Investigations Division

The Investigations Division administers the California Department of Tax and Fee Administration's (CDTFA) tax enforcement and criminal investigations program. The Division plans, organizes, directs, and controls all criminal investigative activities for the various tax programs administered by the CDTFA. Its goals are to deter tax evasion, identify new tax fraud schemes, and actively investigate and assist in the prosecution of crimes committed by individuals violating the laws enforced by the CDTFA.

Cigarette and Tobacco Products Tax Evasion

Any person who intentionally evades the reporting, assessment or payment of cigarette or tobacco products taxes that would otherwise be due is guilty of cigarette or tobacco products tax evasion. And as of 2004, any retailer, wholesaler, or distributor of cigarettes and tobacco products and any manufacturer or importer of cigarettes that does not comply with the licensing requirements of the Cigarette and Tobacco Products Licensing Act (CTPLA) of 2003 may receive fines up to $5,000 per offense, imprisonment up to one year in county jail, or both fines and imprisonment.

See the Special Taxes and Fee Rates webpage for current cigarette or tobacco tax and licensing fee rates and other excise tax and fee rates.

  • Sale of unstamped cigarettes or untaxed tobacco products.
  • Intentionally importing tobacco products from outside the state without remitting the appropriate California State tobacco products taxes.
  • Sale of cigarettes with counterfeit or reused tax stamps.
  • Possessing, owning, storing or selling untaxed cigarettes or tobacco products (unless licensed as a distributor, manufacturer or importer).

  • Sale or distribution of cigarettes or tobacco products without a license.
  • Not obtaining and maintaining a valid license for each location selling cigarettes or tobacco products.
  • Not displaying your license in public view.
  • Not maintaining purchase or sales records, as required.
  • Refusing access of purchase or sales records to authorized inspectors or enforcement staff.
  • Selling cigarettes or tobacco products to individuals under 21 years of age (STAKE Act).
  • Selling cigarettes or roll-your-own (RYO) tobacco in California that are not listed in the California Tobacco Directory.

  • Tax evasion hurts all of us by reducing the amount of revenue available for essential state and local services. Nearly 90% of the taxes collected on cigarettes and tobacco products are earmarked to fund important programs such as breast cancer research, health education, hospital and physician services, research, public resources, and county-run projects for child health and development.
  • Cigarette and tobacco products tax evasion hurts the honest business owner. Unscrupulous sellers of untaxed cigarettes and tobacco products can undercut the prices charged by the legitimate businessperson.
  • Cigarette and tobacco products tax evasion is accompanied by an increase in thefts, hijackings, cross-border smuggling, and other organized crimes.

Public awareness and involvement are essential in eliminating tobacco tax evasion. To report suspected cigarette and tobacco tax evasion, contact the California Department of Tax and Fee Administration, Investigations Division, at 1-916-324-0105 or the Tax Evasion Hotline at 1-888-334-3300. You can also submit a complaint online. By law, all complaints are kept confidential unless a court orders otherwise.

Fuel Tax Evasion

Under the California Revenue and Taxation Code, any person who intentionally evades the reporting, assessment or payment of fuel taxes that would otherwise be due is guilty of fuel tax evasion. Violators are subject to fines and/or jail time.

See the Special Taxes and Fees webpage for current fuel tax rates.

  • Using dyed (untaxed) diesel fuel in a vehicle operated on California highways without being licensed to remit the tax.
  • Intentionally importing fuel from outside the state without remitting the appropriate California State fuel taxes.
  • Blending taxable fuel with an untaxed product to increase volume without paying tax on the increase.

  • When fuel taxes are not paid, those dollars are not available for a variety of transportation uses. Fuel taxes are primarily used for the construction and maintenance of our roads and highways.
  • Fuel tax evasion is bad for the environment. Illegally blended fuels can cause increased soil and air pollution. These result from poor combustion and contamination from toxic or waste chemicals used as blending agents. In addition, illegally blended fuels often cause increased engine wear and can lead to vehicle breakdowns.
  • Fuel tax evasion hurts honest businesses. Fuel can be sold at a lower price when the tax is not paid, which allows the seller to gain more customers and illegally earn increased profits.

Public awareness and involvement are essential in eliminating fuel tax evasion. To report suspected fuel tax evasion, contact the California Department of Tax and Fee Administration, Investigations Division at 1-916-324-0105 or the Tax Evasion Hotline at 1-888-334-3300. You can also submit a complaint online. By law, all complaints are kept confidential unless a court orders otherwise.

Sales Tax Evasion

Under the California Revenue and Taxation Code, any person who intentionally evades the reporting, assessment or payment of sales taxes that would otherwise be due is guilty of sales tax evasion. Violators are subject to fines and/or jail time.

In general, retail sales of tangible personal property in California are subject to sales tax. The responsibility for paying the sales tax is upon the seller (retailer). The sales tax rate varies statewide; however, the statewide tax rate base is 7.25 percent. Sales taxes are higher in locations where voters have approved additional "district taxes." See the Sales and Use Tax Rates page to find the current sales tax rate for your location.

  • Retailers collect sales tax reimbursement from their customers on sales but intentionally fail to report and pay the tax collected.
  • Retailers intentionally fail to report all retail sales on which sales tax is due.

  • Sales tax supports a broad range of state services, from parks to prisons. Sales tax evasion reduces the revenue available to fund these important public services.
  • In addition, sales tax is a major source of revenue for many cities and counties, which depend on the income for police and fire service, courts, roads, health care, and more. Tax evasion hurts all of us by reducing the amount of money available for these essential services.
  • Honest businesses are placed in a competitive disadvantage by deceitful sellers who do not pay the tax they owe.

Public awareness and involvement are essential in eliminating sales tax evasion. To report suspected sales tax evasion, contact the California Department of Tax and Fee Administration, Investigations Division at 1-916-324-0105 or the Tax Evasion Hotline at 1-888-334-3300. You can also submit a complaint online. By law, all complaints are kept confidential unless a court orders otherwise.

File a Tax Evasion Complaint

When filing a complaint and providing information please be as specific as possible. Include the who, what, how, where and when and as many details as possible in your complaint.

  1. The suspected tax violation.
  2. Full name of the suspect.
  3. Suspect's home address and phone number.
  4. Suspect's corporation or business name.
  5. Suspect's business address, phone number, and years in business.
  6. Suspect's profession or job title and years at the job.
  7. Suspect's social security number or federal identification number.
  8. Suspect's bank name, address and account number if known.
  9. Vehicle ownership – Plate number, make, model, color, location where car/van is kept overnight.
  10. Cigarette and tobacco products: cigarette or tobacco products brands (e.g. Marlboro, Newport, etc.); tax stamp on pack of cigarettes (e.g. counterfeit stamp, California or other state stamp, or no tax stamp.); location where the cigarettes or tobacco products are stored (under the counter, behind a door, warehouse, etc.).
  11. Does the store have a current Seller's Permit or Cigarette and Tobacco Products License?
  12. Is the suspect involved in any other criminal activities?

  1. You may call our Tax Evasion Hotline at 1-888-334-3300.
  2. You may call our Investigations Division at 1-916-324-0105.
  3. You may fax your complaint to us at 1-916-324-1578.
  4. You may submit your complaint online (anonymously, if preferred); or
  5. You may write us at:
    Investigations Division, MIC:42
    California Department of Tax and Fee Administration
    PO Box 942879
    Sacramento, CA 94279-0042

Tax evasion is a crime that hurts all of us. Tax evasion decreases the revenue available to fund essential state and local services. These services include funds for police and fire departments, highway improvements, libraries, schools, parks, hospitals, courts and more. Evasion also hurts the honest business owner as a result of unfair competition by those illegally selling untaxed products.

Be as specific as possible. Include the who, what, how, where and when and as many details as possible in your complaint. Whenever possible please include:

  1. The suspected tax violation.
  2. Full name of the suspect.
  3. Suspect's home address and phone number.
  4. Suspect's corporation or business name.
  5. Suspect's business address, phone number, and years in business.
  6. Suspect's profession or job title and years at the job.
  7. Suspect's social security number or federal identification number.
  8. Suspect's bank name, address and account number if known.
  9. Vehicle ownership – plate number, make, model, color and location where vehicle is kept overnight.
  10. Cigarette/tobacco products evasion: cigarette or tobacco product brands (e.g. Marlboro, Newport, etc.); tax stamp on pack of cigarettes (e.g. counterfeit California stamp, other state stamp, or no tax stamp); location where the cigarettes or tobacco products are stored (under the counter, behind a door, warehouse, etc.).
  11. Does the store have a current Seller's Permit?
  12. Is the suspect involved in any other criminal activities?

No. The California Department of Tax and Fee Administration does not have funds for a reward program at this time. However, by stopping tax evasion you will benefit from recovered revenue available to fund your public services.

No. According to California confidentiality laws, the California Department of Tax and Fee Administration cannot disclose the status of its investigations. However, you may submit additional information or supporting documentation regarding your complaint at any time.

Yes. If you wish to remain anonymous you should not give us your name or other identifying information when calling to file a complaint or when sending information. The Investigations Division will investigate all complaints, whether anonymous or not.

Common signs of sales tax evasion include:

  • Sellers who brag about not reporting sales to the government.
  • Sellers who do not or will not issue receipts.
  • Sellers who do not ring up purchases on a cash register or write up receipts, especially at retail stores.
  • Sellers whose prices seem unusually low—"too good to be true."

Common signs of fuel tax evasion include:

  • Numerous fuel spills at a location where unlawful blending may take place.
  • Fuel deliveries taking place when a service station is not open—usually late at night or early in the morning.
  • Deliveries by vehicles other than fuel tanker trucks or by tanker trucks with out-of-state licenses.
  • Service stations that are selling fuel at significantly lower prices than competitors.
  • Dyed (red) diesel fuel spilled at a highway accident scene.

Common signs of cigarette tax evasion include:

  • Cigarette packages that do not include the Surgeon General's health warning.
  • Unstamped cigarette packages (every pack of cigarettes sold in California must have a California tax stamp affixed to it).
  • Cigarettes labeled "U.S. Tax Exempt for Use Outside the U.S.," or similar language.
  • Cigarettes being sold for significantly lower prices than those in other stores.
  • Imported cigarette packages that do not have a California cigarette tax stamp affixed to them.

Common signs of tobacco products tax evasion include:

  • Tobacco products such as cigars and chewing tobacco being sold for significantly lower prices than those in other nearby stores.
  • A sale of tobacco products where a significant discount is offered for cash and no receipt is given.

There are several ways to file a tax evasion complaint.

  1. You may call our Tax Evasion Hotline at 1-888-334-3300.
  2. You may call our Investigations Division at 1-916-324-0105.
  3. You may fax your complaint to us at 1-916-324-1578.
  4. You may submit your complaint online (anonymously, if preferred); or
  5. You may write to us at:
    Investigations Division, MIC:42
    California Department of Tax and Fee Administration
    PO Box 942879
    Sacramento, CA 94279-0042

Legal Division Overview