Sales & Use Tax – Special Tax & Fee Cases
The settlement program is available to taxpayers or feepayers who have a petition for redetermination, administrative protest or claim for refund pending in connection with a tax or fee liability administered by CDTFA. Settlement proposals may be considered for civil tax or fee matters in dispute under the sales and use tax program or certain special tax and fee programs. The settlement program does not presently apply to disputes involving jet fuel tax, motor vehicle fuel tax, or the fire prevention fee. Also, with the exception of the Childhood Lead Poisoning Prevention Fee, and the Occupational Lead Poisoning Prevention Fee, disputes involving the Hazardous Substances Tax Law are administered by the Department of Toxic Substances Control.
Generally, while you are pursuing an appeal with CDTFA, you may request consideration of your case under the settlement program. Also, litigation cases are handled outside the settlement program. The settlement program is intended to expedite the resolution of tax and fee disputes consistent with a reasonable evaluation of litigation risks and costs. Therefore, a taxpayer's inability to pay the disputed liability is not considered under the settlement program. If you are only seeking relief from a tax or fee liability on the basis of an inability to pay, you may contact the Department's Office that handled the audit to inquire about the Offers in Compromise program for more information on the program.
Proposing a Settlement
To initiate settlement, you may request your case be considered under the settlement program by checking the appropriate box set forth on form CDTFA-416, Petition for Redetermination and/or you may submit your proposal on form CDTFA-393, Settlement Review Request for Sales and Use Tax and Special Tax and Fee Cases, or on a signed and dated written request for settlement. The following information would also be helpful to ensure your case is properly acknowledged and processed:
- The taxpayer’s or feepayer’s name, email address, phone number, and current address;
- If applicable, the name, address, email address, fax and phone number of the taxpayer’s or feepayer’s representative, as well as a copy of the representative’s power of attorney;
- The taxpayer’s or feepayer’s account number;
- The tax or fee period involved;
- The tax or fee involved.
Also, please keep in mind that if you have requested a hearing with the Office of Tax Appeals for your appeals case or are already scheduled for a hearing, you must submit your settlement proposal at least 5 days prior to the hearing date to allow the settlement program time to review and process your request.
Settlement offers may be emailed or mailed to:
California Department of Tax and Fee Administration
Ms. Amy Kelly
Assistant Chief Counsel, Settlement and Taxpayer Services Division
450 N Street MIC:87
P.O. Box 942879
Sacramento, California 94279-0087
Settlement Review and Negotiations
After receiving your settlement request, settlement staff will evaluate your proposal and advise you or your representative whether your case is suitable for settlement consideration. Staff will usually seek to settle a case involving genuine factual and/or legal issues. However, settlement is discretionary and your case may be declined for a variety of reasons. For example, if staff perceives little litigation risk to the CDTFA's position, or if sufficient facts to allow proper settlement evaluation have not been provided, your case will not likely be accepted for settlement consideration.
If your case is considered suitable for settlement, staff may accept your offer or, if appropriate, seek to negotiate an agreement for a different amount. If a tentative agreement is reached, you will be asked to sign a formal document setting forth the terms of the agreement. The settlement proposal will then be submitted for approval. Typically staff will notify you or your representative to discuss the proposal within 90 days of its submission. If the proposed settlement requires that you pay an additional amount, you will normally be expected to pay the full amount within 30 days of receiving notification of the acceptance of the proposal. Settlements entered into are final and may be appealed only upon a showing of fraud or misrepresentation of a material fact.
Generally, an appeals case will continue through the appeals process independent of a request for settlement of the disputed amounts. Therefore, while you are seeking settlement you must continue to meet all applicable deadlines with respect to your petition, administrative protest and/or claim for refund. For instance, if your case is scheduled for an appeals conference you will be expected to attend the conference even though you submitted a request for settlement consideration. The appeals process continues, so that if settlement is not reached, your case will not be unduly delayed.
For settlements in which the reduction of tax or fee exceeds $500, the law requires that a public record statement, available for public review, be placed in the Office of the CDTFA Director. The public record will include the following information:
- The name or names of the taxpayers or feepayers who are parties to the settlement.
- The total amount in dispute.
- The amount agreed to in the settlement.
- A summary of the reasons why the settlement is in the best interests of the State.
- If applicable, the Attorney General’s conclusion regarding the reasonableness of the settlement.
Information that relates to any trade secret, patent, process, style of work, apparatus, business secret, or organizational structure will not be included in the public record if its disclosure would adversely affect the taxpayer or feepayer. With the exception of the required public record statement, settlements are considered to be confidential tax information.
For additional information on the settlement process, you may email your request or contact the Settlement Section at 1-916-324-2836, or by fax at 1-916-323-3387, or write to the address above. Information on the settlement program is also available in Publication 17, "Appeals Procedures", or you can have a copy mailed to you by calling the CDTFA Information Center, at 1-800-400-7115.