text:
(a) The Franchise Tax Board shall issue a first notice of the imposition of a penalty for noncompliance with Title 21 (commencing with Section 100000) of the Government Code to an eligible employer after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employer’s noncompliance

(b) Unless an appeal is filed pursuant to Section 19288, within 90 days after the issuance of the first notice, as provided in subdivision (a), the Franchise Tax Board shall issue a second notice of the imposition of a penalty for noncompliance under Title 21 (commencing with Section 100000) of the Government Code to an eligible employer.

(c) If an appeal is filed pursuant to Section 19288, within 90 days after a determination by the Franchise Tax Board sustaining the penalty, the Franchise Tax Board shall issue a second notice of the imposition of a penalty for noncompliance under Title 21 (commencing with Section 100000) of the Government Code to an eligible employer.


kind: section

code: RTC

text:
(a) Within 90 days after the issuance of the notice described in subdivision (a) of Section 19287, an eligible employer may appeal the imposition of a penalty for noncompliance under Title 21 (commencing with Section 100000) of the Government Code.

(b) The Franchise Tax Board shall hear and determine an eligible employer’s appeal of the CalSavers Retirement Savings Board’s imposition of a penalty as provided in Government Code Section 100033.

(c) The Franchise Tax Board, upon the conclusion of the appeal shall notify the eligible employer and the CalSavers Retirement Savings Board of its determination in writing.

history: (History: Added by Stats. 2020, Ch. 21, Sec. 15. (AB 102) Effective June 29, 2020.)

division: 2. OTHER TAXES

chapter: 5. Collection of Tax

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 5. Collection of Tax > 6. Collection of Amounts Imposed by CalSavers Retirement Savings Board and Related Appeals


text: Amounts collected under this article shall be transmitted to the CalSavers Retirement Savings Board for deposit in the CalSavers Retirement Savings Trust pursuant to Title 21 (commencing with Section 100000) of the Government Code, or remitted by means of the Fi$Cal accounting system.

part: 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS

article: 6. Collection of Amounts Imposed by CalSavers Retirement Savings Board and Related Appeals


text: The Franchise Tax Board shall seek additional resources needed to accept referrals from CalSavers Retirement Savings Board pursuant to Section 19286.


text: The Franchise Tax Board may prescribe regulations necessary or appropriate to carry out the purposes of this article. The Administrative Procedure Act (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 regulation adopted by the Franchise Tax Board, pursuant to this article.


text:
(a) The Franchise Tax Board may enter into an agreement to collect any delinquent tax debt due to the Internal Revenue Service or any other state imposing an income tax or tax measured by income if, pursuant to Section 19377.5, the Internal Revenue Service or that state has entered into an agreement to collect delinquent tax debts due the Franchise Tax Board.

(b) Upon written notice to the debtor from the Franchise Tax Board, any amount referred to the Franchise Tax Board under subdivision (a) shall be treated as final and due and payable to the State of California, and shall be collected from the debtor by the Franchise Tax Board in any manner authorized under the law for collection of a delinquent income tax liability, including, but not limited to, the recording of a notice of state tax lien under Article 2 (commencing with Section 7170) of Chapter 14 of Division 7 of Title 1 of the Government Code, and the issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes.

(c) Part 10 (commencing with Section 17001), this part, Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001) shall apply to amounts referred under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this section, except to the extent that any provision is either inconsistent with this section or is not relevant to this section.

(d) The activities required to implement and administer this section shall not interfere with the primary mission of the Franchise Tax Board to administer Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001).

(e) In no event shall a collection under this section be construed as a payment of income taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001), a penalty imposed under Part 32 (commencing with Section 61000), or a premium assistance subsidy under Title 25 (commencing with Section 100800) of the Government Code.

history: (History: Amended by Stats. 2019, Ch. 38, Sec. 38. (SB 78) Effective June 27, 2019.)

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 5. Collection of Tax > 7. Collection of Tax Debts Due to the Internal Revenue Service or Other States


text:
(a) For purposes of this section, the following definitions shall apply:

(1) “CalOSBA” or “office” means the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development.

(2) “Recaptured grant amount” means the amount identified in any recommendation for recapture of a grant approved, in whole or in part, by CalOSBA.

(b) CalOSBA shall provide to the Franchise Tax Board a list of grantees and their respective recaptured grant amounts as approved, in whole or in part, by CalOSBA pursuant to Section 12100.82.5 or 12100.91.5 of the Government Code for collection.

(c) Any recaptured grant amount shall be treated as final and due and payable to the State of California, and shall be collected from the grantee by the Franchise Tax Board in any manner authorized under the law for collection of a delinquent personal income tax liability, including, but not limited to, issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes, and any overpayment of any liability imposed under this part, Part 10 (commencing with Section 17001), or Part 11 (commencing with Section 23001) shall be credited against any balance due pursuant to this section.

(d) The Controller may, in the Controller’s discretion, offset any amount due a grantee by a state agency against any recaptured grant amount pursuant to Article 2 (commencing with Section 12410) of Chapter 5 of Part 2 of Division 3 of Title 2 of the Government Code.

(e) This part, Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001) shall apply to amounts provided to the Franchise Tax Board under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this article, except to the extent that any provision is either inconsistent with this article or is not relevant to this article.

(f) For amounts that CalOSBA provided to the Franchise Tax Board for collection under subdivision (b), interest shall accrue at the greater of the rate applicable to the amount due being collected or the rate provided under Section 19521. When notice of the amount due includes interest and is mailed to the grantee and the amount is paid within 15 days after the date of notice, interest shall not be imposed for the period after the date of notice.

(g) Any information, information sources, or enforcement remedies and capabilities available to CalOSBA or the state with respect to the recaptured grant amount described in subdivision (b) shall be available to the Franchise Tax Board to be used in conjunction with, or independent of, the information, information sources, or remedies and capabilities available to the Franchise Tax Board.

(h) The activities required to implement and administer this article shall not interfere with the primary mission of the Franchise Tax Board to administer Part 10 (commencing with Section 17001), this part, and Part 11 (commencing with Section 23001).

(i) A collection under this article is not a payment of income taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).

history: (History: Amended (as added by Stats. 2021, Ch. 7, Sec. 3) by Stats. 2021, Ch. 256, Sec. 17. (AB 176) Effective September 23, 2021. Repealed as of December 1, 2030, pursuant to Section 19295.)

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 5. Collection of Tax > 8. Collection of Recaptured California Small Business COVID-19 Relief Grants


text: This article shall remain in effect only until December 1, 2030, and as of that date is repealed.

history: (History: Added by Stats. 2021, Ch. 7, Sec. 3. (SB 87) Effective February 23, 2021. Repealed as of December 1, 2030, by its own provisions. Note: Repeal affects Article 8, commencing with Section 19294.)

article: 8. Collection of Recaptured California Small Business COVID-19 Relief Grants


text:
(a) For purposes of this section, all the following definitions shall apply:

(1) “California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program” or “program” means the grant program established under Article 9.1 (commencing with Section 12100.96) of Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code.

(2) “GO-Biz” or “office” means the Governor’s Office of Business and Economic Development.

(3) “Recaptured grant amount” means the amount identified in any recommendation for recapture of a grant approved, in whole or in part, by GO-Biz.

(b) GO-Biz shall provide to the Franchise Tax Board a list of grantees and their respective recaptured grant amounts as approved, in whole or in part, by GO-Biz pursuant to Section 12100.97 of the Government Code for collection.

(c) Any recaptured grant amount shall be treated as final and due and payable to the State of California, and shall be collected from the grantee by the Franchise Tax Board in any manner authorized under the law for collection of a delinquent personal income tax liability, including, but not limited to, issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes, and any overpayment of any liability imposed under this part, Part 10 (commencing with Section 17001), or Part 11 (commencing with Section 23001) shall be credited against any balance due pursuant to this section.

(d) The Controller may, in the Controller’s discretion, offset any amount due a grantee by a state agency against any recaptured grant amount pursuant to Article 2 (commencing with Section 12410) of Chapter 5 of Part 2 of Division 3 of Title 2 of the Government Code.

(e) This part, Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001) shall apply to amounts provided to the Franchise Tax Board under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this article, except to the extent that any provision is either inconsistent with this article or is not relevant to this article.

(f) For amounts that GO-Biz provided to the Franchise Tax Board for collection under subdivision (b), interest shall accrue at the greater of the rate applicable to the amount due being collected or the rate provided under Section 19521. When notice of the amount due includes interest and is mailed to the grantee and the amount is paid within 15 days after the date of notice, interest shall not be imposed for the period after the date of notice.

(g) Any information, information sources, or enforcement remedies and capabilities available to GO-Biz or the state with respect to the recaptured grant amount described in subdivision (b) shall be available to the Franchise Tax Board to be used in conjunction with, or independent of, the information, information sources, or remedies and capabilities available to the Franchise Tax Board.

(h) The activities required to implement and administer this article shall not interfere with the primary mission of the Franchise Tax Board to administer Part 10 (commencing with Section 17001), this part, and Part 11 (commencing with Section 23001).

(i) A collection under this article is not a payment of income taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).

history: (History: Added by Stats. 2022, Ch. 736, Sec. 5. (AB 152) Effective September 29, 2022. Repealed as of December 1, 2030, pursuant to Section 19295.2.)

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 5. Collection of Tax > 8.1. Collection of Recaptured California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grants


history: (History: Added by Stats. 2022, Ch. 736, Sec. 5. (AB 152) Effective September 29, 2022. Repealed as of December 1, 2030, by its own provisions. Note: Repeal affects Article 8.1, commencing with Section 19295.1.)

article: 8.1. Collection of Recaptured California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grants


text:
For purposes of this article, all of the following definitions apply:

(a) “California Competes Grant Program” means the program that authorizes the grants allowed under Article 4.4 (commencing with Section 12096.6) of Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code.

(b) “Committee” means the California Competes Tax Credit Committee established in Section 18410.2.

(c) “GO-Biz” means the Governor’s Office of Business and Economic Development.

(d) “Qualified grantee” means an applicant for grants the California Competes Grant Program that satisfies the requirements of subdivision (b) of Section 12096.6.1 of the Government Code.

(e) “Recaptured grant amount” shall mean the amount identified in any recommendation for recapture of a grant approved, in whole or in part, by the committee pursuant to the California Competes Grant Program and Section 18410.2 of this code.

history: (History: Added by renumbering Section 19292 by Stats. 2021, Ch. 256, Sec. 19. (AB 176) Effective September 23, 2021.)

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 5. Collection of Tax > 9. Collection of Recaptured California Competes Grants


text:
(a) GO-Biz shall provide to the Franchise Tax Board a list of qualified grantees and their respective recaptured grant amounts as approved, in whole or in part, by the committee pursuant to Section 18410.2 for collection.

(b) Any recaptured grant amount shall be treated as final and due and payable to the State of California, and shall be collected from the qualified grantee by the Franchise Tax Board in any manner authorized under the law for collection of a delinquent personal income tax liability, including, but not limited to, issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes, and any overpayment of any liability imposed under this part or, Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) shall be credited against any balance due pursuant to this section.

(c) The Controller may, in the Controller’s discretion, offset any amount due a qualified grantee by a state agency against any recaptured grant amount pursuant to Article 2 (commencing with Section 12410) of Chapter 5 of Part 2 of Division 3 of Title 2 of the Government Code.

(d) This part and Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001) shall apply to amounts provided to the Franchise Tax Board under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this article, except to the extent that any provision is either inconsistent with this article or is not relevant to this article.

(e) For amounts that GO-Biz provided to the Franchise Tax Board for collection under subdivision (a), interest shall accrue at the greater of the rate applicable to the amount due being collected or the rate provided under Section 19521. When notice of the amount due includes interest and is mailed to the qualified grantee and the amount is paid within 15 days after the date of notice, interest shall not be imposed for the period after the date of notice.

(f) Any information, information sources, or enforcement remedies and capabilities available to GO-Biz or the state with respect to the recaptured grant amount described in subdivision (a) shall be available to the Franchise Tax Board to be used in conjunction with, or independent of, the information, information sources, or remedies and capabilities available to the Franchise Tax Board.

(g) The activities required to implement and administer this article shall not interfere with the primary mission of the Franchise Tax Board to administer Part 10 (commencing with Section 17001), this part, and Part 11 (commencing with Section 23001).

(h) A collection under this article is not a payment of income taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) of Division 2 this code.

history: (History: Added by renumbering Section 19293 by Stats. 2021, Ch. 256, Sec. 20. (AB 176) Effective September 23, 2021.)

article: 9. Collection of Recaptured California Competes Grants


text:
(a) The Franchise Tax Board and GO-Biz may prescribe regulations as necessary or appropriate to carry out the purposes of this article.

(b) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of the Government Code) shall not apply to any regulation, standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board or GO-Biz pursuant to this article.

(c) Except as provided in this article, Section 19542 shall apply to all information obtained by the Franchise Tax Board and GO-Biz for the purpose of administering the California Competes Grant Program.

(d) Notwithstanding Section 19542, the Franchise Tax Board may disclose information to GO-Biz and GO-Biz may disclose information to the Franchise Tax Board to facilitate the collection of recaptured grant amounts under this article.

history: (History: Added by renumbering Section 19294 (as added by Stats. 2021, Ch. 74, Sec. 22) by Stats. 2021, Ch. 256, Sec. 21. (AB 176) Effective September 23, 2021.)


text:
(a) If the Franchise Tax Board or the board, as the case may be, finds that there has been an overpayment of any liability imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part by a taxpayer for any year for any reason, the amount of the overpayment may be credited against any amount then due from the taxpayer and the balance shall be refunded to the taxpayer.

(b) In the case of a joint return filed under Section 18521, the amount of the overpayment may be credited against the amount then due from both taxpayers and the balance shall be refunded to both taxpayers in the names under which the return was paid.

(c) In the case of a corporation, the balance shall be refunded to the taxpayer or its successor through reorganization, merger, or consolidation, or to its shareholders upon dissolution.

history: (History: Amended by Stats. 1997, Ch. 605, Sec. 35. Effective January 1, 1998.)

chapter: 6. Overpayments and Refunds

article: 1. Claim for Refund

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 6. Overpayments and Refunds > 1. Claim for Refund


text: If the Franchise Tax Board determines that the taxpayer paid an amount not required to be paid under this part, the Franchise Tax Board shall set forth that fact in its records and may either credit the amount on any amounts then due and payable under this part from the taxpayer by whom the amount was paid or refund the amount or the balance to the taxpayer or the taxpayer’s successors, administrators, or executors.

history: (History: Amended by Stats. 1994, Ch. 726, Sec. 35. Effective September 22, 1994.)

article: 1. Claim for Refund


text: The Franchise Tax Board shall revise returns required to be filed pursuant to Article 1 (commencing with Section 18501) of Chapter 2 of Part 10.2 of Division 2 to allow a taxpayer, who is an individual, to designate more than one account at financial institutions for direct deposit of the taxpayer’s refund.

history: (History: Added by Stats. 2006, Ch. 90, Sec. 1. Effective January 1, 2007.)

article: 1. Claim for Refund


text:
(a) The Franchise Tax Board shall revise taxpayer form instructions, for returns required to be filed, pursuant to Article 1 (commencing with Section 18501) of Chapter 2, to include information about the ability of a taxpayer to directly deposit a portion of the refund into the Golden State Scholarshare College Savings Trust or into the California ABLE Program Trust.

(b) The Scholarshare Investment Board shall provide the Franchise Tax Board with a description of the Golden State Scholarshare College Savings Trust on or before a specified date provided by the Franchise Tax Board. The length of the description shall be five lines or less.

(c) The California ABLE Act Board shall provide the Franchise Tax Board with a description of the California ABLE Program Trust on or before a specified date provided by the Franchise Tax Board. The length of the description shall be five lines or less.

(d) The Franchise Tax Board shall revise the taxpayer form instructions in the most cost-effective manner.

(e) For purposes of this section, “Golden State Scholarshare College Savings Trust” has the meaning set forth in subdivision (e) of Section 69980 of the Education Code.

(f) For purposes of this section, “California ABLE Program Trust” has the meaning set forth in Section 4875 of the Welfare and Institutions Code.

history: (History: Amended by Stats. 2025, Ch. 722, Sec. 1. (AB 1076) Effective January 1, 2026.)

article: 1. Claim for Refund


text:
(a) No credit or refund shall be allowed or made after a period ending four years from the date the return was filed (if filed within the time prescribed by Section 18567 or 18604, whichever is applicable), four years from the last day prescribed for filing the return (determined without regard to any extension of time for filing the return), or after one year from the date of the overpayment, whichever period expires later, unless before the expiration of that period a claim therefor is filed by the taxpayer, or unless before the expiration of that period the Franchise Tax Board allows a credit, makes a refund, or mails a notice of proposed overpayment on a preprinted form prescribed by the Franchise Tax Board.

(b) The amendments to this section by the act adding this subdivision shall be applied to all claims and refunds, without regard to taxable year, for which the statute of limitations has not expired on the date that this act takes effect.

history: (History: Amended by Stats. 2001, Ch. 543, Sec. 12. Effective January 1, 2002.)

article: 1. Claim for Refund


text: For purposes of Section 19306, a return filed within four years from the last day prescribed for filing the return showing a credit allowable by Section 19002 or estimated tax paid pursuant to Section 19023, 19024, or 19136 in excess of the tax due, shall be considered a claim for refund of the excess if the amount thereof is more than one dollar ($1). No refund of tax withheld or estimated tax paid shall be allowed to an employee or taxpayer who fails to file a return for the taxable year in respect of which the tax withheld or estimated tax was allowable as a credit.

history: (History: Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

article: 1. Claim for Refund


text:
The period within which a claim for credit or refund may be filed, or credit or refund allowed or made if no claim is filed, shall be the period within which the Franchise Tax Board may mail a notice of proposed deficiency assessment under the same circumstances, if either of the following apply:

(a) The taxpayer has, within the period prescribed in Section 19306, agreed in writing, under Article 3 (commencing with Section 19031) of Chapter 4, to extend the time within which the Franchise Tax Board may propose a deficiency assessment.

(b) The taxpayer has agreed with the United States Commissioner of Internal Revenue for an extension (or renewals thereof) of the period for proposing and assessing deficiencies in federal income tax for any year.

article: 1. Claim for Refund


text: Section 19306 shall apply to any claim filed, or credit or refund allowed or made, before the execution of an agreement pursuant to Section 19308.

article: 1. Claim for Refund


text:
(a) (1) If a change or correction is made or allowed by the Commissioner of Internal Revenue or other officer of the United States or other competent authority, a claim for credit or refund resulting from the adjustment may be filed by the taxpayer within two years from the date of the final federal determination (as defined in Section 18622 or 18622.5), or within the period provided in Section 19306, 19307, 19308, or 19316, whichever period expires later.

(2) Within two years of the date of the final determination (as defined in Section 18622 or 18622.5) or within the period provided in Section 19306, 19307, or 19308, whichever period expires later, the Franchise Tax Board may allow a credit, make a refund, or mail to the taxpayer a notice of proposed overpayment resulting from the final federal determination.

(b) The amendments made by the act adding this paragraph shall apply, without regard to taxable year, to federal determinations that become final on or after the effective date of the act adding this paragraph.

(c) (1) For adjustments resulting in a tax imposed under paragraph (1) of subdivision (c) of Section 18622.5, paragraph (1) of subdivision (a) is modified by substituting “partnership” for “taxpayer.”

(2) This subdivision shall apply to final federal determinations assessed pursuant to amendments made to Subchapter C of Chapter 63 of the Internal Revenue Code as in effect January 1, 2018.

history: (History: Amended by Stats. 2019, Ch. 332, Sec. 2. (SB 790) Effective January 1, 2020.)

article: 1. Claim for Refund


text:
(a) If any taxes paid to another state result in an allowable credit under Section 18001, 18002, 18003, 18004, 18005, or 18006, a claim for credit or refund of an overpayment of income tax attributable to a credit allowable under any of these sections may be filed within one year from the date tax is paid to the other state or within the period provided in Section 19306, whichever period expires later.

(b) This section shall apply to taxes paid to another state on or after January 1, 2009.

history: (History: Added by Stats. 2008, Ch. 305, Sec. 6. Effective January 1, 2009. Note: See Sec. 12 of Ch. 305.)

article: 1. Claim for Refund


text: Insofar as the claim for credit or refund relates to an overpayment on account of the deductibility, under Section 24348 of this code or Section 166 of the Internal Revenue Code, of a debt as one which became worthless, or a loss from worthlessness of a security under Section 24347 or 24348 of this code or Section 165(g) or 166 of the Internal Revenue Code, or an erroneous inclusion of an amount attributable to the recovery of a bad debt, prior tax or delinquency amount, under Section 111 of the Internal Revenue Code due to an adjustment of a bad debt deduction under Section 24348 of this code or Section 166 of the Internal Revenue Code, or a loss deduction from worthlessness of a security under Section 24347 of this code or Section 165(g) of the Internal Revenue Code, in lieu of the period of limitations prescribed in Section 19306, the period shall be seven years from the date prescribed by law for filing the return for the year with respect to which the claim is made.

article: 1. Claim for Refund


text:
(a) In the case of any tax imposed by Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) with respect to any person, the period for filing a claim for credit or refund of any overpayment attributable to any partnership item of a federally registered partnership shall not expire before the later of the following: (1) The date which is five years after the date prescribed by law (including extensions thereof) for filing the partnership return for the partnership taxable year in which the item arose.(2) If an agreement under Section 6501(c)(4) of the Internal Revenue Code of 1954 extending the period for the assessment of any deficiency attributable to the partnership item is made before the date specified in paragraph (1), the date six months after the expiration of the extension.In any case to which the preceding sentence applies, the amount of the credit or refund may exceed the portion of the tax paid within the period provided in Section 19306 or 19308, whichever is applicable.

(b) For purposes of this subdivision, “partnership item” and “federally registered partnership” have the same meanings as when used in Section 19063.

article: 1. Claim for Refund


text:
(a) Notwithstanding any statute of limitations otherwise provided for in this part, any overpayment due a taxpayer for any year, shall be allowed as an offset in computing any deficiency in tax, for the same or any other year, if the overpayment results from any of the following:

(1) A transfer of items of income or deductions or both to or from another year for the same taxpayer.

(2) A transfer of items of income or deductions or both for the same year for a related taxpayer described in Section 19110.

(3) A transfer of items of income or deductions, or both, to or from another taxpayer for the same or different years if the items of income or deductions are transferred between affiliated taxpayers whose tax is determined under Chapter 17 (commencing with Section 25101) of Part 11.

(b) The offset provided under subdivision (a) shall not be allowed after the expiration of seven years from the due date of the return or returns on which the overpayment is determined.

(c) No refund shall be allowed under subdivision (a) unless before the period set forth in Section 19306 a claim therefor is filed by the taxpayer or unless before the expiration of that period the Franchise Tax Board has allowed a credit or made a refund.

history: (History: Amended by Stats. 1994, Ch. 726, Sec. 37. Effective September 22, 1994.)

article: 1. Claim for Refund


text:
(a) In the case of an individual taxpayer under the Personal Income Tax Law (Part 10 (commencing with Section 17001)), the running of any period specified in Section 19306, 19308, 19311, 19312, or 19313 shall be suspended during any period during which that individual taxpayer is “financially disabled” as defined in subdivision (b). The financial disability of an individual taxpayer shall be established in accordance with those procedures and requirements specified by the Franchise Tax Board.

(b) (1) For purposes of this section, except as otherwise provided in paragraph (2), an individual taxpayer is “financially disabled” if that individual taxpayer is unable to manage his or her financial affairs by reason of a medically determinable physical or mental impairment that is either deemed to be a terminal impairment or is expected to last for a continuous period of not less than 12 months.

(2) An individual taxpayer shall not be considered to be “financially disabled” for any period during which that individual’s spouse or any other person is legally authorized to act on that individual’s behalf in financial matters.

(c) This section applies to periods of disability commencing before, on, or after the effective date of the act adding this section, but does not apply to any claim or refund that (without regard to this section) is barred by the operation or rule of law, including res judicata, as of the effective date of the act adding this section.

history: (History: Added by Stats. 2002, Ch. 807, Sec. 15. Effective September 23, 2002.)

article: 1. Claim for Refund


text: A refund claim upon which action has become final shall not thereafter be considered a refund claim within the meaning of Section 19306 except to the extent it has been allowed.

article: 1. Claim for Refund


text:
Every claim for refund shall be in writing, shall be signed by the taxpayer or the taxpayer’s authorized representative, and shall state the specific grounds upon which it is founded. A claim filed for or on behalf of a class of taxpayers shall do all of the following:

(a) Be accompanied by written authorization from each taxpayer sought to be included in the class.

(b) Be signed by each taxpayer or taxpayer’s authorized representative.

(c) State the specific grounds on which the claim is founded.

article: 1. Claim for Refund


text:
(a) A claim for refund that is otherwise valid under Section 19322, but that is made in the case in which payment of the entire tax assessed or asserted has not been made, shall be a claim only for purposes of tolling the time periods set forth in Section 19306. For all other purposes (including the application of Sections 19323, 19324, 19331, 19335, 19384, and 19385) the claim shall be deemed filed on the date that full payment of the tax is made. However, no credit or refund may be made or allowed for any payment made more than seven years before the date that full payment of the tax is made.

(b) This section shall apply to all claims for refund filed on or after the effective date of the act adding this section, without regard to taxable year.

history: (History: Added by Stats. 2001, Ch. 920, Sec. 25. Effective January 1, 2002.)

article: 1. Claim for Refund


text:
(a) If the Franchise Tax Board disallows any claim for refund, it shall notify the taxpayer accordingly and provide an explanation for the disallowance.

(b) The amendments made by the act adding this subdivision shall apply to disallowances after the 180th day after the effective date of the act adding this subdivision.

history: (History: Amended by Stats. 1999, Ch. 931, Sec. 24. Effective October 10, 1999.)

article: 1. Claim for Refund


text:
(a) Except as provided in subdivision (b), at the expiration of 90 days from the mailing of the notice, the Franchise Tax Board’s action upon the claim is final unless within the 90-day period the taxpayer appeals in writing from the action of the Franchise Tax Board to the board.

(b) If within the period set forth in Section 19384 for filing a suit for refund the Franchise Tax Board receives information which it determines clearly establishes that a disallowed claim should have been allowed, in whole or in part, the Franchise Tax Board shall credit the amount of the overpayment against any taxes due from the taxpayer under this part and the balance shall be refunded to the taxpayer.

article: 1. Claim for Refund


text: No interest shall be allowed or paid with respect to a claim for credit or refund based upon an overpayment which is the result of federal law, including treaties, which reduces taxes for taxable years prior to the enactment date of the federal law or the approval date of the treaty.

article: 1. Claim for Refund


text: If the Franchise Tax Board fails to mail notice of action on any refund claim within six months after the claim is filed, the taxpayer may prior to mailing of notice of action on the refund claim consider the claim disallowed and appeal to the board. For substitution of the 120-day period for the six-month period contained in this section in a Title 11 case, see Section 505(a)(2) of Title 11 of the United States Code.

article: 1. Claim for Refund


text: 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.

article: 1. Claim for Refund


text: 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.

article: 1. Claim for Refund


text: The determination of the board is final upon the expiration of 30 days from the date of the determination unless within the 30-day period, the taxpayer or 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 date the board issues its opinion on the petition.

article: 1. Claim for Refund


text: If, with or after the filing of a protest or an appeal to the State Board of Equalization pursuant to Article 3 (commencing with Section 19031) of Chapter 4, a taxpayer pays the tax protested before the Franchise Tax Board acts upon the protest, or the board upon the appeal, the Franchise Tax Board or board shall treat the protest or the appeal as a claim for refund or an appeal from the denial of a claim for refund filed under this article.

article: 1. Claim for Refund


text:
Interest shall be allowed and paid on any overpayment in respect of any tax, at the adjusted annual rate established pursuant to Section 19521 as follows:

(a) In the case of a credit, from the date of the overpayment to the due date of the amount for which the credit is allowed. Any interest allowed on any credit shall first be credited on any amounts due from the taxpayer under Part 10 (commencing with Section 17001), this part, or Part 11 (commencing with Section 23001).

(b) In the case of a refund, including a refund in excess of tax liability as prescribed in subdivision (j) of Section 17053.5, from the date of the overpayment to a date preceding the date of the refund warrant by not more than 30 days, the date to be determined by the Franchise Tax Board.

history: (History: Amended by Stats. 1997, Ch. 605, Sec. 36. Effective January 1, 1998.)

article: 1. Claim for Refund


text:
(a) Except as provided in subdivisions (b), (c), and (d), if any overpayment of tax is refunded or credited within 90 days after the return is filed, or within 90 days after the last day prescribed for filing the return of tax (determined without regard to any extension of time for filing the return), whichever is later, no interest shall be allowed under Section 19340 on the overpayment.

For the purposes of this section, “overpayment of tax” includes a refund in excess of tax liability as prescribed in subdivision (j) of Section 17053.5.

(b) In the case of returns which set forth no determination or amount of tax liability, or credits other than that allowed under Section 17053.5, and which are filed solely for the purpose of claiming the renter credit, no interest shall be allowed on refunds made within 90 days from the date on which the return is filed, or within 90 days after the last day prescribed for filing the return, whichever is later. This subdivision applies only when communication with the claimant or other verification is necessary to determine entitlement to the claimed credit.

(c) In the case of an individual or fiduciary taxable under Part 10 (commencing with Section 17001), for the 1982 taxable year and each taxable year thereafter, the 90-day time periods specified in subdivision (a) shall be 45 days.

(d) In the case of a return of tax which is filed after the last date prescribed for filing the return (determined with regard to extensions), no interest shall be allowed or paid for any day before the date on which the return is filed.

article: 1. Claim for Refund


text: If the Franchise Tax Board disallows interest on any claim for refund, it shall notify the taxpayer accordingly.

article: 1. Claim for Refund


text: At the expiration of 90 days from the mailing of the notice specified in Section 19342, the Franchise Tax Board’s action upon the disallowance of the interest shall be final unless within the 90-day period, the taxpayer appeals in writing from the action of the Franchise Tax Board to the board.

article: 1. Claim for Refund


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

article: 1. Claim for Refund


text: The determination is final upon the expiration of 30 days from the date of the determination unless within the 30-day period, the taxpayer or 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 date the board issues its opinion upon the petition.

article: 1. Claim for Refund


text: Within 90 days after the mailing of the notice of the Franchise Tax Board’s action disallowing interest upon any refund claim, or, in the case of an appeal to the board from the disallowance of interest on any refund claim, within the 90 days after the board’s determination (including the issuance of a decision, opinion, or dismissal) of the appeal becomes final pursuant to Section 19346, the taxpayer may bring an action against the Franchise Tax Board on the grounds set forth for interest in the claim for the recovery of the interest.

history: (History: Amended by Stats. 1999, Ch. 605, Sec. 2. Effective January 1, 2000.)

article: 1. Claim for Refund


text: If the Franchise Tax Board fails to mail notice of action of disallowance of interest on any refund claim within six months after the interest was claimed, the taxpayer may, prior to mailing notice of action of disallowance of interest on the refund claim, consider the interest disallowed and bring an action against the Franchise Tax Board on the grounds set forth for interest in the claim for the recovery of the interest.

article: 1. Claim for Refund


text: A payment not made incident to a bona fide and orderly discharge of an actual liability or one reasonably assumed to be imposed by law, is not an overpayment for the purposes of Section 19340 and interest is not payable thereon.

article: 1. Claim for Refund


text: If a credit or refund of any part of an overpayment would be barred under Section 19306, except for Section 19312, no interest shall be allowed or paid with respect to that part of the overpayment for any period beginning after the expiration of the period of limitation provided in Section 19306 for filing claim for credit or refund of that part of the overpayment and ending at the expiration of six months after the date on which the claim was filed or, in case no claim was filed and the overpayment was found by the board, ending at the time the appeal was filed with the board.

article: 1. Claim for Refund


text: The provisions of Section 19066, which are applicable in determining the period of limitation on credit or refund, shall be applicable in determining the date of payment for purposes of Sections 19340, 19341, 19363, and 19391.

article: 1. Claim for Refund


text: If the amount allowable as a credit under Section 19002 (relating to credit for tax withheld) and the amount, if any, allowable as a refundable tax credit (including the Child and Dependent Care Credit allowable under Section 17052.6) exceeds the tax imposed by Part 10 (commencing with Section 17001), against which the credits are allowable, the amount of the excess shall be considered an overpayment.

history: (History: Amended by Stats. 2002, Ch. 374, Sec. 7. Effective January 1, 2003.)

article: 1. Claim for Refund


text: Any action of the Franchise Tax Board in refunding the excess of tax withheld under Section 18662 or 18666 or estimated tax paid pursuant to Section 19136 or any action of the Employment Development Department in refunding to the employer the excess tax withheld under Section 13020 of the Unemployment Insurance Code shall not constitute a determination of the correctness of the return of the taxpayer for purposes of this part.

article: 1. Claim for Refund


text: In the case of an overpayment of tax imposed by Section 18662 or 18666, refund or credit shall be made to the employer or to the withholding agent, as the case may be, only to the extent that the amount of the overpayment was not deducted and withheld by the employer or withholding agent. No interest shall be allowed on the overpayment.

article: 1. Claim for Refund


text: The Franchise Tax Board is authorized to prescribe regulations providing for the crediting against the estimated tax for any taxable year of the amount determined by the taxpayer or the Franchise Tax Board to be an overpayment of the tax for a preceding taxable year.

article: 1. Claim for Refund


text: Credits or refunds of overpayments of estimated tax shall be made by the Franchise Tax Board as provided in this article. Any amount paid as estimated tax for any taxable year shall be deemed to have been paid on the last day prescribed for filing the return for the taxable year (determined without regard to any extension of time for filing the return).

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 34. Effective January 1, 2001.)

article: 1. Claim for Refund


text: If any overpayment of tax is claimed as a credit against estimated tax for the succeeding taxable year, that amount shall be considered as payment of the tax for the succeeding year (whether or not claimed as a credit in the return of estimated tax for that succeeding year), and no claim for credit or refund of that overpayment shall be allowed for the taxable year in which the overpayment arises.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 35. Effective January 1, 2001.)

article: 1. Claim for Refund


text:
(a) (1) A corporation electing to be treated as an “S corporation” for a taxable year beginning in 2002 under Chapter 4.5 (commencing with Section 23800) of Part 11 may file an application for the transfer of an overpayment with respect to payments of estimated tax for taxable years beginning in 2002 to the personal income tax accounts of its shareholders. An application under this subdivision shall not constitute a claim for credit or refund.

(2) An application under this subdivision shall be verified in the manner prescribed by Section 18621 in the case of the taxpayer, and shall be filed in the manner and form prescribed by the Franchise Tax Board. The application shall set forth all of the following:

(A) The amount the “S corporation” estimates as its tax liability under this part for the taxable year, which shall not be less than the greater of 112 percent of its net income or the applicable minimum franchise tax.

(B) The amount and date of the estimated tax paid during the taxable year.

(C) For each shareholder affected, his or her name, social security account number, address, and percentage of ownership, and any changes in that percentage of ownership for the S corporation’s taxable year, the amount of each overpayment to be transferred, and the date the amount was paid.

(D) Any other information for purposes of carrying out this section as may be required by the Franchise Tax Board.

(b) (1) Within a period of 45 days from the date on which an application for a transfer is filed under subdivision (a), the Franchise Tax Board shall make, to the extent it deems practicable in that period, a limited examination of the application to discover omissions and errors therein, and shall determine the final amount of the transfers upon the basis of the application and the examination, except that the Franchise Tax Board may disallow, without further action, any application which it finds contains material omissions or errors which it deems cannot be corrected within the 45-day period.

(2) The Franchise Tax Board, within the 45-day period referred to in paragraph (1), may credit the amount of the overpayment against any liability on the part of the taxpayer under Part 11 (commencing with Section 23001).

(3) In the event the amount available for transfer is less than requested by the taxpayer, the overpayment amount shall be allocated among the shareholders on a pro rata basis based on their percentage of ownership stated on the application.

(4) For purposes of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), and this part, the transferred amounts shall be treated as if they had been estimated tax payments paid by the respective shareholders on the date originally paid by the corporation.

(5) No application under subdivision (a) shall be allowed unless the amount to be transferred equals or exceeds five hundred dollars ($500).

(6) Each S corporation which files an application for transfer of overpayments under subdivision (a) shall furnish to each person who is a shareholder at any time during the taxable year a statement showing amounts and dates of the overpayments being transferred to that person’s personal income tax account.

history: (History: Amended by Stats. 2002, Ch. 35, Sec. 32. Effective May 8, 2002.)

article: 1. Claim for Refund


text:
(a) If the Franchise Tax Board makes or allows a refund or credit that it determines to be erroneous, in whole or in part, the amount erroneously made or allowed may be assessed and collected after notice and demand pursuant to Section 19051 (pertaining to mathematical errors), except that the rights of protest and appeal shall apply with respect to amounts assessable as deficiencies without regard to the running of any period of limitations provided elsewhere in this part. Notice and demand for repayment must be made within two years after the refund or credit was made or allowed, or during the period within which the Franchise Tax Board may mail a notice of proposed deficiency assessment, whichever period expires the later. Abatement of interest on an amount due under this section is governed by subdivision (c) of Section 19104.

(b) (1) This section shall also apply to a misdirected refund. For purposes of this subdivision, a “misdirected refund” means a direct deposit refund that was deposited in the account of a person other than the taxpayer entitled to that refund. A misdirected refund does not include any refund caused by Franchise Tax Board error, which is an erroneous refund under subdivision (a).

(2) This subdivision shall only apply if the Franchise Tax Board determines that all of the following conditions have been satisfied:

(A) A taxpayer filed a tax return that designated one or more direct deposit refunds.

(B) The taxpayer, tax preparer, or electronic return originator entered an incorrect financial institution account or routing number that resulted in all or a portion of the refund not being received, directly or indirectly, by the taxpayer due the refund.

(C) The taxpayer did not receive the refund.

(D) The recipient of the misdirected refund was not entitled to the refund.

(3) Before any credit of the misdirected refund is allowed to the taxpayer, the taxpayer shall provide one or more of the following to the Franchise Tax Board, upon written request by the board:

(A) An affidavit from the taxpayer that the taxpayer notified the financial institution that the taxpayer, tax preparer, or electronic return originator entered an incorrect financial institution account or routing number and that the state-issued refund was directly deposited into an account not owned, directly or indirectly, by the taxpayer entitled to the refund.

(B) An affidavit from the taxpayer indicating that neither the taxpayer nor the taxpayer’s representative has custody or control, directly or indirectly, over the account at the financial institution that received the direct deposit refund.

(C) An affidavit from the taxpayer indicating that neither the taxpayer nor the taxpayer’s representative has received reimbursement of the refund moneys from any source.

(4) The Franchise Tax Board shall mail notice and demand for repayment as prescribed in subdivision (a) to the recipient of the misdirected refund at the last known address.

(5) Effective on the date the notice and demand for repayment to the recipient is mailed to the recipient, the taxpayer’s account shall be credited with the amount of the misdirected refund.

(6) This subdivision shall apply to any misdirected refund deposited on or after January 1, 2009.

history: (History: Amended by Stats. 2008, Ch. 234, Sec. 3. Effective January 1, 2009.)

article: 1. Claim for Refund


text:
(a) At any time within 10 years after the determination of liability for any tax, penalties, and interest, or within the period during which a lien is in force as the result of the recording of an abstract under Section 19203 or of the recording or filing of a notice of state tax lien under Section 7171 of the Government Code, the Franchise Tax Board may bring an action in the courts of this state, of any other state, or of the United States in the name of the people of the State of California to recover the amount of any taxes, penalties, and interest due and unpaid under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part.

(b) The amendments made by Sections 41 and 108 of Chapter 117 of the Statutes of 1991 shall apply to any of the following:

(1) Taxes assessed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part after July 16, 1991.

(2) Taxes assessed on or before July 16, 1991, under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, if the period specified in subdivision (a), determined without regard to those amendments, has not expired on July 16, 1991.

article: 2. Suit for Tax

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 6. Overpayments and Refunds > 2. Suit for Tax


text: The Attorney General or the counsel for the Franchise Tax Board shall prosecute the action. The action shall be tried in the County of Sacramento unless the court with the consent of the prosecutor orders a change of place of trial.

article: 2. Suit for Tax


text: In the action a writ of attachment may be issued in the manner provided by Chapter 5 (commencing with Section 485.010) of Title 6.5 of Part 2 of the Code of Civil Procedure without the showing required by Section 485.010 of the Code of Civil Procedure.

article: 2. Suit for Tax


text: In the action a certificate by the Franchise Tax Board showing the delinquency shall be prima facie evidence of the levy of the tax, penalties and interest of the delinquency, and of the compliance by the Franchise Tax Board and the board with all the provisions of Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), and this part in relation to the computation and levy of the tax.

article: 2. Suit for Tax


text: The Franchise Tax Board may bring an appropriate action, whether in the form of a common law action of debt or indebitatus assumpsit or a code or other action, in any court of competent jurisdiction in the United States or in a foreign country, in the name of the people of the State of California, to recover the amount of any tax, penalties, and interest due. The Attorney General or the counsel for the Franchise Tax Board shall prosecute the action.

article: 2. Suit for Tax


text:
(a) For the purpose of collecting taxes, interest, additions to tax, and penalties, the Franchise Tax Board may enter into agreement with one or more private persons, companies, associations, or corporations providing debt collection services outside this state with respect to the collection of taxes, interest, additions to tax, and penalties. That agreement may provide, at the discretion of the Franchise Tax Board, the rate of payment and the manner in which compensation for services shall be paid. The compensation may be added to the amount of the tax, interest, additions to tax, and penalties, and collected as a part thereof, by the contractor from the tax debtor. The Franchise Tax Board shall provide the necessary information for the contractor to fulfill its obligation under this agreement.

(b) At the discretion of the Franchise Tax Board, the contractor may, as part of the collection process, refer the tax debt for litigation by its legal representatives in the name of the Franchise Tax Board.

article: 2. Suit for Tax


text:
(a) The Franchise Tax Board may enter into agreement with one or more persons for the purpose of collecting delinquent accounts with respect to amounts assessed or imposed under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, provided the agreements do not cause the net displacement of civil service employees. The agreement may provide for the rate and manner of payment for the contracted collection services. However, the consideration payable by the Franchise Tax Board under the agreement shall not be included in the amounts to be collected from the tax debtor by the contractor providing collection services.

(b) For purposes of this section, “displacement” includes layoff, demotion, involuntary transfer to a new class, involuntary transfer to a new location requiring a change of residence, and time base reductions. “Displacement” does not include changes in shifts or days off, nor does it include reassignment to any other position within the same class and general location.

article: 2. Suit for Tax


text:
(a) The Franchise Tax Board may enter into an agreement with the Internal Revenue Service or any other state imposing an income tax or tax measured by income for the purpose of collecting delinquent tax debts with respect to amounts assessed or imposed under Part 10 (commencing with Section 17001), this part, or Part 11 (commencing with Section 23001), provided the agreements do not cause the net displacement of civil service employees. The agreement may provide, at the discretion of the Franchise Tax Board, the rate of payment and the manner in which compensation for services shall be paid.

(b) At the discretion of the Franchise Tax Board, the Internal Revenue Service or the other state collecting the tax debt pursuant to subdivision (a) may, as part of the collection process, refer the tax debt for litigation by its legal representatives in the name of the Franchise Tax Board.

(c) For purposes of this section, “displacement” includes layoff, demotion, involuntary transfer to a new class, involuntary transfer to a new location requiring a change of residence, and time base reductions. “Displacement” does not include changes in shifts or days off, nor does it include reassignment to any other position within the same class and general location.

history: (History: Added by Stats. 2011, Ch. 455, Sec. 13. (AB 1424) Effective January 1, 2012.)

article: 2. Suit for Tax


text: No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against this state or against any officer of this state to prevent or enjoin the assessment or collection of any tax under this part; provided, however, that any individual after protesting a notice or notices of deficiency assessment issued because of his or her alleged residence in this state and after appealing from the action of the Franchise Tax Board to the State Board of Equalization, may within 60 days after the action of the State Board of Equalization becomes final commence an action, on the grounds set forth in his or her protest, in the Superior Court of the County of Sacramento, in the County of Los Angeles or in the City and County of San Francisco against the Franchise Tax Board to determine the fact of his or her residence in this state during the year or years set forth in the notice or notices of deficiency assessment. No tax based solely upon the residence of such an individual shall be collected from that individual until 60 days after the action of the State Board of Equalization becomes final and, if he or she commences an action pursuant to this section, during the pendency of the action, other than by way of or under the jeopardy assessment provisions of this part.

article: 3. Suit for Refund

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 6. Overpayments and Refunds > 3. Suit for Refund


text: Except as provided in Section 19385, after payment of the tax and denial by the Franchise Tax Board of a claim for refund, any taxpayer claiming that the tax computed and assessed is void in whole or in part may bring an action, upon the grounds set forth in that claim for refund, against the Franchise Tax Board for the recovery of the whole or any part of the amount paid.

article: 3. Suit for Refund


text: The credit of an overpayment of any tax in satisfaction of any tax liability shall, for the purpose of any suit for refund of the tax liability so satisfied, be deemed to be a payment in respect of the tax liability at the time the credit is allowed.

article: 3. Suit for Refund


text: The action provided by Section 19382 shall be filed within four years from the last date prescribed for filing the return or within one year from the date the tax was paid, or within 90 days after (a) notice of action by the Franchise Tax Board upon any claim for refund, or (b) the determination (including the issuance of a decision, opinion, or dismissal) by the State Board of Equalization on an appeal from the action of the Franchise Tax Board on a claim for refund becomes final pursuant to Section 19334, whichever period expires the later.

history: (History: Amended by Stats. 1999, Ch. 605, Sec. 3. Effective January 1, 2000.)

article: 3. Suit for Refund


text: If the Franchise Tax Board fails to mail notice of action on any refund claim within six months after the claim was filed, the taxpayer may, prior to mailing of notice of action on the refund claim, consider the claim disallowed and bring an action against the Franchise Tax Board on the grounds set forth in the claim for the recovery of the whole or any part of the amount claimed as an overpayment. For substitution of the 120-day period for the six-month period contained in this section in a Title 11 case, see Section 505(a)(2) of Title 11 of the United States Code.

article: 3. Suit for Refund


text: Whenever an action is commenced against the Franchise Tax Board under this article, a copy of the complaint and the summons shall be served upon the Franchise Tax Board or the executive officer. A second copy of the complaint and the summons shall be furnished to the Franchise Tax Board, but this requirement is not jurisdictional.

article: 3. Suit for Refund


text: Any action against the Franchise Tax Board under this article shall be commenced and tried in any city or city and county in which the Attorney General maintains an office.

article: 3. Suit for Refund


text: The Attorney General or the counsel for the Franchise Tax Board of California shall defend the action.

article: 3. Suit for Refund


text: Failure to begin an action within the time specified in this article shall be a bar against the recovery of taxes.

article: 3. Suit for Refund


text: In any judgment of any court rendered for any overpayment, interest shall be allowed at the adjusted annual rate established pursuant to Section 19521 upon the amount of the overpayment, from the date of the payment or collection thereof to the date of allowance of credit on account of the judgment or to a date preceding the date of the refund warrant by not more than 30 days, the date to be determined by the Franchise Tax Board.

article: 3. Suit for Refund


text: If judgment is rendered against the Franchise Tax Board, the amount thereof shall first be credited against any taxes and interest due from the taxpayer and the remainder refunded to the taxpayer or his or her trust or estate, or in the case of a corporation, its successor through reorganization, merger, or consolidation, or its stockholders upon dissolution, by the Treasurer on warrants drawn by the Controller.

history: (History: Amended by Stats. 1997, Ch. 605, Sec. 37. Effective January 1, 1998.)

article: 3. Suit for Refund


text:
(a) Except as provided in subdivision (b), for the purposes of the tax imposed under Chapter 2 (commencing with Section 23101) of Part 11, if any deduction, credit, or exclusion provided for in Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) is finally adjudged discriminatory against a national banking association contrary to Section 548 of Title 12 of the United States Code, or is for any reason finally adjudged invalid or discriminatory under the California Constitution, or the laws or the Constitution of the United States, the tax of the favored taxpayer shall be recomputed by the Franchise Tax Board for the taxable year in question, as of the time of allowance of the deduction, credit, or exclusion, by disallowing the deduction, credit, or exclusion, and any difference between the amount of the tax as recomputed and the amount of the tax as originally computed shall be subject to the provisions hereof relating to original computations.

(b) Subdivision (a) shall not apply to a taxpayer for the invalidation of any provision of Section 17053.98, 17053.99, or 23698 amended or added by the act that added this subdivision.

history: (History: Amended by Stats. 2021, Ch. 114, Sec. 4. (SB 144) Effective July 21, 2021.)

article: 3. Suit for Refund


text: If the fee provided under Section 17942 is finally adjudged to be discriminatory or unfairly apportioned under the California Constitution, or the laws or the Constitution of the United States, the fee of a disfavored taxpayer that files, or has filed, a timely claim for refund within the period allowed by this part asserting discrimination or unfair apportionment shall be recomputed by the Franchise Tax Board for the taxable year in question, as of the time of allowance of the recomputation, only to the extent necessary to remedy the discrimination or unfair apportionment that is not otherwise relieved by Section 19393 and the amount of the fee, as originally computed, shall be subject to the provisions hereof relating to original computations.

history: (History: Added by Stats. 2007, Ch. 381, Sec. 3. Effective October 10, 2007. Applicable as prescribed in Sec. 4 of Ch. 381.)

article: 3. Suit for Refund


text:
(a) The Franchise Tax Board may recover any refund or credit or any portion thereof that is erroneously made or allowed to the taxpayer or any third party, including where the taxpayer or a related party caused, in any way, that erroneous refund, together with interest at the adjusted annual rate established pursuant to Section 19521, in an action brought in a court of competent jurisdiction in the County of Sacramento in the name of the people of the State of California within whichever of the following periods expires the later:

(1) Two years after the refund or credit was made.

(2) During the period within which the Franchise Tax Board may mail a notice of proposed deficiency assessment.

(b) Abatement of interest under this section is governed by subdivision (c) of Section 19104.

history: (History: Amended by Stats. 2008, Ch. 234, Sec. 4. Effective January 1, 2009.)

article: 4. Recovery of Erroneous Refunds

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 6. Overpayments and Refunds > 4. Recovery of Erroneous Refunds


text: The action shall be tried in the County of Sacramento unless the court with the consent of the prosecutor orders a change of place of trial.

history: (History: Added by Stats. 1993, Ch. 31, Sec. 26. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

article: 4. Recovery of Erroneous Refunds


text: The Attorney General or the counsel for the Franchise Tax Board shall prosecute the action, and the provisions of the Code of Civil Procedure relating to service of summons, pleadings, proofs, trials, and appeals are applicable to the proceedings.

article: 4. Recovery of Erroneous Refunds


text: If a tax has been illegally levied against a taxpayer, the Franchise Tax Board shall set forth on its records the reasons therefor and thereafter shall authorize the cancellation of the tax.

article: 5. Cancellations

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 6. Overpayments and Refunds > 5. Cancellations


text:
(a) The Franchise Tax Board or any person authorized in writing by the Franchise Tax Board is authorized to enter into an agreement in writing with any person (or the person or estate for whom that person acts) in respect of any tax, interest, penalty, or addition to tax levied under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part for any taxable period.

(b) If the agreement is approved by the Franchise Tax Board, itself, within the time as may be stated in the agreement, or later agreed to, the agreement shall be final and conclusive, and except upon a showing of fraud or malfeasance, or misrepresentation of a material fact:

(1) The case shall not be reopened as to the matters agreed upon or the agreement modified, by any officer, employee, or agent of the state, and

(2) In any suit, action, or proceeding, the agreement, or any determination, assessment, collection, payment, abatement, refund, or credit made in accordance therewith, shall not be annulled, modified, set aside, or disregarded.

history: (History: Amended by Stats. 1994, Ch. 726, Sec. 38. Effective September 22, 1994.)

article: 6. Closing Agreements

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 6. Overpayments and Refunds > 6. Closing Agreements


text:
(a) It is the intent of the Legislature that the Franchise Tax Board, its staff, and the Attorney General pursue settlements as authorized under this section with respect to civil tax matters in dispute 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 (3) and subject to paragraph (2), the executive officer or chief counsel, if authorized by the executive officer, of the Franchise Tax Board may recommend to the Franchise Tax Board, itself, a settlement of any civil tax matter in dispute.

(2) No recommendation of settlement shall be submitted to the Franchise Tax Board, itself, unless and until that recommendation has been submitted by the executive officer or chief counsel to the Attorney General. Within 30 days of receiving that recommendation, the Attorney General shall review the recommendation and advise in writing the executive officer or chief counsel of the Franchise Tax Board of his or her conclusions as to whether the recommendation is reasonable from an overall perspective. The executive officer or chief counsel shall, with each recommendation of settlement submitted to the Franchise Tax Board, itself, also submit the Attorney General’s written conclusions obtained pursuant to this paragraph.

(3) (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 seven thousand five hundred dollars ($7,500), may be approved by the executive officer and chief counsel, jointly. The executive officer shall notify the Franchise Tax Board, itself, of any settlement approved pursuant to this paragraph.

(B) On January 1 of each calendar year beginning on or after January 1, 2004, the Franchise Tax Board shall increase the amount specified in subparagraph (A) to the amount computed under this subparagraph. That adjustment shall be made as follows:

(i) The Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index, as modified for rental equivalent homeownership for all items, from June of the prior calendar year to June of the current calendar year, no later than August 1 of the current calendar year.

(ii) The Franchise Tax Board shall then:

(I) Compute the percentage change in the California Consumer Price Index from the later of June 2003 or June of the calendar year prior to the last increase in the amount specified in subparagraph (A).

(II) Compute the inflation adjustment factor by adding 100 percent to the percentage change so computed, and converting the resulting percentage to the decimal equivalent.

(III) Multiply the amount specified in subparagraph (A) for the immediately preceding calendar year, as adjusted under this paragraph, by the inflation adjustment factor determined in subclause (II), and round off the resulting product to the nearest one hundred dollars ($100).

(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 in the office of the executive officer of the Franchise Tax Board 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) For any settlement approved by the Franchise Tax Board, itself, the Attorney General’s conclusion as to whether the recommendation of settlement was reasonable from an overall perspective.

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 members of the Franchise Tax Board 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 Franchise Tax Board, itself, within 45 days of the submission of that recommendation. Any recommendation for settlement that is not either approved or disapproved by the Franchise Tax Board, itself, within 45 days of the submission of that recommendation shall be deemed approved. Upon approval of a recommendation for settlement, the matter shall be referred back to the executive officer or chief counsel in accordance with the decision of the Franchise Tax Board.

(2) Disapproval of a recommendation for settlement shall be made only by a majority vote of the Franchise Tax Board. Where the Franchise Tax Board disapproves a recommendation for settlement, the matter shall be remanded to Franchise Tax Board staff for further negotiation, and may be resubmitted to the Franchise Tax Board, in the same manner and subject to the same requirements as the initial submission, at the discretion of the executive officer or chief counsel.

(f) (1) 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.

(2) A settlement may include matters that may otherwise be included in an agreement under Section 19441.

(3) Settlements pursuant to this section do not preclude assessments or refunds under Section 19059, 19060, or 19311 (relating to application of federal adjustments).

(g) (1) Any proceedings undertaken by the Franchise Tax Board itself pursuant to a settlement as described in this section shall be conducted in a closed session or sessions.

(2) Except as provided in subdivision (c), any settlement entered into pursuant to this section shall constitute confidential tax information for purposes of Article 2 (commencing with Section 19542) of Chapter 7.

(3) Notwithstanding any other provision of law, no evidence of an offer of settlement made during settlement negotiations is admissible in any adjudicative proceeding or civil action, including, without limitation, any appeal to the board, whether as affirmative evidence, by way of impeachment, or for any other purpose, and no evidence of conduct or statements related to the settlement negotiations is admissible to prove liability for any tax, penalty, fee, or interest, except to the extent provided for in Section 1152 of the Evidence Code.

(4) A settlement approved by the Franchise Tax Board, itself, shall be final and conclusive, to the same extent as an agreement under Section 19441 approved by the Franchise Tax Board, itself.

(h) This section shall apply only to civil tax matters in dispute existing on or after the effective date of the act adding this subdivision.

(i) 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 Franchise Tax Board in implementing and administering the settlement program authorized by this section.

(j) The amendments made to this section by Section 1 of Chapter 258 of the Statutes of 2002 shall apply to any settlements approved on or after January 1, 2003.

(k) The amendments made to this section by the act adding this subdivision shall apply to any settlement negotiations entered into on or after the date of enactment, without regard to a taxable year.

history: (History: Amended by Stats. 2007, Ch. 309, Sec. 1. Effective January 1, 2008.)

article: 6. Closing Agreements


text:
(a) (1) The Executive Officer and Chief Counsel of the Franchise Tax Board, jointly, or their delegates, may compromise any final tax liability in which the reduction of tax is seven thousand five hundred dollars ($7,500) or less.

(2) Except as provided in paragraph (3), the Franchise Tax Board, upon recommendation by its executive officer and chief counsel, jointly, may compromise a final tax liability involving a reduction in tax in excess of seven thousand five hundred dollars ($7,500). Any recommendation for approval of an offer in compromise that is not either approved or disapproved by the Franchise Tax Board, itself, within 45 days of the submission of the recommendation shall be deemed approved.

(3) The Franchise Tax Board, itself, may by resolution delegate to the executive officer and the chief counsel, jointly, the authority to compromise a final tax liability in which the reduction of tax is in excess of seven thousand five hundred dollars ($7,500) but less than ten thousand dollars ($10,000).

(b) For purposes of this section, “a final tax liability” means any final tax liability arising under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001) or related interest, additions to tax, penalties, or other amounts assessed under this part.

(c) For an amount to be compromised under this section, the following conditions shall exist:

(1) The taxpayer shall establish that the:

(A) Amount offered in payment is the most that can be expected to be paid or collected from the taxpayer’s present assets or income, and

(B) Taxpayer does not have reasonable prospects of acquiring increased income or assets that would enable the taxpayer to satisfy a greater amount of the liability than the amount offered, within a reasonable period of time.

(2) The Franchise Tax Board shall have determined that acceptance of the compromise is in the best interest of the state.

(d) A determination by the Franchise Tax Board that it would not be in the best interest of the state to accept an offer in compromise in satisfaction of a final tax liability shall not be subject to administrative appeal or judicial review.

(e) When an offer in compromise is either accepted or rejected, or the terms and conditions of a compromise agreement are fulfilled, the Franchise Tax Board shall notify the taxpayer in writing.

(f) In the case of a joint and several liability, the acceptance of an offer in compromise from one liable spouse shall not relieve the other spouse from paying the entire liability. However, the amount of the liability shall be reduced by the amount of the accepted offer.

(g) Whenever a compromise of tax or penalties or total tax and penalties in excess of five hundred dollars ($500) is approved, there shall be placed on file for at least one year in the office of the Executive Officer of the Franchise Tax Board a public record with respect to that compromise. The public record shall include all of the following information:

(1) The name of the taxpayer.

(2) The amount of unpaid tax, and related penalties, additions to tax, interest, or other amounts involved.

(3) The amount offered.

(4) A summary of the reason why the compromise is in the best interest of the state.

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. No list shall be prepared and no releases distributed by the Franchise Tax Board in connection with these statements.

(h) Any compromise made under this section may be rescinded, all compromised liabilities may be reestablished (without regard to any statute of limitations that otherwise may be applicable), and no portion of the amount offered in compromise refunded, if either of the following occurs:

(1) The Franchise Tax Board determines that any person did any of the following acts regarding the making of the offer:

(A) Concealed from the Franchise Tax Board any property belonging to the estate of any taxpayer or other person liable for the tax.

(B) Received, withheld, destroyed, mutilated, or falsified any book, document, or record or made any false statement, relating to the estate or financial condition of the taxpayer or other person liable for the tax.

(2) The taxpayer fails to either:

(A) Comply with any of the terms and conditions relative to the offer.

(B) File subsequent required returns and pay subsequent final tax liabilities within 20 days after the Franchise Tax Board issues notice and demand to the person stating that the continued failure to file or pay the tax may result in rescission of the compromise.

(i) Notwithstanding any other provision of this section, if the Franchise Tax Board determines that any portion of an application for an offer in compromise or installment agreement submitted under this section or Section 19008 meets the requirements of clause (i) or (ii) of Section 6702(b)(2)(A) of the Internal Revenue Code, as modified by Section 19179, then the Franchise Tax Board may treat that portion as if it were never submitted and that portion shall not be subject to any further administrative or judicial review.

(j) This section shall become operative on the effective date of Chapter 931 of the Statutes of 1999 without regard to the taxable year at issue.

history: (History: Amended by Stats. 2010, Ch. 14, Sec. 53. (SB 401) Effective January 1, 2011.)

article: 6. Closing Agreements


text: The Franchise Tax Board shall administer and enforce Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part. For this purpose, it may divide the state into a reasonable number of districts, in each of which a branch office or offices may be maintained during all or part of the time as may be necessary.

chapter: 7. Administration of Tax

path: 2. OTHER TAXES > 10.2. ADMINISTRATION OF FRANCHISE AND INCOME TAX LAWS > 7. Administration of Tax > 1. Powers and Duties of Franchise Tax Board


text: In the establishment of the districts and offices, the Franchise Tax Board shall give due consideration to the matter of economy of administration and service to the taxpayers.

article: 1. Powers and Duties of Franchise Tax Board


text:
(a) The Franchise Tax Board shall prescribe all rules and regulations necessary for the enforcement of Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), and this part and may prescribe the extent to which any ruling (including any judicial decision or any administrative determination other than by regulation) shall be applied without retroactive effect.

(b) (1) Except as otherwise provided in this subdivision, no regulation relating to Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), Part 11 (commencing with Section 23001), or this part shall apply to any taxable year ending before the date on which any notice substantially describing the expected contents of any regulation is issued to the public.

(2) Paragraph (1) shall not apply to either of the following:

(A) Regulations issued within 24 months of the date of the enactment of the statutory provision to which the regulation relates.

(B) Regulations issued within 24 months of the date that temporary or final federal regulations with respect to statutory provisions to which California conforms are filed with the Federal Register.

(3) The Franchise Tax Board may provide that any regulation may take effect or apply retroactively to prevent abuse.

(4) The Franchise Tax Board may provide that any regulation may apply retroactively to correct a procedural defect in the issuance of any prior regulation.

(5) The limitation of paragraph (1) shall not apply to any regulation relating to the Franchise Tax Board’s policies, practices, or procedures.

(6) The limitation of paragraph (1) may be superseded by a legislative grant of authority to the Franchise Tax Board to prescribe the effective date with respect to any regulation.

(7) The Franchise Tax Board may provide for any taxpayer to elect to apply any regulation before the dates specified in paragraph (1).

(c) The amendments made by the act adding this subdivision are operative with respect to regulations which relate to California statutory provisions enacted on or after January 1, 1998.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 37. Effective January 1, 2001.)


text:
(a) The Franchise Tax Board, for the purpose of administering its duties under this part, including ascertaining the correctness of any return; making a return where none has been made; determining or collecting the liability of any person in respect of any liability imposed by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part (or the liability at law or in equity of any transferee in respect of that liability); shall have the power to require by demand, that an entity of any kind including, but not limited to, employers, persons, or financial institutions provide information or make available for examination or copying at a specified time and place, or both, any book, papers, or other data which may be relevant to that purpose. Any demand to a financial institution shall comply with the California Right to Financial Privacy Act set forth in Chapter 20 (commencing with Section 7460) of Division 7 of Title 1 of the Government Code. Information that may be required upon demand includes, but is not limited to, any of the following:

(1) Addresses and telephone numbers of persons designated by the Franchise Tax Board.

(2) Information contained on Federal Form W-2 (Wage and Tax Statement), Federal Form W-4 (Employee’s Withholding Allowance Certificate), or State Form DE-4 (Employee’s Withholding Allowance Certificate).

(b) The Franchise Tax Board may require the attendance of the taxpayer or of any other person having knowledge in the premises and may take testimony and require material proof for its information and administer oaths to carry out this part.

(c) (1) The Franchise Tax Board may issue subpoenas or subpoenas duces tecum, which subpoenas must be signed by any member of the Franchise Tax Board, and may be served on any person for any purpose.

(2) For taxpayers that have been contacted by the Franchise Tax Board regarding the use of an abusive tax avoidance transaction, as defined in Section 19777, the subpoena may be signed by any member of the Franchise Tax Board, the Executive Officer of the Franchise Tax Board, or any designee.

(d) Obedience to subpoenas or subpoenas duces tecum issued in accordance with this section may be enforced by application to the superior court as set forth in Article 2 (commencing with Section 11180) of Chapter 2 of Part 1 of Division 3 of Title 2 of the Government Code.

(e) When examining a return, the Franchise Tax Board shall not use financial status or economic reality examination techniques to determine the existence of unreported income of any taxpayer unless the Franchise Tax Board has a reasonable indication that there is a likelihood of unreported income. This subdivision applies to any examination beginning on or after October 10, 1999.

(f) The amendments made to this section by the act adding this subdivision shall apply to subpoenas issued on or after the effective date of the act adding this subdivision.

history: (History: Amended by Stats. 2011, Ch. 14, Sec. 7. (SB 86) Effective March 24, 2011.)


text:
(a) (1) Except as provided in subdivision (b), no subpoena may be issued under this part and the Franchise Tax Board may not begin any action under Article 2 (commencing with Section 1180) of Chapter 2 of Part 1 of Division 3 of Title 2 of the Government Code to enforce any subpoena to produce or analyze any tax-related computer software source code.

(2) Any software and related materials that are provided to the Franchise Tax Board under this part shall be subject to the safeguards under subdivision (c).

(b) (1) Paragraph (1) of subdivision (a) shall not apply to any portion, item, or component of the tax-related computer software source code if all of the following apply:

(A) The Franchise Tax Board is unable to otherwise reasonably ascertain the correctness of any item on a return from either of the following:

(i) The taxpayer’s books, papers, records, or other data.

(ii) The computer software executable code (and any modifications thereof) to which the source code relates and any associated data which, when executed, produces the output to ascertain the correctness of the item.

(B) The Franchise Tax Board identifies with reasonable specificity the portion, item, or component of the source code needed to verify the correctness of the item on the return.

(C) The Franchise Tax Board determines that the need for the portion, item, or component of the source code with respect to the item outweighs the risks of unauthorized disclosure of trade secrets.

(2) Paragraph (1) of subdivision (a) shall not apply to any of the following:

(A) Any inquiry into any offense connected with the administration or enforcement of this part, Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), or Part 11 (commencing with Section 23001).

(B) Any tax-related computer software source code acquired or developed by the taxpayer or related person primarily for internal use by the taxpayer or that person rather than for commercial distribution.

(C) Any communications between the owner of the tax-related computer software source code and the taxpayer or related persons.

(D) Any tax-related computer software source code which is required to be provided or made available pursuant to any other provision of this part, Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), or Part 11 (commencing with Section 23001).

(3) For purposes of paragraph (1), the Franchise Tax Board shall be treated as meeting the requirements of subparagraphs (A) and (B) of that paragraph if all of the following apply:

(A) The Franchise Tax Board determines that it is not feasible to determine the correctness of an item without access to the computer software executable code and associated data described in clause (ii) of subparagraph (A) of paragraph (1).

(B) The Franchise Tax Board makes a formal request to the taxpayer for the code and data and to the owner of the computer software source code for the executable code.

(C) The code and data are not provided within 180 days of that request.

(4) In any proceeding brought under Article 2 (commencing with Section 1180) of Chapter 2 of Part 1 of Division 3 of Title 2 of the Government Code to enforce a subpoena issued under the authority of this subdivision, the court shall, at the request of any party, hold a hearing to determine whether the applicable requirements of this section have been met.

(c) (1) In any court proceeding to enforce a subpoena for any portion of software, the court may receive evidence and issue any order necessary to prevent the disclosure of trade secrets or other confidential information with respect to that software, including requiring that any information be placed under seal to be opened only as directed by the court.

(2) Notwithstanding any other provision of this section, and in addition to any protections ordered pursuant to paragraph (1), in the case of software that comes into the possession or control of the Franchise Tax Board in the course of any examination with respect to any taxpayer, all of the following shall apply:

(A) The software may be used only in connection with the examination of that taxpayer’s return, any protest or appeal by the taxpayer, any judicial proceeding and any appeals therefrom, or any inquiry into any offense connected with the administration or enforcement of this part, Part 10 (commencing with Section 17001), Part 10.7 (commencing with Section 21001), or Part 11 (commencing with Section 23001).

(B) The Franchise Tax Board shall provide, in advance, to the taxpayer and the owner of the software a written list of the names of all individuals who will analyze or otherwise have access to the software.

(C) (i) The software shall be maintained in a secure area or place, and in the case of computer software source code, shall not be removed from the owner’s place of business unless the owner permits, or a court orders, that removal.

(ii) For purposes of clause (i), the owner shall make available any necessary equipment or materials for analysis of computer software source code required to be conducted on the owner’s premises.

(D) The software may not be copied except as necessary to perform an analysis, and the Franchise Tax Board shall number all copies made and certify in writing that no other copies have been or will be made.

(E) At the end of the period during which the software may be used under subparagraph (A), both of the following apply:

(i) The software and all copies thereof shall be returned to the person from whom they were obtained and any copies thereof made under subparagraph (D) on the hard drive of a machine or other mass storage device shall be permanently deleted.

(ii) The Franchise Tax Board shall obtain from any person who analyzes or otherwise had access to that software a written certification under penalty of perjury that all copies and related materials have been returned and that no copies were made of them.

(F) The software may not be decompiled or disassembled.

(G) (i) The Franchise Tax Board shall provide to the taxpayer and the owner of any interest in the software, as the case may be, a written agreement, between the Franchise Tax Board and any person who is not an officer or employee of the State of California and who will analyze or otherwise have access to that software, which provides that the person agrees not to do either of the following:

(I) Disclose the software to any person other than persons to whom the information could be disclosed for tax administration purposes under Section 19542.

(II) Participate for two years in the development of software which is intended for a similar purpose as the software examined.

(ii) The owner of any interest in the software shall be considered a party to any agreement described in clause (i).

(H) The software shall be treated as return information for purposes of Section 19542.

(d) For purposes of this section:

(1) “Software” includes computer software source code and computer software executable code.

(2) “Computer software source code” means all of the following:

(A) The code written by a programmer using a programming language which is comprehensible to appropriately trained persons and is not capable of directly being used to give instructions to a computer.

(B) Related programmers’ notes, design documents, memoranda, and similar documentation.

(C) Related customer communications.

(3) “Computer software executable code” means both of the following:

(A) Any object code, machine code, or other code readable by a computer when loaded into its memory and used directly by the computer to execute instructions.

(B) Any related user manuals.

(4) “Owner” includes, with respect to any software, the developer of the software.

(5) A person shall be treated as related to another person if the persons are related persons under Section 267 or 707(b) of the Internal Revenue Code.

(6) “Tax-related computer software source code” means the computer source code for any computer software program intended for accounting, tax return preparation or compliance, or tax planning.

(e) This section and Section 19542.3 shall not apply to any software acquired or developed for internal use by the Franchise Tax Board.

(f) This section shall apply to subpoenas issued, and software acquired, after the effective date of the act adding this section. In the case of any software acquired on or before the effective date of the act adding this section, the requirements of paragraph (2) of subdivision (a) shall apply after the 90th day after the effective date of the act adding this section. The preceding sentence shall not apply to the requirement under clause (ii) of subparagraph (G) of paragraph (2) of subdivision (c).

history: (History: Added by Stats. 1999, Ch. 931, Sec. 27. Effective October 10, 1999.)