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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 5. Determinations
Article 2. Deficiency Determinations
Section 6487
6487. Limitations; deficiency determinations. (a) For taxpayers filing returns, other than a return filed pursuant to Section 6452.1, on other than an annual basis, except in the case of fraud, intent to evade this part or authorized rules and regulations, or failure to make a return, every notice of a deficiency determination shall be mailed within three years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined or within three years after the return is filed, whichever period expires the later. In the case of failure to make a return, every notice of determination shall be mailed within eight years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined.
(b) For taxpayers filing returns on an annual basis, except in the case of fraud, intent to evade this part or authorized rules and regulations, or failure to make a return, every notice of a deficiency determination shall be mailed within three years after the last day of the calendar month following the one-year period for which the amount is proposed to be determined or within three years after the return is filed, whichever period expires the later. In the case of failure to make a return, every notice of determination shall be mailed within eight years after the last day of the calendar month following the one-year period for which the amount is proposed to be determined.
(c) The limitation specified in this section does not apply in case of a sales tax proposed to be determined with respect to sales of property for the storage, use, or other consumption of which notice of a deficiency determination has been or is given pursuant to subdivision (a) or (b) or pursuant to Section 6486, 6515, or 6536. The limitation specified in this section does not apply in case of an amount of use tax proposed to be determined with respect to storage, use, or other consumption of property for the sale of which notice of a deficiency determination has been or is given pursuant to subdivision (a) or (b) or pursuant to Section 6486, 6515, or 6536.
History—Stats. 1943, p. 2457, operative July 1, 1943, added last sentence. Stats. 1947, p. 1557, operative July 1, 1947, substituted "last" for "fifteenth" in first paragraph. Stats. 1951, p. 2638, operative July 1, 1951, added eight-year limitation period in cases of failure to make a return. Stats. 1969, p. 893, in effect November 10, 1969, deleted "or claim for additional amount pursuant to Section 6563" from the first and second sentences of the first paragraph. Stats. 1977, Ch. 921, operative January 1, 1978, added "For taxpayers filing returns on other than an annual basis" to first paragraph, and added new second paragraph for annual basis taxpayers. Stats. 1983, Ch. 337, in effect January 1, 1984, added "or second" after "first" in the last sentence of the third paragraph. Stats. 1991, Ch. 236, in effect July 29, 1991, added the subdivision letters, added "subdivision (a) or (b) or pursuant to" after "given pursuant to" and substituted "or 6536" for "and 6537" twice in subdivision (c). Stats. 2003, Ch. 718 (SB 1009), in effect January 1, 2004, added ", other than a return filed pursuant to Section 6452.1," after "filing returns" in subdivision (a); added a hyphen in "one-year" after "month following the" twice in subdivision (b); added "a" after "which notice of", deleted "and to the first or second paragraph of this section" after "6515, or 6536" twice in subdivision (c).
Sufficiency of return.—A return by a taxpayer on a "Sales and Use Tax Return" form prescribed by the State Board of Equalization for a combined showing of sales and use tax liability in which the taxpayer fills in entries in all but one of the lines under the sales tax subheading, leaves blank the lines under the use tax subheading, enters the sales tax total in the line for the total amount due for both sales tax and use tax and signs a concluding certificate stating the report to be "a true and complete return" pursuant to the sales and use tax acts is a return for use tax as well as sales tax purposes and starts the running of the limitation period specified in this section against a use tax deficiency determination. People v. Universal Film Exchanges, Inc. (1950) 34 Cal.2d 649.
Burden of proof.—In a suit for refund of sales tax paid pursuant to a deficiency determination issued after the period of limitations has run, the burden of proving fraud is on the State Board of Equalization, and the taxpayer is entitled to recover in the absence of such proof. Marchica v. State Board of Equalization (1951) 107 Cal.App.2d 501.
Setoffs of overpayments against underpayments.—The Board may properly credit and set off underpayment of taxes barred by the statute of limitations in one quarter against an overpayment of taxes in another quarter, so long as both setoffs and overpayments occurred during the period put at issue by the taxpayer's claim for refund. Sprint Communications Company v. State Board of Equalization (1995) 40 Cal.App.4th 1254.