Article 6 - Interest and Penalties

California Revenue and Taxation Code — §§ 6591-6597

Sections (11)

Amended by Stats. 1996, Ch. 1087, Sec. 29. Effective January 1, 1997.

(a)Any person who fails to pay any tax to the state or any amount of tax required to be collected and paid to the state, except amounts of determinations made by the board under Article 2 (commencing with Section 6481) or Article 3 (commencing with Section 6511) of this chapter, within the time required shall pay a penalty of 10 percent of the tax or amount of the tax, in addition to the tax or amount of tax, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date

on which the tax or the amount of tax 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 6451 or the due date established by the board in accordance with Section 6455, shall pay a penalty of 10 percent of the amount of taxes, exclusive of prepayments, 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 taxes for which the return is required, exclusive of any prepayments, for any one return.

§ 6591.3

Added by Stats. 2020, Ch. 17, Sec. 7. (AB 90) Effective June 29, 2020.

(a)An accuracy-related penalty shall be imposed under this part if a person fails to accurately disclose information in the information return required by Section 6452.05 such that the information return is substantially inconsistent with the return required under Section 6452, and that person shall pay a penalty of five thousand dollars ($5,000) for each return not accurately filed.

(b)The accuracy-related penalty imposed by this section shall not be assessed if the penalty of Section 6452.05 is imposed.

§ 6591.5

Amended by Stats. 1991, Ch. 236, Sec. 5.2. Effective July 29, 1991.

(a)(1) For interest required to be paid to the state upon underpayments of tax to the state, “ modified adjusted rate per annum” means the adjusted annual rate established pursuant to subdivision (c), plus three percentage points.

(2)For interest required to be paid by the state upon overpayments of tax, “modified adjusted rate per annum” means the adjusted annual rate established pursuant to subdivision (d).

(b)“Modified adjusted rate per month,

or fraction thereof” means the modified adjusted rate per annum divided by 12.

(c)The rate established for interest to be paid upon underpayments of tax shall be determined in accordance with the provisions of Section 6621 of the Internal Revenue Code which establish the underpayment rate, except that the determination specified in Section 6621(b) of the Internal Revenue Code shall be modified to be determined semiannually as follows:

(1)The rate for January shall apply for the following July 1 to December 31, inclusive.

(2)The rate for July shall apply for the following January 1 to June 30, inclusive.

(d)(1) Except as provided in paragraph (2), the rate established for interest to be paid by the state upon overpayments of

tax shall be equal to the bond equivalent rate of 13-week treasury bills auctioned, rounded to the nearest full percent (or if a multiple of one-half of 1 percent, the rate shall be increased to the next highest full percent), as follows:

(A) The bond equivalent rate of 13-week treasury bills established at the first auction held during the month of January shall apply for the following July 1 to December 31, inclusive.

(B) The bond equivalent rate of 13-week treasury bills established at the first auction held during the month of July shall apply for the following January 1 to June 30, inclusive.

(2)For the period July 1, 1991, through June 30, 1992, the rate to be paid by the state upon overpayments of tax shall be equal to the bond equivalent rate of 13-week treasury bills established at the auction held on

July 1, 1991, rounded to the nearest full percent (or if a multiple of one-half of 1 percent, the rate shall be increased to the next highest full percent).

(e)For purposes of this part, and any other provision of law referencing this method of computation, in computing the amount of any interest required to be paid by the state or by the taxpayer, or any other amount determined by reference to that amount of interest, that interest and that amount shall be computed as simple interest, not compound interest.

§ 6591.6

Amended by Stats. 2021, Ch. 432, Sec. 14. (SB 824) Effective January 1, 2022.

(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 tax or prepayment was due until the date of payment, if all of the following occur:

(1)The payment of tax or the prepayment was made one business day after the date the tax or prepayment was due.

(2)The person was granted relief from all penalties that applied to that payment of tax or prepayment.

(3)The person files a request for an 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 purposes of this section, “business day” means any day other than a Saturday, Sunday, or any day designated as a state holiday.

(d)This section shall not apply to any payment made pursuant to a deficiency determination, a determination where no return has been filed, or a jeopardy determination issued by the

department.

(e)This section shall only apply to electronic payments or prepayments of taxes.

§ 6592

Amended by Stats. 2022, Ch. 474, Sec. 4. (SB 1496) Effective January 1, 2023.

(a)(1) 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 shall be relieved of the penalties provided by Sections 6452.05, 6476, 6477, 6479.3, 6480.4, 6511, 6565, 6591, 7051.2, 7073, and 7074.

(2)If the department finds, with respect to the information return required by Section 6452.05, that a person’s failure to accurately disclose information 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 shall be

relieved of the relevant penalty provided by Section 6591.3.

(b)Except as provided in subdivisions (c) and (d), a 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 provides for efficient resolution of requests for relief pursuant to this section.

§ 6592.5

Added by Stats. 1993, Ch. 1109, Sec. 6. Effective January 1, 1994.

Any person who is granted relief from the penalty imposed by Section 6476 or 6477 shall pay, in addition to any prepayment, interest at the “modified adjusted rate per month, or fraction thereof” established pursuant to subdivision (b) of Section 6591.5, from the date on which the prepayment would have been due until the date of payment.

§ 6593

Amended by Stats. 2022, Ch. 474, Sec. 5. (SB 1496) Effective January 1, 2023.

(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 6459, 6480.4, 6480.8, 6513, 6591, and 6592.5.

(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 that 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.

§ 6593.5

Amended by Stats. 2022, Ch. 474, Sec. 6. (SB 1496) Effective January 1, 2023.

(a)The department, in its discretion, may relieve all or any part of the interest imposed on a person by this part under the following circumstances:

(1)Where the failure to pay tax is due in whole or in part to an unreasonable error or delay by an employee of the department acting in their official capacity.

(2)Where failure to pay sales or use tax was the direct result of an error or delay by a state agency that collects the tax on behalf of the California Department of Tax and Fee Administration.

(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)The department may grant relief only for interest imposed on tax liabilities that arise during taxable periods commencing on or after July 1, 1999.

§ 6594

Added by renumbering Section 6593 (as added by Stats. 1980, Ch. 1194) by Stats. 1981, Ch. 714, Sec. 403.

Notwithstanding any other provision of this part, no interest or penalties shall be assessed against any person for failure to make payments of any taxes on leases of personal property to the United States government while the board is enjoined from collecting such taxes by order of the United States District Court for the Central District of California in the case of United States of America v. California State Board of Equalization, No. CV 79-03359-R, provided that payment of any applicable taxes is made within 60 days after the board is no longer enjoined from collecting such taxes.

§ 6596

Amended by Stats. 1991, Ch. 402, Sec. 1.

(a)If the board 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 board, the person may be relieved of the taxes imposed by Sections 6051 and 6201 and any penalty or interest added thereto.

(b)For the purpose 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 board, only if the board finds that all of the following conditions are satisfied:

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

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

(3)In reasonable reliance on the board’s written advice, the person did not do either of the following:

(A)Charge or collect from his or her customers amounts designated as sales tax reimbursement or use tax for the described activity or

transaction.

(B)Pay a use tax on the storage, use, or other consumption in this state of tangible personal property.

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

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

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

(c)Any person seeking relief under this section shall file with the board:

(1)A copy of the person’s written request to the board and a copy of the board’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 board may require.

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

§ 6597

Amended by Stats. 2024, Ch. 499, Sec. 13. (SB 1528) Effective January 1, 2025.

(a)(1) Any person who knowingly collects sales tax reimbursement, as defined in Section 1656.1 of the Civil Code, or who knowingly collects use tax pursuant to Chapter 3 (commencing with Section 6201), and who fails to timely remit that sales tax reimbursement or use tax to the California Department of Tax and Fee Administration, shall be liable for a penalty of 40 percent of the amount not timely remitted.

(2)(A) This subdivision shall not apply to any person whose liability for the unremitted sales tax reimbursement or use tax described in paragraph (1) averages one thousand five hundred dollars ($1,500) or less per month or does not exceed 25 percent of the total amount of tax

liability for which the sales tax reimbursement or use tax was collected for the period in which tax was due, whichever is greater.

(B)If a person’s failure to make a timely remittance of sales tax reimbursement or use tax is due to a reasonable cause or circumstances beyond the person’s control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person shall be relieved of the penalty imposed by this subdivision.

(b)For purposes of this section:

(1)“Reasonable cause or circumstances beyond the person’s control” includes, but is not limited to, any of the following:

(A)The occurrence of a death or serious illness of the person or the person’s next of kin that caused the person’s failure to make a

timely remittance.

(B)The occurrence of an emergency, as defined in Section 8558 of the Government Code that caused the person’s failure to make a timely remittance.

(C)A natural disaster or other catastrophe directly affecting the business operations of the person that caused the person’s failure to make a timely remittance.

(D)The California Department of Tax and Fee Administration failed to send returns or other information to the correct address of record, that caused the person’s failure to make a timely remittance.

(E)The person’s failure to make a timely remittance occurred only once over a three-year period, or once during the period in which the person was engaged in business, whichever time period is shorter.

(F)The person voluntarily corrected errors in remitting sales tax reimbursement or use tax collected that were made in previous reporting periods and remitted payment of the liability owed as a result of those errors prior to being contacted by the California Department of Tax and Fee Administration regarding possible errors or discrepancies.

(2)“Sales tax reimbursement” shall also include any sales tax that is advertised, held out, or stated to the public or to any customer, directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the retailer.

(c)This section shall apply to any determination made by the California Department of Tax and Fee Administration pursuant to Article 2 (commencing with Section 6481), Article 3 (commencing with Section 6511), and Article 4 (commencing with

Section 6536).

(d)The amendments made by the act adding this subdivision shall apply to determinations made on or after January 1, 2025.