Article 2 - Deficiency Determinations

California Revenue and Taxation Code — §§ 43201-43204

Sections (5)

Amended by Stats. 2024, Ch. 499, Sec. 79. (SB 1528) Effective January 1, 2025.

(a)If the California Department of Tax and Fee Administration is dissatisfied with the return or report filed or the amount of tax paid to the state by any taxpayer, or if no return or report has been filed or no payment or payments of the taxes have been made to the state by a taxpayer, the California Department of Tax and Fee Administration may compute and determine the amount to be paid, based upon any information available to it. In addition, where the California Department of Tax and Fee Administration is authorized to collect a tax for another state agency, the California Department of Tax and Fee Administration may issue a notice of determination or similar billing document for collection of the tax. One or more additional determinations may be made of the amount of tax due for

one, or for more than one, period. The amount of tax so determined shall bear interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the amount of the tax, or any portion thereof, became due and payable until the date of payment. In making a determination, the California Department of Tax and Fee Administration may offset overpayments for a period or periods against underpayments for another period or periods and against the interest and penalties on the underpayments.

(b)If any part of the deficiency for which a determination of an additional amount due is found to have been occasioned by negligence or intentional disregard of this part or authorized regulations, a penalty of 10 percent of the amount of the determination shall be added, plus interest as provided above.

(c)If any part of the deficiency for

which a determination of an additional amount due is found to be occasioned by fraud or an intent to evade this part or authorized regulations, a penalty of 25 percent of the amount of the determination shall be added, plus interest as provided in subdivision (a).

(d)The California Department of Tax and Fee Administration shall give to the taxpayer written notice of its determination. The notice shall be served in one of the following manners:

(1)By placing the notice in a sealed envelope, with postage

paid, addressed to the taxpayer at their address as it appears in the records of the California Department of Tax and Fee Administration.

Service made pursuant to this paragraph shall be deemed complete at the time of the deposit of the notice in a United States Post Office, or a mailbox, sub-post office, substation, or mail chute, or other facility regularly maintained or provided by the United States Postal Service without extension of time for any reason.

(2)By personally delivering the notice to the person to be served. Service made pursuant to this paragraph shall be deemed complete at the time of 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.

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

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

(ii) The California Department of Tax and Fee Administration has evidence that the taxpayer no longer receives mail at the address of record and has previously

provided an address for electronic mail.

(B) Service provided pursuant to subparagraph (A) shall be deemed complete at the time the California Department of Tax and Fee Administration electronically transmits the notice via the taxpayer’s secure web portal, without extension of time for any reason.

(e)This section shall not apply to any fee imposed pursuant to Section 25205.5 or 25205.5.2 of the Health and Safety Code for any return or payment that becomes due on or after November 30, 2024.

§ 43201.01

Amended by Stats. 2024, Ch. 499, Sec. 80. (SB 1528) Effective January 1, 2025.

(a)If the California Department of Tax and Fee Administration is dissatisfied with the return or report filed or the amount of fee paid to the state by any feepayer, or if no return or report has been filed or no payment or payments of the fees have been made to the state by a feepayer, the California Department of Tax and Fee Administration may compute and determine the amount to be paid, based upon any information available to it. In addition, where the California Department of Tax and Fee Administration is authorized to collect a fee for another state agency, the California Department of Tax and Fee Administration may issue a notice of determination or similar billing document for collection of the fee. One or more additional determinations may be made of the amount of fee due for one, or for more than one, period. The

amount of fee so determined shall bear interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the amount of the fee, or any portion thereof, became due and payable until the date of payment. In making a determination, the California Department of Tax and Fee Administration may offset overpayments for a period or periods against underpayments for another period or periods and against the interest and penalties on the underpayments.

(c)If a feepayer willfully or knowingly provides incorrect

information or withholds information that results in a deficient payment or nonpayment, as determined by California Department of Tax and Fee Administration, a penalty of 300 percent of the amount of the determination shall be added.

(d)Notwithstanding any other limitation to the maximum penalty amount imposed for any one payment or return specified in this part, the penalties imposed pursuant to this section shall be in addition to any other penalties imposed under this part.

(e)The California Department of Tax and Fee Administration shall give to the feepayer written notice of its determination. The notice shall be served in one of the following manners:

(1)By placing the notice

in a sealed envelope, with postage paid, addressed to the feepayer at their address as it appears in the records of the California Department of Tax and Fee Administration. Service made pursuant to this paragraph shall be deemed complete at the time of the deposit of the notice in a United States post office, or a mailbox, subpost office, substation or mail chute, or other facility regularly maintained or provided by the United States Postal Service without extension of time for any reason.

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

(i)The feepayer requests the notice of determination to be sent

electronically via secure transmission.

(ii) The California Department of Tax and Fee Administration has evidence that the feepayer no longer receives mail at the address of record and has previously provided an address for electronic mail.

(B) Service provided pursuant to subparagraph (A) shall be deemed complete at the time the California Department of Tax and Fee Administration electronically transmits the notice via the feepayer’s secure web portal, without extension of time for any reason.

(f)This section shall only apply to any return or payment that becomes due on or after November 30, 2024, and shall only apply to the generation and handling fee imposed pursuant to Section 25205.5 or 25205.5.2 of the Health and Safety Code.

§ 43202

Amended by Stats. 2024, Ch. 499, Sec. 81. (SB 1528) Effective January 1, 2025.

(a)Except in the case of fraud, intent to evade this part, authorized rules and regulations, or failure to make a return, every notice of a determination of an additional amount due shall be served within three years after the date when the amount should have been paid or the return was due, or within three years after the return was filed, whichever period expires later. In the case of failure to make a return, the notice of determination shall be

served

within eight years after the date the report or return was due.

(b)The limitation specified in subdivision (a) shall not apply to a liability for the fees described in subdivisions (b) and (c) of Section 25205.25 of the Health and Safety Code that is proposed to be determined with respect to a taxpayer if a notice of determination for the fee imposed pursuant to Section 25205.2 of the Health and Safety Code has been given pursuant to Section 43201 or 43350 for the same period and site, or with respect to a taxpayer that has paid the fee imposed by Section 25205.2 of the Health and Safety Code for the same period and site. The notice of determination with respect to the fees described in subdivisions (b) and (c) of Section 25205.25 of the Health and Safety Code shall be given within 90 days from the date of final action of the California Department of Tax and Fee Administration or final judicial action, whichever is later,

concerning liability for the fee imposed pursuant to Section 25205.2 of the Health and Safety Code.

(c)The limitation specified in subdivision (a) shall not apply to a liability for the fee imposed pursuant to Section 25205.2 of the Health and Safety Code that is proposed to be determined with respect to a taxpayer if a notice of determination for the fees described in subdivisions (b) and (c) of Section 25205.25 of the Health and Safety Code has been given pursuant to Section 43201 or 43350 for the same period and site, or with respect to a taxpayer that has paid the fees described in subdivisions (b) and (c) of Section 25205.25 of the Health and Safety Code for the same period and site. The notice of determination with respect to the fee imposed pursuant to Section 25205.2 of the Health and Safety Code shall be given within 90 days from the date of final action of the California Department of Tax and Fee Administration or final judicial

action, whichever is later, concerning liability for the fees described in subdivisions (b) and (c) of Section 25205.25 of the Health and Safety Code.

§ 43203

Amended by Stats. 2024, Ch. 499, Sec. 82. (SB 1528) Effective January 1, 2025.

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 California Department of Tax and Fee Administration, by the fiduciary of the estate or trust or by any other person liable for the tax or any portion thereof.

§ 43204

Amended by Stats. 2024, Ch. 499, Sec. 83. (SB 1528) Effective January 1, 2025.

If before the expiration of the time prescribed in Section 43202 for serving a notice of deficiency determination the taxpayer has consented in writing to service of the notice after such 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.