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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Alcoholic Beverage Tax Law > Chapter 8 > entire chapter

Alcoholic Beverage Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 14. Alcoholic Beverage Tax

Chapter 8. Overpayments and Refunds.

Article 1 Claim for Refund

Article 2 Suit for Refund

Article 3 Recovery of Erroneous Refunds

Article 4 Cancellations

Article 1. Claim for Refund.

32401. Credits and refunds. If the board determines that any amount of tax, penalty, or interest has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in its records and certify the amount collected in excess of what was legally due and the person from whom it was collected or by whom paid, and credit the excess amount collected or paid on any amounts then due from the person from whom the excess amount was collected or by whom it was paid under this part, and the balance shall be refunded to the person, or the person’s successors, administrators, or executors. Any determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days after the effective date of that determination.If the board determines that any amount of tax, penalty, or interest has been paid more than once or has been erroneously or illegally collected or computed, the board shall set forth that fact in its records and certify the amount collected in excess of what was legally due and the person from whom it was collected or by whom paid, and credit the excess amount collected or paid on any amounts then due from the person from whom the excess amount was collected or by whom it was paid under this part, and the balance shall be refunded to the person, or the person’s successors, administrators, or executors. Any determination by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days after the effective date of that determination.

History—Stats. 1961, p. 1253, in effect September 15, 1961, added the paragraph which permits the board to credit or refund overpaid alcoholic beverage taxes of $100 or less without approval of the State Board of Control. Stats. 1963, p. 3114, in effect September 20, 1963, added "from whom the excess amount was collected or by whom it was paid" in the second sentence of the first paragraph, and substituted "two hundred fifty dollars ($250)" for "one hundred dollars ($100)" in the second paragraph. Stats. 1965, p. 2058, in effect September 17, 1965, substituted "one thousand dollars ($1,000)" for "two hundred fifty dollars ($250)" in the second paragraph. Stats. 1977, Ch. 921, operative January 1, 1978, substituted "five thousand dollars ($5,000)" for "one thousand dollars ($1,000)". Stats. 1985, Ch. 591, effective January 1, 1986, substituted "fifteen thousand dollars ($15,000)" for "five thousand dollars ($5,000)" in second paragraph. Stats. 1988, Ch. 1029, in effect January 1, 1989, added "or her" following "his" in the first paragraph and substituted "fifty thousand dollars ($50,000)" for "fifteen thousand dollars ($15,000)" following "amount not exceeding" and added "or her" following "his" in the second paragraph. Stats. 1994, Ch. 726, in effect September 22, 1994, substituted ", and credit the excess amount collected or paid" for ". If approved by the State Board of Control the excess amount collected or paid shall be credited" after "by whom paid"; added "Any proposed determination … of that determination." as the second sentence; deleted the second paragraph which read: "In the case, however, of a determination by the board that an amount not exceeding fifty thousand dollars ($50,000) was not required to be paid under this part, the board without obtaining the approval of the State Board of Control may credit the amount on any amounts then due and payable under this part from the person by whom the amount was paid and may refund the balance to the person or his or her successors, administrators, or executors." Stats. 1995, Ch. 555, in effect January 1, 1996, substituted "its records and certify" for "the records of the board, certify to the State Board of Control" after "that fact in" in the first sentence. Amended by Stats. 2023, ch. 511 (SB 889), effective January 1, 2024, substituted "the person’s" for "his or her" after "to the person, or" in the first sentence; deleted "proposed" after "Any" in the second sentence; and substituted "after" for "prior to" after "at least 10 days" in the second sentence.

Note.—Stats. 1971, p.1784, in effect October 6, 1971, provides that licensees may file a claim for refund of tax paid on alcoholic beverages destroyed or damaged so that they cannot be sold as a result of the earthquakes which occurred in southern California between January 1, 1971, and March 1, 1971. No refund shall be allowed or approved after one year from the effective date of this act unless a claim has been filed within such period.

32402. Claim; limitation period. (a) Except as provided in subdivision (b) no refund shall be approved by the board after three years from the 15th day of the calendar month following the close of the period for which the overpayment was made, or, with respect to determinations made under Article 2 (commencing with Section 32271), Article 3 (commencing with Section 32291), or Article 5 (commencing with Section 32311) of Chapter 6 after six months from the date the determinations become final, or after six months from the date of overpayment, whichever period expires later, unless a claim therefor is filed with the board within that period. No credit shall be approved by the board after the expiration of that period unless a claim for credit is filed with the board within that period, or unless the credit relates to a period for which a waiver is given pursuant to Section 32273.

(b) A refund may be approved by the board for any period for which a waiver is given under Section 32273, if a claim therefor is filed with the board before the expiration of the period agreed upon.

(c) Every claim for refund or credit shall be in writing and shall state the specific grounds upon which the claim is founded.

History—Stats. 1965, p. 4442, in effect September 17, 1965, revised this section to provide for a credit and refund when a waiver is given pursuant to § 32273. Stats. 1975, Ch. 1186, in effect January 1, 1976, substituted "of the calendar month following the close of the period" for "after the close of the monthly period." Stats. 1982, Ch. 454, in effect January 1, 1983, substituted "Article 2 (commencing with Section 32271), 3 (commencing with Section 32291) or 5 (commencing with Section 32311) of Chapter 6" for "Article 2, 3 or 5 of Chapter 6 of this part" after "under" in the first sentence in subdivision (a) and made numerous grammatical corrections throughout this section. Stats. 2001, Ch. 543 (SB 1185), in effect January 1, 2002, substituted "after" for "within" after "of Chapter 6", substituted "from the date" for "after" after "six months", and added "or after six months from the date of overpayment" after "the determinations become final" in the first sentence of subdivision (a). Stats. 2002, Ch. 664 (AB 3034), in effect January 1, 2003, added "Article" after "Section 32271)," in, added a comma after "Section 32291)", and added "Article" after "Section 32291), or" in, subdivision (a).

32402.1. Claim limitation; financially disabled. (a) The limitation period specified in Section 32402 shall be suspended during any period of a person's life that the person is financially disabled.

(b) (1) For purposes of subdivision (a), a person is financially disabled if the person is unable to manage his or her financial affairs by reason of medically determinable physical or mental impairment of the person which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A person shall not be considered to have an impairment unless proof of the existences thereof is furnished in the form and manner as the board may require.

(2) A person shall not be treated as financially disabled during any period that the person's spouse or any other person is authorized to act on behalf of the person 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 for 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—Added by Stats. 2000, Ch. 1052 (AB 2898), in effect January 1, 2001.

32402.2. Overpayments from levies or liens. Notwithstanding Section 32402, a refund of an overpayment of any tax, penalty, or interest collected by the board by means of levy, through the use of liens, or by other enforcement procedures, shall be approved if a claim for a refund is filed within three years of the date of an overpayment.

History—Added by Stats. 2006, Ch. 364 (AB 3076), in effect January 1, 2007.

32402.3. Refund claim where tax has not been paid in full; timely filing. (a) A claim for refund that is otherwise valid under Section 32402 that is made in the case in which the amount of tax determined has not been paid in full shall be deemed to be a timely filed claim for refund with respect to all subsequent payments applied to that determination.

(b) For purposes of this section, "amount of tax determined" means an amount of tax, interest, or penalty, with respect to a single determination made under Article 2 (commencing with Section 32271), Article 3 (commencing with Section 32291), or Article 5 (commencing with Section 32311) of Chapter 6.

(c) This section shall apply to all claims for refund on or after the effective date of the act adding this section.

History—Added by Stats. 2016, Ch. 98 (AB 1856), in effect January 1, 2017.

32403. Failure to file claim. Failure to file a claim within the time prescribed in this article constitutes a waiver of all demands against the State on account of the overpayment.

32404. Notice disallowing claim. Within 30 days after disallowing any claim in whole or in part, the board shall serve written notice of its action on the claimant, such service to be made as provided by Section 32271.

32405. Interest. Interest shall be computed, allowed, and paid upon any overpayment of any amount of tax at the modified adjusted rate per month established pursuant to Section 6591.5, from the 16th day of the calendar month following the period during which the overpayment was made. In addition, a refund or credit shall be made of any interest imposed upon the claimant with respect to the amount being refunded or credited.

The interest shall be paid as follows:

(a) In the case of a refund, to the 15th day of the calendar month following the date upon which the claimant, if he or she has not already filed a claim, is notified by the board that a claim may be filed or the date upon which the claim is approved by the board, whichever date is earlier.

(b) In the case of a credit, to the same date as that to which interest is computed on the tax or amount against which the credit is applied.

History—Stats. 1963, p. 3114, in effect September 20, 1963, substituted "15th" for "fifteenth" in the first sentence and in subdivision (a). Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "1 percent" for "one-half of 1 percent." Stats. 1975, Ch. 1186, in effect January 1, 1976, substituted "period" for "monthly period." Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … month" before "from" in the first sentence. Stats. 1984, Ch. 1020, effective January 1, 1985, operative July 1, 1985, substituted "modified … month" for "adjusted annual rate" before "established," substituted "Section 6591.5" for "Section 19269." Stats. 1992, Ch. 1336, in effect January 1, 1993, substituted "16th" for "15th" after "from the", substituted "during" for "for" after "period", and substituted ". In addition, a" for "but no" in the first sentence; and added "as follows" after "paid" in the second paragraph. Stats. 1996, Ch. 320, in effect January 1, 1997, deleted "or the date upon which the claim is certified to the State Board of Control, whichever date is the earlier" after"may be filed" in subdivision (a). Stats. 1997, Ch. 620 (SB 1102), in effect January 1, 1998, added ", if he or she has not already filed a claim," after "which the claimant" and added "or the date … date is earlier" after "may be filed" in subdivision (a).

32406. Disallowance of interest. (a) If the board determines that any overpayment has been made intentionally or by reason of carelessness, it shall not allow any interest thereon.

(b) If any person who has filed a claim for refund requests the board to defer action on the claim, the board, as a condition to deferring action, may require the claimant to waive interest for the period during which the person requests the board to defer action on the claim.

History—Stats. 1998, Ch. 420 (SB 2230), in effect January 1, 1999, added subdivision designation "(a)" and added subdivision (b).

32407. Refunds on certain losses. (a) The State Board of Equalization shall refund without interest to the licensee the amount of the tax imposed under this part with respect to the alcoholic beverages and which has been paid by the licensee as part of his purchase price of the alcoholic beverages, when such beverages were lost, rendered unmarketable, or condemned by a duly authorized official by reason of:

(1) Fire, flood, casualty, or other disaster, or

(2) Breakage, destruction, or other damage (but not including theft) resulting from vandalism, malicious mischief, or insurrection if such disaster or damage occurred in this state and if such beverages were held and intended for sale at the time of such disaster or other damage. The payments provided for in this section shall be made to the person holding such beverages for sale at the time of such disaster or other damage.

(b) The State Board of Equalization may approve claims for refunds without interest under this section upon proof satisfactory to it that the alcoholic beverages were destroyed or damaged so that they could not be sold and that the licensee has not otherwise been compensated for the loss in the amount of the tax included in the purchase price paid for the alcoholic beverages. A claim for refund under this section shall be in such form and accompanied by such proof as the State Board of Equalization may require.

(c) No claim shall be allowed under this section unless such claim is filed within six months after the date on which such beverages were lost, rendered unmarketable, or condemned by a duly authorized official.

(d) No claim of less than two hundred fifty dollars ($250) shall be allowed under this section with respect to any disaster or other damage.

History—Added by Stats. 1979, Ch. 633, operative April 1, 1980.

Article 2. Suit for Refund

32411. Enjoining collection forbidden. 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 the State to prevent or enjoin the collection of any tax sought to be collected.

32412. Necessity for refund claim. No suit or proceeding shall be maintained in any court for the recovery of any amount alleged to have been erroneously or illegally assessed or collected unless a claim for refund or credit has been duly filed.

32413. Suit for refund. Within 90 days after the mailing of the notice of the board's action upon a claim for refund or credit, the claimant may bring an action against the board on the grounds set forth in the claim in a court of competent jurisdiction in the County of Sacramento for the recovery of the whole or any part of the amount with respect to which the claim has been disallowed.

32414. When no decision on refund claim. If the board fails to mail notice of action on a claim within six months after the claim is filed, the claimant may, prior to the mailing of notice by the board, consider the claim disallowed and bring an acton against the 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.

32415. Failure to bring timely suit. Failure to bring suit or action within the time specified in this article constitutes a waiver of all demands against the State on account of any alleged overpayments.

32416. Crediting judgment to taxes due. If judgment is rendered for the plaintiff, the amount of the judgment shall first be credited on any taxes due from the plaintiff, and the balance shall be refunded to the plaintiff.

32417. Interest on judgment. In any judgment, interest shall be allowed at the modified adjusted rate per annum established pursuant to Section 6591.5, upon the amount found to have been illegally collected from the date of payment of the amount 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 board.

History—Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "12 percent" for "6 percent." Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … annum" before "upon". Stats. 1984, Ch. 1020, effective January 1, 1985, operative July 1, 1985, substituted "modified … annum" for "adjusted annual rate," substituted "Section 6591.5" for "Section 19269."

32418. Judgment for assignee forbidden. A judgment shall not be rendered in favor of the plaintiff in any action brought against the board to recover any tax paid when the action is brought by or in the name of an assignee of the taxpayer paying the tax or by any person other than the person who has paid the tax.

Article 3. Recovery of Erroneous Refunds

32431. Action by Controller. (a) The Controller may recover any refund or part thereof that is erroneously made, and any credit or part thereof that is erroneously allowed, 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.

(b) As an alternative to subdivision (a), the board may recover any refund or part thereof that is erroneously made, and any credit or part thereof that is erroneously allowed. In recovering any erroneous refund or credit, the board may, in its discretion, issue a deficiency determination in accordance with Article 2 (commencing with Section 32271) or Article 5 (commencing with Section 32311) of Chapter 6. Except in the case of fraud, the deficiency determination shall be made by the board within three years from the date of the Controller's warrant or date of credit.

History—Stats. 1998, Ch. 609 (SB 2232), in effect January 1, 1999, added subdivision designation "(a)", substituted "that" for "which" after "or part thereof", and deleted ", and the action shall be tried in the County of Sacramento unless the court, with the consent of the Attorney General, orders a change of place of trial. The Attorney General shall prosecute the action, and the provisions of the Code of Civil Procedures relating to service of summons, pleadings, proofs, trials, and appeals are applicable to the proceedings" after "State of California" in subdivision (a), and added subdivision (b).

Note.—SEC. 61. of Stats. 1998, Ch. 609 (SB 2232), effective January 1, 1999, states: It is the intent of the Legislature in enacting those provisions of this act that allow the State Board of Equalization to recover refunds administratively that no increase in taxpayer costs result from taxpayer compliance with these provisions.

32432. Place of trial. In any action brought pursuant to subdivision (a) of Section 32431, the court may, with the consent of the Attorney General, order a change in the place of trial.

History—Added by Stats. 1998, Ch. 609 (SB 2232), in effect January 1, 1999.

32432.5. Interest on erroneous refunds. (a) Notwithstanding any other provision of this part, if the board finds that neither the person liable for payment of tax nor any party related to that person has in any way caused an erroneous refund for which an action for recovery is provided under Section 32431, no interest shall be imposed on the amount of that erroneous refund until 30 days after the date on which the board mails a notice of determination for repayment of the erroneous refund to the person. The act of filing a claim for refund shall not be considered as causing the erroneous refund.

(b) This section shall be operative for any action for recovery under Section 32431 on or after January 1, 2000.

History—Added by Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000. Stats. 2015, Ch. 303 (AB 731), in effect January 1, 2016, renumbered Section 32432 as added by Stats. 1999, Ch. 929 (AB 1638) to Section 32432.5.

32433. Rules of procedure, etc. The Attorney General shall prosecute any action brought pursuant to subdivision (a) of Section 32431, and the provisions of the Code of Civil Procedure relating to service of summons, pleadings, proof, trials, and appeals shall apply to the proceedings.

History—Added by Stats. 1998, Ch. 609 (SB 2232), in effect January 1, 1999.

Article 4. Cancellations

32440. Cancellation of determination. If any amount has been illegally determined, either by the person filing the return or by the board, the board shall certify the amount determined to be in excess of the amount legally due and the person against whom the determination was made, and shall authorize the cancellation of the amount upon the records of the board. Any cancellation by the board pursuant to this section with respect to an amount in excess of fifty thousand dollars ($50,000) shall be available as a public record for at least 10 days after the effective date of that determination.

History—Stats. 1961, p. 1252, in effect September 15, 1961, added the provision for cancellation by the board of illegally determined amounts of $100 or less without the approval of the State Board of Control. Stats. 1963, p. 3114, in effect September 20, 1963, substituted "two hundred fifty dollars ($250) " for "one hundred dollars ($100) " in the first and last sentences. Stats. 1965, p. 2058, in effect September 17, 1965, substituted "one thousand dollars ($1,000) " for "two hundred fifty dollars ($250) " in the first and last sentences. Stats. 1977, Ch. 921, operative January 1, 1978, substituted "five thousand dollars ($5,000)" for "one thousand dollars ($1,000)". Stats. 1985, Ch. 591, effective January 1, 1986, substituted "fifteen thousand dollars ($15,000)" for "five thousand dollars ($5,000)" after "in excess of" and "fifteen thousand dollars ($15,000)" for "five thousand dollars ($5,000)" after "not exceeding." Stats. 1988, Ch. 1029, in effect January 1, 1989, substituted "fifty thousand dollars ($50,000)" for "fifteen thousand dollars ($15,000)" before "has been illegally determined" in the first and last sentences. Stats. 1994, Ch. 726, in effect September 22, 1994, deleted "in excess of fifty thousand dollars ($50,000)" after "If any amount"; deleted "to the State Board of Control" after "board shall certify"; deleted ". If the State Board of Control approves, it" after "determination was made"; and substituted "Any proposed determination … of that determination." for "If an amount not exceeding fifty thousand dollars ($50,000) has been illegally determined, either by the person filing a return or by the board, the board without certifying this fact to the State Board of Control shall authorize the cancellation of the amount upon the records of the board." Amended by Stats. 2023, ch. 511 (SB 889), effective January 1, 2024, deleted "proposed" after "Any" and substituted "after" for "prior to" after "at least 10 days" in the second sentence.