shall be filed" in the first sentence of the first paragraph; substituted "department" for "board" in the second sentence of the first paragraph; lettered former second paragraph as subdivision (b). Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" before "imposed by" in subdivision (b).

Text of Section Operative Through December 31, 2021

41052.1. Other than monthly returns. If the board deems it necessary in order to ensure payment or to facilitate the collection by the state of the amount of taxes, the board may require returns and payment of the amount of surcharges for a calendar quarter or calendar year period.

History—Added by Stats. 1996, Ch. 1087, in effect January 1, 1997. Stats. 1998, Ch. 350 (SB 2231), in effect January 1, 1999, substituted "the board" for "it" after "If", added "the" after "or to facilitate", and substituted "surcharges for a … calendar year period" for "taxes for quarterly periods other than calendar quarters, or for multiples of quarterly periods" after "the amount of".

Text of Section Operative January 1, 2022

41052.1. Other than monthly returns. The department may require the payment of the amount due and the filing of returns for periods other than the periods set forth under this part.

History—Added by Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022.

41053. Filing return. The person required to file the return shall deliver the return together with a remittance of the amount of the surcharges payable to the department.

History—Stats. 2019, Ch. 54 (SB 96), substituted "department" for "office of the board". Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" before "payable to".

41053.1. Surcharge payable and return due; seller. (a) Notwithstanding Sections 41053 and 41055, the surcharge imposed pursuant to Section 41028 and collected by a seller, except a service supplier, is due and payable to the department quarterly on or before the last day of the month following each calendar quarter.

(b) On or before the last day of the month following each calendar quarter, a return for the preceding calendar quarter shall be filed using electronic media with the department. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

History—Added by Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022.

41054. Extensions. (a) Except as provided in subdivision (b), the department, for good cause, may extend not to exceed one month the time for making any return or paying any amount required to be paid under this part. The extension may be granted at any time provided a request therefor is filed with the department within or prior to the period for which the extension may be granted.

(b) (1) In the case of a disaster, the department, for a period not to exceed three months, may extend the time for making any report or return or paying any surcharge required under this part. The extension may be granted at any time provided a request therefor is filed with the department within or before the period for which the extension may be granted.

(2) For purposes of this section, "disaster" means fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes.

History—Stats. 2016, Ch. 257 (AB 1559), in effect September 9, 2016, lettered first paragraph as subdivision (a), substituted "Except as provided in subdivision (b), the" for "The" in the first sentence of new subdivision (a), and added subdivision (b). ). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; added "," after "cause" in the first sentence of subdivision (a); substituted "surcharge" for "tax" before "required under" in the first sentence of paragraph (b)(1).

41054.5. Extension of time; state of emergency proclamation. (a) Subject to subdivision (c), if the Governor issues a state of emergency proclamation, the department may extend the time, for a period not to exceed three months, for making any report or return or paying any surcharge required under this part for any person in an area identified in the state of emergency proclamation.

(b) If the department makes an extension pursuant to subdivision (a), any person in an area identified in a state of emergency proclamation shall not be required to file a request for the extension.

(c) The department may make the extension in subdivision (a) only during the first 12 months following the issuance of the state of emergency proclamation or the duration of the state of emergency, whichever is less.

History—Added by Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023.

41055. Payment to department. All amounts required to be paid to the state under this part shall be paid to the department in the form of remittances payable to the California Department of Tax and Fee Administration.

History—Stats. 2019, Ch. 54 (SB 96), added "Department of Tax and Fee Administration" after "California" and deleted "State Board of Equalization of the State of". Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "in the form".

41056. Records. The service supplier and seller shall maintain records as may be necessary to determine the amount of surcharges collected under provisions of this part. Those records shall be maintained for a period of four years from the time the surcharge is due.

History—Stats. 1987, Ch. 38, effective January 1, 1988, in second sentence replaced "Such" with "Those" and "three" with "four". Stats. 2019, Ch. 54 (SB 96), added "or seller" after "The service supplier". Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "and" for "or" after "service supplier" and deleted "such" after "shall maintain" in the first sentence. Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" after "amount of" in the first sentence of the paragraph.

Article 1.1. Payment by Electronic Funds Transfer

41060. Electronic funds transfer payments. (a) Any service supplier whose estimated surcharge liability under this part averages twenty thousand dollars ($20,000) or more per month, as determined by the department pursuant to methods of calculation prescribed by the department, shall remit amounts due by an electronic funds transfer under procedures prescribed by the department.

(b) Any service supplier whose estimated surcharge liability under this part averages less than twenty thousand dollars ($20,000) per month may elect to remit amounts due by electronic funds transfer with the approval of the department.

(c) Any service supplier remitting amounts due pursuant to subdivision (a) or (b) shall perform electronic funds transfer in compliance with the due dates set forth in Article 1 (commencing with Section 41050). Payment is deemed complete on the date the electronic funds transfer is initiated if settlement to the state's demand account occurs on or before the banking day following the date the transfer is initiated. If settlement to the state's demand account does not occur on or before the banking day following the date the transfer is initiated, payment is deemed to occur on the date settlement occurs.

(d) Any person remitting surcharges by electronic funds transfer shall, on or before the due date of the remittance, file a return for the preceding reporting period in the form and manner prescribed by the department. Any person who fails to timely file the required return shall pay a penalty of 10 percent of the amount of the surcharges with respect to the period for which the return is required.

(e) Any person required to remit surcharges pursuant to this article who remits those surcharges by means other than appropriate electronic funds transfer shall pay a penalty of 10 percent of the surcharges incorrectly remitted.

(f) Any person who fails to pay any surcharge to the state or any amount of surcharge required to be collected and paid to the state, except amounts of determinations made by the department under Article 3 (commencing with Section 41070) or Article 4 (commencing with Section 41080), within the time required shall pay a penalty of 10 percent of the surcharge or amount of surcharge, in addition to the surcharge or amount of surcharge, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date on which the surcharge or the amount of surcharge required to be collected became due and payable to the state until the date of payment.

(g) In determining whether a service supplier’s estimated surcharge liability averages twenty thousand dollars ($20,000) or more per month, the department may consider returns filed pursuant to this part and any other information in the department’s possession.

(h) The penalties imposed by subdivisions (d), (e), and (f) shall be limited to a maximum of 10 percent of the surcharges due for any one return. Any person remitting surcharges by electronic funds transfer shall be subject to the penalties under this section and not Section 41095.

(i) The department shall promulgate regulations pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code for purposes of implementing this section.

History—Added by Stats. 2000, Ch. 923 (AB 2894), effective January 1, 2001. Stats. 2005, Ch. 519 (AB 1765), in effect October 4, 2005, operative January 1, 2006, deleted the former last sentence of subdivision (b) which provided "The election shall be operative for a minimum of one year." Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "service supplier" or "service supplier’s" for "person" or "person’s", respectively, throughout; substituted "department" or "department’s" for "board" or "board’s" respectively, throughout.

41061. Relief of penalty. If the department finds that a person's failure to make payment by an appropriate electronic funds transfer in accordance with department procedures is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, that person shall be relieved of the penalty provided in subdivision (e) of Section 41060. Any person seeking to be relieved of the penalty shall file with the department a statement under penalty of perjury setting forth the facts upon which that person bases the claim for relief.

History—Added by Stats. 2000, Ch. 923 (AB 2894), effective January 1, 2001. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "that person" for "he or she" after "facts upon which" and substituted "the" for "his or her" before "claim for relief" in the second sentence.

41062. Definitions. (a) "Electronic funds transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape, so as to order, instruct, or authorize a financial institution to debit or credit an account. Electronic funds transfers shall be accomplished by an automated clearinghouse debit, an automated clearinghouse credit, or by Federal Reserve Wire Transfer (Fedwire).

(b) "Automated clearinghouse" means any federal reserve bank, or an organization established in agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and which authorizes an electronic transfer of funds between these banks or bank accounts.

(c) "Automated clearinghouse debit" means a transaction in which the state, through its designated depository bank, originates an automated clearinghouse transaction debiting the person's bank account and crediting the state's bank account for the amount of the surcharge. Banking costs incurred for the automated clearinghouse debit transaction shall be paid by the state.

(d) "Automated clearinghouse credit" means an automated clearinghouse transaction in which the person through their own bank, originates an entry crediting the state's bank account and debiting the person’s own bank account. Banking costs incurred for the automated clearinghouse credit transaction charged to the state shall be paid by the person originating the credit.

(e) "Fedwire transfer" means any transaction originated by a person and utilizing the national electronic payment system to transfer funds through the federal reserve banks, when that person debits their own bank account and credits the state's bank account. Electronic funds transfers pursuant to Section 41060 may be made by Fedwire only if payment cannot, for good cause, be made according to subdivision (a), and the use of Fedwire is preapproved by the department. Banking costs incurred for the Fedwire transaction charged to the person and to the state shall be paid by the person originating the transaction.

History—Added by Stats. 2000, Ch. 923 (AB 2894), effective January 1, 2001. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "their" for "his or her" after "person through" and substituted "the person’s" for "his or her" after "and debiting" in subdivision (d); substituted "their" for "his or her" after "that person debits" in the first sentence of subdivision (e); substituted "department" for "board" in the second sentence of subdivision (e).

41063. Electronic filing. (a) Any return, declaration, statement, or other document required to be made under this part that is filed using electronic media shall be filed and authenticated pursuant to any method or form the department may prescribe.

(b) Notwithstanding any other law, any return, declaration, statement, or other document otherwise required to be signed that is filed by the taxpayer using electronic media in a form as required by the department shall be deemed to be a signed, valid original document, including upon reproduction to paper form by the department.

(c) Electronic media includes, but is not limited to, computer modem, magnetic media, optical disk, facsimile machine, or telephone.

History—Added by Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout.

Article 3. Deficiency Determinations

41070. Deficiency determinations. If the department is not satisfied with return or returns of the surcharges or the amount of surcharges required to be paid upon the basis of the facts contained in the return or returns or upon the basis of any information within its possession or that may come into its possession, one or more deficiency determinations may be made of the amounts payable for one or for more than one period.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "If the" and substituted ", one" for ". One" before "or more deficiency". Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" throughout and substituted "amounts" for "amount" before "payable for".

41071. Interest. The amount of the determination, exclusive of penalties, shall bear interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the day specified pursuant to Section 41051 for which the amount or any portion thereof should have been returned until the date of payment.

History—Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … thereof" before "from." Stats. 1984, Ch. 1020, operative July 1, 1985, added "modified" before "adjusted," deleted "annual" before "rate," added "per month, or fraction thereof," before "established" and substituted "Section 6591.5, … period" for "Section 19269 … month" before "for". Stats. 1985, Ch. 591, effective January 1, 1986, deleted "60th" after "from the", deleted "following" after "day", substituted "specified … 41051" for "the quarterly period" after "following".

41072. Offsets. In making a determination the department may offset overpayments for another period or periods, against underpayments for another period or periods, against penalties, and against the interest on the underpayments.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "may offset".

41073. 10 percent penalty. If any part of the deficiency for which a deficiency determination is made is due to negligence or intentional disregard of this part or authorized rules and regulations, a penalty of 10 percent of the amount of the determination shall be added thereto.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, deleted "or ten dollars ($10), whichever is greater," before "shall be added".

41074. 25 percent penalty. If any part of the deficiency for which a deficiency determination is made is due to fraud or an intent to evade this part or authorized rules and regulations, a penalty of 25 percent of the amount of the determination shall be added thereto.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, deleted "or twenty five dollars ($25), whichever is greater," before "shall be added".

41075. Notice of determination. The department shall give to the service supplier, seller, or service user written notice of its determination. The notice shall be served in one of the following manners:

(a) By placing the notice in a sealed envelope with postage paid addressed to the service supplier, seller, or service user at the service supplier’s, seller’s, or service user’s address as it appears in the records of the department. Service made pursuant to this subdivision shall be deemed complete at the time of the deposit of the notice in the United States Post Office or facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason.

(b) By personally delivering the notice to the person to be served. Service made pursuant to this subdivision shall be deemed complete at the time of such delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

(c) (1) By delivering the notice electronically via secure transmission when either of the following applies:

(A) The feepayer requests the notice of determination to be sent electronically via secure transmission.

(B) The department has evidence that the feepayer no longer receives mail at the address of record and has previously provided an address for electronic mail.

(2) Service provided pursuant to paragraph (1) shall be deemed complete at the time the department electronically transmits the notice via the feepayer’s secure web portal, without extension of time for any reason.

History—Stats. 1980, Ch. 546, operative January 1, 1981, deleted "The notice shall be sent either certified or registered mail." following second sentence. Stats. 2019, Ch. 54 (SB 96), substituted "department" for "board" throughout section, added ", seller," after "service supplier" in the first and second sentences, and substituted "the service supplier, seller, or service user's" for "his" in the second sentence. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "served in one of the following manners" for "placed in" after "shall be" in the second sentence; redesignated the remainder of the former second and third sentence as subdivision (a); added "By placing the notice in" before "a sealed ", substituted "supplier’s, seller’s," for "supplier, seller," before "or service user’s" in first sentence of new subdivision (a); substituted "Service made pursuant to this subdivision" for "The giving of notice" before "shall be" and substituted "Post Office" for "post office" in second sentence of new subdivision (a); redesignated the former fourth and fifth sentences as subdivision (b); substituted "By personally" for "In lieu of mailing, a notice may be served personally by" before "delivering", added "the notice" after "delivering," and substituted "served." for "served and service" after "to be" in the first sentence and added "Service made pursuant to this subdivision" before "shall be deemed" in the second sentence of new subdivision (b); added subdivision (c).

41076. Deficiency determination limitations. Except in the case of fraud, intent to evade this part or authorized rules and regulations, or failure to make a return, every notice of a deficiency determination shall be served within three years after the last day of the second calendar month following the reporting period for which the amount is proposed to be determined or within three years after the return is filed, whichever period expires the later. In the case of failure to make a return, every notice of determination shall be served within eight years after the last day of the second calendar month following the reporting period for which the amount is proposed to be determined.

History—Added by Stats. 1976, Ch. 443, effective January 1, 1977. Stats. 1985, Ch. 591, effective January 1, 1986, added "second" after "day of the" in the first sentence and added "second" after "day of the" in the second sentence. Stats. 1996, Ch. 432, in effect January 1, 1997, substituted "month" for "quarterly period" after "month following the" in the first sentence. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "reporting period" for "month" throughout. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "mailed" for "served" before "within" in the first and third sentences.

41077. Decedent deficiency determination limitations. In the case of a deficiency arising under this part during the lifetime of a decedent, a notice of deficiency determination shall be served within four months after written request therefor, in the form required by the department, by the fiduciary of the estate or trust or by any other person liable for the surcharge or any portion thereof.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before ", by the fiduciary" and substituted "surcharge" for "tax" after "liable for the". Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "served" for "mailed" after "shall be."

41078. Mailing of notice. If before the expiration of the time prescribed in Section 41076 for serving a notice of deficiency determination, the taxpayer has consented in writing to service of the notice after that time, the notice may be served at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

History—Added by Stats. 1985, Ch. 591, effective January 1, 1986. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "serving" for "the mailing of" after "Section 41076 for", substituted "service" for "the mailing" after "in writing to" and substituted "served" for "mailed" after "may be".

Article 4. Determinations If No Return Made

41080. Failure to file determinations; penalty. If any person fails to make a return, the department shall make an estimate of the number of access lines or purchases of prepaid mobile telephony services that are subject to the surcharges. The estimate shall be made for the period or periods in respect to which the person failed to make a return and shall be based upon any information which is in the department’s possession or may come into its possession. Upon the basis of this estimate the department shall compute and determine the amounts required to be paid to the state, adding to the sum thus arrived at a penalty equal to 10 percent thereof. One or more determinations may be made for one or for more than one period.

History—Stats. 1981, Ch. 714, in effect January 1, 1982, substituted "into" for "in" after "come" in the second sentence. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" or "department’s" for "board" or "board’s" respectively, throughout; substituted "number" for "amount" after "estimate of the", substituted "access lines or purchases of prepaid mobile telephony services" for "the charges for services" after "of", and substituted "that" for "by the person, or, as the case may be of the amount of charges for services received by the persons, in this state which" before "are subject to" in the first sentence; deleted ", or ten dollars ($10), whichever is greater" after "percent thereof" in the third sentence. Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" after "subject to the" in the first sentence of the paragraph and substituted "amounts" for "amount" before "required to be" in the third sentence of the paragraph.

41081. Offsets. In making a determination the department may offset overpayments for a period or periods, together with interest on the overpayments, against underpayments for another period or periods, against penalties, and against the interest on the underpayments.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "may offset".

41082. Interest. The amount of the determination, exclusive of penalties, shall bear interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the day specified pursuant to Section 41051 for which the amount or any portion thereof should have been returned until the date of payment.

History—Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … thereof" before "from." Stats. 1984, Ch. 1020, operative July 1, 1985, added "modified" before "adjusted," deleted "annual" before "rate," added "per month, or fraction thereof," before "established" and substituted "Section 6591.5, … period" for "Section 19269 … month" before "for". Stats. 1985, Ch. 591, effective January 1, 1986, deleted "60th" after "from the", substituted "specified … 41051" for "following … period".

41083. 25 percent penalty. If the failure of any person to file a return is due to fraud or an intent to evade this part or rules and regulations, a penalty of 25 percent of the amount required to be paid by the person, exclusive of penalties, shall be added thereto in addition to the penalty provided in Section 41080.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, deleted "or twenty five dollars ($25), whichever is greater," before "shall be added".

41084. Notice of determination. Promptly after making its determination the department shall give to the person written notice of the estimate, determination, and penalty, the notice to be served in the manner prescribed for service of notice of a deficiency determination.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "shall give". Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, deleted "personally or by mail" after "served."

Article 5. Redeterminations

41085. Petition for redetermination. Any person against whom a determination is made under Article 3 or 4 of this chapter may petition for a redetermination within 30 days after service upon the person of notice thereof. If a petition for redetermination is not filed within the 30-day period, the determination becomes final at the expiration of the period.

41086. Form, content, and amendment of petition. Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at any time prior to the date on which the department issues its order or decision upon the petition for redetermination.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "issues its order" in the second sentence.

41087. Oral hearing. If a petition for redetermination is filed within the 30-day period, the department shall reconsider the determination and, if the person has so requested in the person’s petition, shall grant the person an oral hearing and shall give the person 10 days' written notice of the time and place of the hearing. The department may continue the hearing from time to time as may be necessary.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "shall consider", substituted " the person’s" for "his" before "petition", and substituted "the person" for "him" before "10 days’" in the first sentence; substituted "department" for "board" before "may continue" in the second sentence.

41088. Decrease or increase of determination. The department may decrease or increase the amount of the determination before it becomes final, but the amount may be increased only if a claim for the increase is asserted by the department at or before the hearing. Unless the penalty imposed by Section 41074 or Section 41080 applies to the amount of the determination as originally made or as increased, the claim for increase shall be asserted within eight years after the last day of the second calendar month following the month for which the increase is asserted.

History—Added by Stats. 1976, Ch. 443, effective January 1, 1977. Stats. 1985, Ch. 591, effective January 1, 1986, added "second" after "day of the" in second sentence. Stats. 1996, Ch. 432, in effect January 1, 1997, substituted "month" for "quarterly period" after "month following the" in the second sentence. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "may decrease" and substituted "department" for "board" after "asserted by the" in the first sentence; substituted "shall" for "must" after "claim for increase" in the second sentence.

41089. Finality date of redetermination. The order or decision of the department upon a petition for redetermination becomes final 30 days after service upon the petitioner of notice thereof.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "decision of the".

41090. Due date of determination; penalty. All determinations made by the department under Article 3 or 4 of this chapter are due and payable at the time they become final. If they are not paid when due and payable, a penalty of 10 percent of the amount of the determination, exclusive of interest and penalties, shall be added thereto.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "under Article 3" and deleted "or ten dollars ($10), whichever is greater," before "shall be added".

41091. Service of notice. Any notice required by this article shall be served in the manner prescribed for service of notice of a deficiency determination.

History—Added by Stats. 1976, Ch. 443, in effect January 1, 1977. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, deleted "personally or by mail" after "served."

Article 6. Interest and Penalties

41095. Interest and penalty. (a) Any person who fails to pay any surcharge to the state or any amount of surcharge required to be collected and paid to the state, except amounts of determinations made by the department under Article 3 (commencing with Section 41070) or Article 4 (commencing with Section 41080), within the time required shall pay a penalty of 10 percent of the surcharge in addition to the surcharge or amount of surcharge, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date on which the surcharge or the amount of surcharge required to be collected became due and payable to the state until the date of payment.

(b) Any person who fails to file a return in accordance with the due date set forth in Section 41052 or the due date established by the department in accordance with Section 41052.1, shall pay a penalty of 10 percent of the amount of the surcharge with respect to the period for which the return is required.

(c) The penalties imposed by this section shall be limited to a maximum of 10 percent of the surcharge for which the return is required for any one return.

History—Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … thereof" before "from." Stats. 1984, Ch. 1020, operative July 1, 1985, deleted "of this chapter," after "Section 41080)," added "modified" before "adjusted," deleted "annual" before "rate," added "per month, or fraction thereof," before "established" and substituted "Section 6591.5," for "Section 19269". Stats. 2000, Ch. 923 (AB 2898), effective January 1, 2001, substituted "surcharge" for "tax" in subdivision (a), added subdivision (b) and (c). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "under Article 3" and deleted "or amount of the surcharge or ten dollar ($10), whichever is greater," before "in addition to" in subdivision (a); substituted "department" for "board" after "established by the" and deleted ",or ten dollars ($10), whichever is greater" after "is required" in subdivision (b); deleted subdivision (c). Stats. 2022, Ch. 474 (SB 1496), effective January, 2023, added subdivision (c).

41095.5. Interest; daily basis. [Repealed by Stats. 2016, Ch. 264 (AB 2201), in effect January 1, 2017.]

41095.5. Interest; daily basis. (a) If the department finds, taking into account all facts and circumstances, that it is inequitable to compute interest at the modified adjusted rate per month or fraction thereof, as defined in subdivision (b) of Section 6591.5, interest shall be computed at the modified adjusted daily rate from the date on which the surcharges were due until the date of payment, if all of the following occur:

(1) The payment of the surcharges was made one business day after the date the surcharges were due.

(2) The person was granted relief from all penalties that applied to that payment of the surcharges.

(3) The person files a request for a one-day adjustment.

(b) For purposes of this section, "modified adjusted daily rate" means the modified adjusted rate per annum as defined in subdivision (a) of Section 6591.5 determined on a daily basis by dividing the modified adjusted rate per annum by 365.

(c) For the purposes of this section, "department" means the California Department of Tax and Fee Administration.

(d) For purposes of this section, "business day" means any day other than a Saturday, Sunday, or any day designated as a state holiday.

(e) This section shall not apply to any payment made pursuant to a deficiency determination, or a determination where no return has been filed.

(f) This section shall only apply to electronic payments of surcharges.

History—Added by Stats. 2016, Ch. 264 (AB 2201), in effect January 1, 2017. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "If the" in subdivision (a); substituted "a one-day adjustment" for "an oral hearing before the board" after "request for" in paragraph (a)(3); added "the" before "purposes of", substituted ""department"" for ""board"" before "means the", and substituted "California Department of Tax and Fee Administration" for "members of the State Board of Equalization meeting as a public body" after "means the" in subdivision (c). Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" throughout; substituted "surcharges were" for "surcharge was" before "due until" in subdivision (a); and substituted "surcharges were" for "surcharge was" after "date the" in paragraph (1) of subdivision (a).

Note.—Sec. 1, Stats. 2010, Ch. 316 (SB 1028) provides the following: "It is the intent of the Legislature that California's penalty and interest provisions foster and maintain the current high level of compliance, provide appropriate costs and sanctions for noncompliance, and provide a reasonable and administrable degree of latitude for individual taxpayer circumstances and errors. It is the intent of the Legislature in enacting this act, that the State Board of Equalization strictly and narrowly apply its provisions on a case-by-case basis and only in special circumstances."

41096. Excusable delay. (a) If the department finds that a person's failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 41060, 41080, 41090, and 41095.

(b) Except as provided in subdivisions (c) and (d), any person seeking to be relieved of the penalty shall file with the department a statement under penalty of perjury setting forth the facts upon which the person bases the claim for relief.

(c) (1) Subject to paragraph (2), the department may grant relief of the penalty for any person in an area identified in a state of emergency proclamation made by the Governor for the period the state of emergency proclamation is effective, regardless of whether the person has filed a statement with the department pursuant to subdivision (b).

(2) The department may grant the relief in paragraph (1) only during the first 12 months following the issuance of the state of emergency proclamation or the duration of the state of emergency, whichever is less.

(d) The department shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section.

History—Stats. 1995, Ch. 555, in effect January 1, 1996, added ", 41090," after "by Section 41080" in the first paragraph; and added "or she" after "the which he" and added "or her" after "bases his" in the second paragraph. Stats. 2000, Ch. 1052 (AB 2898), effective January 1, 2001, renumbered first sentence as subdivision (a), added "41060," after "provided by Sections" in subdivision (a), renumbered second sentence as subdivision (b), added "Except as provided in subdivision (c)," before "any person seeking" in subdivision (b), added subdivision (c). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "the person" for "he or she" after "facts upon which" and substituted "the" for "his or her" before "claim for relief." in subdivision (b). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "subdivisions" for "subdivision" after "provided in,", added "and (d)," after "(c)" in subdivision (b); added subdivision (c): relettered former subdivision (c) to (d).

41097. Relief from interest; disaster. (a) If the department finds that a person's failure to make a timely return or payment was due to a disaster, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the interest provided by Sections 41054, 41060, 41082, and 41095.

(b) Except as provided in subdivision (c), a person seeking to be relieved of the interest shall file with the department a statement under penalty of perjury setting forth the facts upon which the person bases the claim for relief.

(c) (1) Subject to paragraph (2), the department may grant relief of the interest for any person in an area identified in a state of emergency proclamation made by the Governor for the period the state of emergency proclamation is effective, regardless of whether the person has filed a statement with the department pursuant to subdivision (b).

(2) The department may grant the relief in paragraph (1) only during the first 12 months following the issuance of the state of emergency proclamation or the duration of the state of emergency, whichever is less.

History—Added by Stats. 1981, Ch. 947, in effect January 1, 1982. Stats. 2000, Ch. 923 (AB 2894), effective January 1, 2001, added "41060" after "by Sections 41054," of first sentence, added "or she" after "upon which he" of second sentence, added "or her" after "bases his" of second sentence. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "the person" for "he or she" after "facts upon which" and substituted "the" for "his or her" before "claim for relief." in the second paragraph. Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, lettered first sentence of the paragraph to subdivision (a); lettered second sentence of paragraph to subdivision (b) and substituted "Except as provided in subdivision (c), a" for "Any" before "person seeking"; added subdivision (c).

41097.5. Relief of interest. (a) The department, in its discretion, may relieve all or any part of the interest imposed on a person by this part if the failure to pay the surcharge is due in whole or in part to an unreasonable error or delay by an employee of the department acting in the employee’s official capacity.

(b) For purposes of this section, an error or delay shall be deemed to have occurred only if no significant aspect of the error or delay is attributable to an act of, or a failure to act by, the taxpayer.

(c) Any person seeking relief under this section shall file with the department a statement under penalty of perjury setting forth the facts on which the claim for relief is based and any other information which the department may require.

(d) (d) The department may grant relief only for interest imposed on surcharge liabilities that arise during surcharge periods commencing on or after January 1, 2000.

History—Added by Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000. Stats. 2001, Ch. 251 (AB 1123), substituted "this part" for "Section 41082 and 41095" in subdivision (a), effective January 1, 2002. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "if" for "where" after "this part", substituted "the surcharge" for "tax" after "failure to pay" and "the employee’s" for "his or her" after "acting in" in subdivision (a); substituted "surcharge" for "tax" after "imposed on" and "surcharge" for "taxable" after "arise during" in subdivision (d).

41098. Penalty interest rates. [Repealed by Stats. 1985, Ch. 20, effective July 1, 1985.]

41098. Reasonable reliance on written advice; relief from tax, penalty and interest. (a) If the department finds that a person's failure to make a timely return or payment is due to the person's reasonable reliance on written advice from the department, the person may be relieved of the surcharges imposed by this part and any penalty or interest added thereto.

(b) For purposes of this section, a person's failure to make a timely return or payment shall be considered to be due to reasonable reliance on written advice from the department, only if the department finds that all of the following conditions are satisfied:

(1) The person requested in writing that the department advise the person whether a particular activity or transaction is subject to the surcharge under this part. The specific facts and circumstances of the activity or transaction shall be fully described in the request.

(2) The department responded in writing to the person regarding the written request for advice, stating whether or not the described activity or transaction is subject to the surcharges, or stating the conditions under which the activity or transaction is subject to the surcharges.

(3) The liability for surcharges applied to a particular activity or transaction which occurred before either of the following:

(A) Before the department rescinded or modified the advice so given, by sending written notice to the person of rescinded or modified advice.

(B) Before a change in statutory or constitutional law, a change in the department’s regulations, or a final decision of a court, which renders the department’s earlier written advice no longer valid.

(c) Any person seeking relief under this section shall file with the department all of the following:

(1) A copy of the person's written request to the department and a copy of the department’s written advice.

(2) A statement under penalty of perjury setting forth the facts on which the claim for relief is based.

(3) Any other information which the department may require.

(d) Only the person making the written request shall be entitled to rely on the department’s written advice to that person.

History—Added by Stats. 1990, Ch. 987, in effect January 1, 1991. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" or "department’s" for "board" or "board’s" respectively, throughout; substituted "the person" for "him or her" after "advise" in paragraph (b)(1). Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" throughout.

41099. Relief of spouse. (a) Under regulations prescribed by the department, if:

(1) A surcharge liability under this part was understated by a failure to file a return required to be filed under this part, by the omission of an amount properly includable therein, or by erroneous deductions or credits claimed on a return, and the understatement of surcharge liability is attributable to one spouse; or any amount of the surcharge reported on a return was unpaid and the nonpayment of the reported surcharge liability is attributable to one spouse.

(2) The other spouse establishes that the other spouse did not know of, and had no reason to know of, that understatement or nonpayment.

(3) Taking into account whether the other spouse significantly benefited directly or indirectly from the understatement or the nonpayment and taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in surcharge attributable to that understatement or nonpayment, then the other spouse shall be relieved of liability for the surcharge, including interest, penalties, and other amounts, to the extent that the liability is attributable to that understatement or nonpayment of the surcharge.

(b) For purposes of this section, the determination of the spouse to whom items of understatement or nonpayment are attributable shall be made without regard to community property laws.

(c) This section shall apply to all calendar months, quarters, or years subject to the provisions of this part, but shall not apply to a calendar month, quarter, or year that is more than five years from the final date on the department-issued determination, five years from the return due date for nonpayment on a return, or one year from the first contact with the spouse making a claim under this section; or that has been closed by res judicata, whichever is later.

(d) For purposes of paragraph (2) of subdivision (a), "reason to know" means whether a reasonably prudent person would have had reason to know of the understatement or nonpayment.

(e) For purposes of this section, with respect to a failure to file a return or an omission of an item from the return, "attributable to one spouse" may be determined by whether a spouse rendered substantial service as a service supplier for each access line subscribed by service users or a sellers collection from each prepaid consumer’s purchase of prepaid mobile telephony services, or an access line or purchase of prepaid mobile telephony services to which the understatement is attributable. If neither spouse rendered substantial services as a service supplier, seller, or as a service user, then the attribution of applicable items of understatement shall be treated as community property. An erroneous deduction or credit shall be attributable to the spouse who caused that deduction or credit to be entered on the return.

(f) Under procedures prescribed by the department, if, taking into account all the facts and circumstances, it is inequitable to hold the other spouse liable for an unpaid surcharge or deficiency, or any portion of either, attributable to any item for which relief is not available under subdivision (a), the department may relieve the other spouse of that liability.

(g) For purposes of this section, registered domestic partners, as defined in Section 297 of the Family Code, have the same rights, protections, and benefits as provided by this section, and are subject to the same responsibilities, obligations, and duties as imposed by this section, as are granted to and imposed upon spouses.

(h) The relief provided by this section shall apply retroactively to liabilities arising prior to January 1, 2008.

History—Added by Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008. Stats. 2008, Ch. 179 (SB 1498), in effect January 1, 2009, deleted "or not" after "account whether" and substituted commas for parentheses around the phrase "including interest, penalties, and other amounts" in paragraph (3) of subdivision (a); substituted "a" for "any" after "shall not apply to" in subdivision (c); deleted "or not" after "means whether" in subdivision (d); substituted "communication" for "communications" after "intrastate telephone" in subdivision (e); substituted "an" for "any" after "spouse liable for", deleted "any" after "unpaid surcharge or", and substituted commas for parentheses around the phrase "or any portion of either" in subdivision (f); and substituted "January 1, 2008" for "the effective date of this section" in subdivision (h). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "the other spouse" for "he or she" after "establishes that" in paragraph (a)(2); substituted "for each access line subscribed by" for "of intrastate telephone communication services" after "service supplier", deleted "as" after "service users or", substituted "sellers collection from each prepaid consumer’s purchase of prepaid mobile telephony services, or an access line or purchase" for "users" before "of", substituted "prepaid mobile telephony" for "intrastate telephone communication" before "services to which" in the first sentence of subdivision (e); added "or seller," after "service supplier" in the second sentence of subdivision (e).