Article 3 - Deficiency Assessments

California Revenue and Taxation Code — §§ 19031-19067

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Sections (32)

§ 19031

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

The Franchise Tax Board may proceed under this article or Article 5 (commencing with Section 19081) whether or not it requires a return as an amended return under Section 18622.

§ 19032

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

As soon as practicable after the return is filed, the Franchise Tax Board shall examine it and shall determine the correct amount of the tax.

§ 19033

Amended by Stats. 2007, Ch. 281, Sec. 1. Effective January 1, 2008.

(a)If the Franchise Tax Board determines that the tax disclosed by the taxpayer on an original or amended return, including an amended return reporting federal adjustments pursuant to Section 18622, is less than the tax disclosed by its examination, it shall mail notice to the taxpayer of the deficiency proposed to be assessed. In no case shall the determination of the deficiency be arbitrary or without foundation.

(b)(1) Except as provided in

paragraph (2), the Franchise Tax Board, in connection with the determination described in subdivision (a), shall examine the original or amended return or related electronically stored return data.

(2)If the return or return data described in paragraph (1) has been destroyed or cannot be located after reasonable effort, the Franchise Tax Board shall request the taxpayer to provide a paper or electronic copy of the return. If the taxpayer fails to provide a copy within 30 days, which may be extended an additional 30 days for reasonable cause, from the date of the request, paragraph (1) shall not apply.

(c)As used in this section, “electronically stored return data” means an electronic record of line items from an original or amended return and accompanying schedules that is routinely created as a return is processed.

(d)The amendments to this section made by Chapter 414 of the Statutes of 2000 shall apply to notices of deficiencies proposed to be assessed issued on or after January 1, 2001.

(e)The notice described in subdivision (a) shall be mailed in a manner that includes a postmark. For purposes of this subdivision, postmark means a postal marking made on a letter, package, or postcard indicating the date on which the item is delivered to the United States Postal Service.

(f)The amendments made to this section by the act adding this subdivision shall apply to notices of deficiencies proposed to be assessed issued on or after January 1, 2008.

§ 19034

Amended by Stats. 1999, Ch. 931, Sec. 10. Effective October 10, 1999.

(a)Each notice shall set forth the reasons for the proposed deficiency assessment and the computation thereof.

(b)Each notice shall include the date determined by the Franchise Tax Board as the last day on which the taxpayer may file a written protest pursuant to Section 19041. Failure to include this date shall not invalidate a notice that is otherwise valid.

(c)The amendments made by the act adding this

subdivision shall apply to any notice mailed after December 31, 1999.

§ 19035

Amended by Stats. 2016, Ch. 50, Sec. 108. (SB 1005) Effective January 1, 2017.

In the case of a joint return filed by spouses, the notice of proposed deficiency assessment may be a single joint notice, except that if the Franchise Tax Board is notified by either spouse that separate residences have been established, it shall mail to each spouse, in lieu of the single joint notice, duplicate originals of the joint notice.

§ 19036

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

Notwithstanding any provision to the contrary, any interest, penalty or addition to tax, imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part may be assessed and collected in the same manner as if it were a deficiency.

§ 19041

Amended by Stats. 1999, Ch. 931, Sec. 11. Effective October 10, 1999.

(a)Within 60 days after the mailing of each notice of proposed deficiency assessment the taxpayer may file with the Franchise Tax Board a written protest against the proposed deficiency assessment, specifying in the protest the grounds upon which it is based.

(b)Any protest filed with the Franchise Tax Board on or before the last date specified for filing that protest by the Franchise Tax Board in the notice of proposed deficiency assessment (according to Section 19034)

shall be treated as timely filed.

(c)The amendments made by the act adding this subdivision shall apply to any notice mailed after December 31, 1999.

§ 19041.5

Amended by Stats. 2005, Ch. 691, Sec. 45. Effective October 7, 2005.

(a)Notwithstanding any other provision of this part, Part 10 (commencing with Section 17001), or Part 11 (commencing with Section 23001), the provisions of Section 6603 of the Internal Revenue Code, relating to deposits made to suspend the running of interest on potential underpayments, shall apply, except as otherwise provided. A deposit shall not be considered a payment of tax for purposes of filing a claim for refund pursuant to Section 19306, converting an administrative action to an action on a claim pursuant to Section 19335,

or filing an action pursuant to Section 19384, until either of the following occurs:

(1)The taxpayer provides a written statement to the Franchise Tax Board specifying that the deposit shall be a payment of tax for purposes of Section 19306, 19335, or 19384.

(2)The deposit is used to pay a final tax liability.

(b)Section 6603(d) of the Internal Revenue Code is modified to substitute the phrase “notice of proposed deficiency assessment under Article 3 of Chapter 4 of this part” for “30-day letter” in each place that the phrase “30-day letter” appears.

(c)In the case of any amount held by the Franchise Tax Board as a deposit in the nature of a cash bond pursuant to the provisions of this section prior to the amendments made by the act adding this

subdivision, the date that the taxpayer identifies that amount as a deposit made pursuant to this section, as amended by the act adding this subdivision, shall be treated as the date that the amount is deposited for purposes of this section, as amended by the act adding this subdivision.

§ 19042

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

If no protest is filed, the amount of the proposed deficiency assessment becomes final upon the expiration of the 60-day period provided in Section 19041.

§ 19043

Amended by Stats. 2001, Ch. 191, Sec. 2. Effective January 1, 2002.

(a)For purposes of this part, “deficiency” means the amount by which the tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) exceeds the excess of—

(1)The sum of—

(A)The amount shown as the tax by the taxpayer on an original or amended return, if an original or amended return was filed, plus

(B)The amounts previously assessed (or collected without assessment) as a deficiency, over—

(2)The amount of rebates, as defined in paragraph (2) of subdivision (b), made.

(b)For purposes of this section:

(1)The tax imposed by Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001) and the tax shown on an original or amended return shall both be determined without regard to payments on account of estimated tax, and without regard to the credit under Section 19002.

(2)“Rebate” means so much of an abatement, credit, refund, or other repayment, as was made on the ground that the tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) was less than the excess of the

amount specified in paragraph (1) of subdivision (a) over the rebates previously made.

§ 19043.5

Added by Stats. 2001, Ch. 191, Sec. 3. Effective January 1, 2002.

(a)(1) If the Franchise Tax Board determines that the amount of a carryover disclosed by the taxpayer on an original or amended return, including an amended return reporting federal adjustments pursuant to Section 18622, is more than the amount of the carryover disclosed by its own examination, it may mail a notice or notices to the taxpayer of the proposed carryover adjustment and the proposed adjusted carryover amount.

(2)For purposes of this

section, “carryover” means the amount of a credit, loss, deduction, or other item that is shown on an original or amended return for carry forward to a subsequent taxable year.

(b)Except as otherwise provided in this section, the provisions of this article applicable to a proposed deficiency assessment shall be applicable to a proposed adjusted carryover amount, including protest and appeal rights as if that proposed adjusted carryover amount were a proposed deficiency assessment.

(c)(1) A proposed adjusted carryover amount shall become a final adjusted carryover amount under this section following a determination of the board regarding that proposed adjusted carryover amount that becomes final pursuant to the provisions of Section 19048.

(2)A final adjusted carryover amount shall be binding

and conclusive with respect to the amount of that carryover for purposes of Part 10 (commencing with Section 17001), this part, and Part 11 (commencing with Section 23001), except in the following circumstances:

(A)In the event of fraud, malfeasance, or misrepresentation of a material fact.

(B)Subject to any provision of the Revenue and Taxation Code that expressly provides that effect be given to that provision notwithstanding any other law or rule of law.

(C)Subject to any law that is, or becomes, operative with respect to a taxable year affected by the final adjusted carryover amount.

(D)Subject to any final federal adjustment that is made with respect to the taxpayer’s federal income tax liability for a taxable year affected by the final

adjusted carryover amount.

(E)In an action brought pursuant to provisions of Section 19382.

(d)(1) In any case where there is a final adjusted carryover amount with respect to a carryover, the taxpayer shall report that final adjusted carryover amount on an original or amended return for any subsequent year.

(2)If a taxpayer fails to comply with paragraph (1), then any adjustment required to make the amount of the carryover shown on the return for any year consistent with the final adjusted carryover amount shall be treated as arising out of a mathematical error and assessed and collected under Section 19051.

(e)Except as provided in subdivision (c), this section shall not affect the determination, issuance, assessment,

collection, or validity of a deficiency assessment under this part.

§ 19044

Amended by Stats. 1995, Ch. 938, Sec. 87. Effective January 1, 1996. Operative July 1, 1997, by Sec. 98 of Ch. 938.

(a)If a protest is filed, the Franchise Tax Board shall reconsider the assessment of the deficiency and, if the taxpayer has so requested in his or her protest, shall grant the taxpayer or his or her authorized representatives an oral hearing. Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to a hearing under this subdivision.

(b)The Franchise Tax Board may act on the protest in whole or in part. In the

event the Franchise Tax Board acts on the protest in part only, the remaining part of the protest shall continue to be under protest until the Franchise Tax Board acts on that part.

§ 19045

Amended by Stats. 1999, Ch. 931, Sec. 12. Effective October 10, 1999.

(a)The Franchise Tax Board’s action upon the protest, whether in whole or in part, is final upon the expiration of 30 days from the date when it mails notice of its action to the taxpayer, unless within that 30-day period the taxpayer appeals in writing from the action of the Franchise Tax Board to the board.

(b)(1) The Franchise Tax Board’s notice of action upon protest shall include the date determined by the Franchise Tax Board as the last day on

which the taxpayer may file an appeal with the board.

(2)Any appeal to the board filed by the taxpayer on or before the date for filing an appeal specified in the notice (pursuant to paragraph (1)) shall be treated as timely filed.

(c)This section shall apply to any notice mailed after December 31, 1999.

§ 19046

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

Two copies of the appeal and two copies of any supporting documents shall be addressed and mailed to the State Board of Equalization at Sacramento, California. Upon receipt of the appeal, the board shall provide one copy of the appeal and one copy of any supporting documents to the Franchise Tax Board at Sacramento, California.

§ 19047

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

The board shall hear and determine the appeal and thereafter shall forthwith notify the taxpayer and the Franchise Tax Board of its determination and the reasons therefor.

§ 19048

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

The board’s determination becomes final upon the expiration of 30 days from the time of the determination unless within the 30-day period the taxpayer or the Franchise Tax Board files a petition for rehearing with the board. In that event the determination becomes final upon the expiration of 30 days from the time the board issues its opinion on the petition.

§ 19049

Amended by Stats. 2007, Ch. 281, Sec. 2. Effective January 1, 2008.

(a)When a deficiency is determined and the assessment becomes final, the Franchise Tax Board shall mail notice and demand to the taxpayer for the payment thereof. The deficiency assessed is due and payable at the expiration of 15 days from the date of the notice and demand.

(b)The amendments made by Chapter 600 of the Statutes of 1997 are operative for notices issued on or after January 1, 1998.

(c)The

notice described in subdivision (a) shall be mailed in a manner that includes a postmark. For purposes of this subdivision, postmark means a postal marking made on a letter, package, or postcard indicating the date on which the item is delivered to the United States Postal Service.

(d)The amendments made to this section by the act adding this subdivision are operative for notices issued on or after January 1, 2008.

§ 19050

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

A certificate by the Franchise Tax Board or of the board, as the case may be, of the mailing of the notices specified in this article is prima facie evidence of the assessment of the deficiency and of the giving of the notices.

§ 19051

Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.

Any amount of tax in excess of that disclosed by the return, due to a mathematical error, notice of which has been mailed to the taxpayer, is not a deficiency assessment. The taxpayer has no right of protest or appeal based on that notice; however, the amount of tax erroneously omitted in the return may be assessed and collected in the manner provided in this part as in the case of deficiency assessments.

§ 19052

Amended by Stats. 2002, Ch. 374, Sec. 5. Effective January 1, 2003.

Notwithstanding any other provision of this part to the contrary, adjustments to refundable credits (including credits claimed on or after January 1, 2001, in accordance with Section 17052.6) may be made pursuant to Section 19054, and claimants shall have the right to claim a refund of adjusted amounts within the period provided in Section 19306, 19307, 19308, or 19311, whichever period expires later.

§ 19054

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§ 19057

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§ 19058

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§ 19059

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§ 19060

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§ 19061

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