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Business Taxes Law Guide—Revision 2024
Hazardous Substances Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 22. Hazardous Substances Tax Law
Chapter 6. Administration
Article 2. The California Taxpayers' Bill of Rights*
Section 43522
43522. Settlement of disputed tax liabilities. [Repealed by Stats. 1995, Ch. 497, in effect January 1, 1996.]
43522. Settlement authority. (a) It is the intent of the Legislature that the California Department of Tax and Fee Administration, its staff, and the Attorney General pursue settlements as authorized under this section with respect to civil tax matters in dispute, which arise under Section 105190 or 105310 of the Health and Safety Code, that are the subject of protests, appeals, or refund claims, consistent with a reasonable evaluation of the costs and risks associated with litigation of these matters.
(b) (1) Except as provided in paragraph (2), no recommendation of settlement shall be submitted to the director for approval unless and until that recommendation has been submitted by the chief counsel to the Attorney General. Within 30 days of receiving that recommendation, the Attorney General shall review the recommendation and advise the chief counsel, in writing, of their conclusions as to whether the recommendation is reasonable from an overall perspective. The chief counsel shall, with each recommendation of settlement submitted to the director, also submit the Attorney General's written conclusions obtained pursuant to this paragraph.
(2) (A) A settlement of any civil tax matter in dispute involving a reduction of tax or penalties in settlement, the total of which reduction of tax and penalties in settlement does not exceed eleven thousand five hundred dollars ($11,500) may be approved by the director.
(B) Beginning on July 1, 2029, and each fifth fiscal year thereafter, the department shall adjust the amount specified in subparagraph (A) by increasing that amount by a percentage amount equal to the increase in the California Consumer Price Index, as calculated by the Department of Finance, with the resulting amount rounded to the nearest one hundred dollars ($100). The first adjustment pursuant to this subparagraph shall be a percentage amount equal to the increase in the California Consumer Price Index from January 1, 2024, to January 1, 2029. Subsequent fifth fiscal year adjustments shall cover subsequent five-year periods. The incremental change shall be added to the previously adjusted amount.
(c) Whenever a reduction of tax, or penalties, or total tax and penalties in settlement in excess of five hundred dollars ($500) is approved pursuant to this section, there shall be placed on file, for at least one year, in the office of the director of the California Department of Tax and Fee Administration a public record with respect to that settlement. The public record shall include all of the following information:
(1) The name or names of the taxpayers who are parties to the settlement.
(2) The total amount in dispute.
(3) The amount agreed to pursuant to the settlement.
(4) A summary of the reasons why the settlement is in the best interests of the State of California.
(5) (A) For any settlement approved by the director, except those settlements approved pursuant to paragraph (2) of subdivision (b), the Attorney General's conclusion as to whether the recommendation of settlement was reasonable from an overall perspective.
(B) The public record shall not include any information that relates to any trade secret, patent, process, style of work, apparatus, business secret, or organizational structure that, if disclosed, would adversely affect the taxpayer or the national defense.
(d) The director shall not participate in the settlement of tax matters pursuant to this section, except as provided in subdivision (e).
(e) (1) Any recommendation for settlement shall be approved or disapproved by the director within 45 days of the submission of that recommendation to the director. Any recommendation for settlement that is not either approved or disapproved by the director within 45 days of the submission of that recommendation shall be deemed approved.
(2) Where the director disapproves a recommendation for settlement, at the discretion of the director and chief counsel, the matter shall be remanded to staff for further negotiation, and may be resubmitted to the director in the same manner and subject to the same requirements as the initial submission.
(f) All settlements entered into pursuant to this section shall be final and nonappealable, except upon a showing of fraud or misrepresentation with respect to a material fact.
(g) Except as provided in subdivision (c), any settlement considered or entered into pursuant to this section shall constitute confidential tax information for purposes of Section 43651.
(h) The Legislature finds that it is essential for fiscal purposes that the settlement program authorized by this section be expeditiously implemented. Accordingly, Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any determination, rule, notice, or guideline established or issued by the California Department of Tax and Fee Administration in implementing and administering the settlement program authorized by this section.
(i) The amendments made to this section by the act adding this subdivision shall apply to any settlements approved on or after January 1, 2024.
History—Stats. 1998, Ch. 350 (SB 2231), in effect January 1, 1999, substituted "105190 or 105310" for "372.7 or 429.14" after "arises under Section" in subparagraph (1) of subdivision (b). Stats. 2003, Ch. 605 (SB 1060), in effect January 1, 2004, added ", for at least one year," after "placed on file" to subdivision (c). Stats. 2006,Ch. 364 (AB 3076), in effect January 1, 2007, substituted "Except as provided in paragraph (3) and subject" for "Subject" before "to paragraph (2)" in paragraph (1) of, added ", itself," after "submitted to the board" in the first and third sentences of paragraph (2) of, and added paragraph (3) to subdivision (b); added ", or penalties, or total tax and penalties" after "a reduction of tax" in the first paragraph of, and substituted "For any settlement approved by the board, itself, the" for "The" before "Attorney General's conclusion" in the first sentence of paragraph (5) of subdivision (c); added ", itself," after "disapproved by the board" in the second sentence of paragraph (1) of subdivision (e); and added "considered or" after "any settlement" in the second sentence of subdivision (g). Stats. 2023, Ch. 511 (SB 889), in effect January 1, 2024, substituted "California Department of Tax and Fee Administration," for "State Board of Equalization" before "its staff", substituted "dispute, which arise under Section 105190 or 105310 of the Health and Safety Code," for "dispute" after "matters in" in subdivision (a); deleted paragraph (1) and renumbered paragraph (2) as (1) and paragraph (3) as (2)(A), substituted "Except as provided in paragraph (2), no recommendation" for "No recommendation" before "of settlement", substituted "director for approval" for "board, itself," after "submitted to the" and deleted "executive director or" before "chief counsel" in the first sentence of new paragraph (b)(1), substituted "advise the chief counsel," for "advise" before "in writing,", substituted "of their" for "the executive director or chief counsel of the board of his or her" before "conclusions" in the second sentence of new paragraph (2), deleted "executive director or" before "chief counsel" after "The", substituted "director," for "board, itself," before "also submit" in third sentence of new paragraph (1), substituted "eleven thousand five hundred dollars ($11,500)" for "five thousand dollars ($5,000)" after "exceed" and substituted "director." for "executive director and chief counsel, jointly. The executive director shall notify the board, itself, of any settlement approved pursuant to this paragraph." after "approved by the" in subparagraph (A) of new paragraph (2) and added new subparagraph (B) in subdivision (b)(1); deleted "executive" before "director" and substituted "California Department of Tax and Fee Administration" for "board" before "a public" in the first sentence, lettered first paragraph of subdivision (c)(5) to subparagraph (c)(5)(A), substituted "director, except those settlements approved pursuant to paragraph (2) of subdivision (b)," for "board, itself," before "the Attorney" in new subparagraph (c)(5)(A), lettered second paragraph of former subdivision (c)(5) to subparagraph (B), substituted "feepayer" for "fee payer" after "affect the" in new subparagraph (c)(5)(B) in paragraph (5) of subdivision (c); substituted "director" for "members of the State Board of Equalization" after "The" in subdivision (d); substitute "director" for "board, itself," before "within", substitute "director." for "board." after "to the" in first sentence of paragraph (1), substitute "director" for "board" before "within" in second sentence of paragraph (1), deleted "Upon approval of a recommendation for settlement, the matter shall be referred back to the executive director or chief counsel in accordance with the decision of the board." as the third sentence of paragraph (1), deleted "Disapproval of a recommendation for settlement shall be made only by a majority vote of the board." as the first sentence of paragraph (2), substituted "director" for "board" before "disapproved", added "at the discretion of the director and chief counsel" after "settlement’, deleted "board" before "staff", substituted "director," for "board" before "in the same" and substituted "submission." for "submission, at the discretion of the executive director or chief counsel." after "initial" in former second sentence in paragraph (2) of subdivision (e); deleted "Any proceedings undertaken by the board itself pursuant to a settlement as described in this section shall be conducted in a closed session or sessions." as first sentence of subdivision (g); deleted "This section shall apply only to civil tax matters in dispute on or after the effective date of the act adding this subdivision." as subdivision (h), relettered subdivision (i) to (h) and substituted "California Department of Tax and Fee Administration" for "board" after "by the" in new subdivision (h); and added new subdivision (i).
* Added by Stats. 1992, Ch. 438, in effect January 1, 1993.