Publication 75, Interest, Penalties, and Collection Cost Recovery Fee
When Do Interest, Penalty, and the Collection Cost Recovery Fee Charges Apply?

Due dates for filing or payment

Filing a return

You must file your tax return and pay the tax by the due date. If the due date falls on a Saturday, Sunday, or state holiday, your return and payment will be considered on time if you file a return and pay the tax the next business day.

Mailing returns or payments

Tax returns and payments mailed to us must be postmarked on or before the due date to be considered on time. If the due date falls on a Saturday, Sunday, or state holiday, returns postmarked by the next business day are considered on time.

Please note: If you use a commercial delivery service rather than the U.S. Postal Service, you must retain proof of when the return or payment was sent.

Credit card payments

Your credit card payment must be completed before midnight (Pacific time) on the due date for the reporting period to be considered on time.

Please note: If your account requires payment by Electronic Funds Transfer (EFT), a penalty will apply if you pay by credit or debit card. These methods are not considered EFT payments. For more information, see Failure to pay by EFT.

Electronic funds transfer (EFT) payments

If you pay your taxes by EFT, your payment must settle into our bank account by the first banking day following the tax due date. Depending on how you submit your EFT payment to us, there is a cutoff time for completing your transaction to ensure your payment is on time.

• ACH Debit—If you submit your payment using our Online Services on the due date, you must complete your transaction by 3:00 p.m. (Pacific time) to ensure your funds settle into the state’s bank account by the first banking day following the tax due date.
• Third Party Vendor—If you submit your payment through the state’s third-party payment processor, Fiserv, Inc. dba First Data Merchant Services LLC, on the due date, you must complete your transaction by 3:00 p.m. (Pacific time) and select the first banking day following the due date as your debit date.
• ACH Credit—You must contact your financial institution to determine when to initiate your payment so that your payment settles into the state’s bank account by the first banking day following the due date.

Late tax return filings and late payments

Please note: The following information does not apply to late prepayments. For interest and penalty information related to late prepayments, see Late tax prepayments.

Interest

If you do not pay by the due date, your payment is considered late, and you will owe interest on the unpaid tax in addition to a penalty. Interest is due for each month or fraction of a month, the tax payment is late.

If you do not file your return by the due date, your return is considered late, and we will apply the interest and penalty. See below for examples of how the interest is calculated.

Example 1: Your tax amount is $1,000, and payment is due by April 30. However, you did not pay the tax amount until May 20, and the monthly interest rate factor shown at the bottom of your tax return is 0.0083 (10% annual interest rate ÷ 12 months). To calculate the interest, multiply the $1,000 tax amount by the 0.0083 monthly interest rate factor, which equals $8.33 interest.

Example 2: Assume the same facts as in Example 1 above, except you did not pay the tax amount until June 3. To calculate the interest, multiply the $1,000 tax amount by the 0.0083 monthly interest rate factor and by two months, which equals $16.66 interest. A full month’s interest is due for each month or fraction of a month that the payment is late. Since the tax was not paid until June 3, the total interest owed includes two full months of May and June.

Penalties

You are subject to:

• A 10 percent penalty if you do not file your tax return by its due date.
• A 10 percent penalty if your tax payment is late.

If you file a late return and make a late tax payment, your penalty will not exceed 10 percent of the amount of tax due for the reporting period.

Example: Your tax amount is $1,000 for the reporting period. You file a late return and pay the tax late. As noted above, a 10 percent penalty applies for both the late payment and the late return filing. In this example, the total penalty amount is limited to $100 (10 percent of the $1,000 total tax amount due).

This general rule of penalty applies except for some special tax and fee programs listed below under Exceptions.

Exceptions

Alcoholic Beverage Tax

• A fifty-dollar ($50.00) penalty will apply if you do not file your tax return by its due date, even if the return reports zero tax due.
• A 10 percent or fifty-dollar ($50.00) penalty, whichever is greater, will apply if you do not file your tax return and do not pay the tax by the due date.

Hazardous Waste Generation and Handling Fee

• The penalties shown below will apply if you do not timely file your generation and handling fee return or do not pay the fee by the due date.

Please note: The penalties escalate based on the number of days your return filing or payment was late, and the sum of both penalties is capped at 100 percent of the total fee and are in addition to any other penalties imposed under the Hazardous Substance Tax Law.

Late Return Filing and Late Payment Penalties by Number of Days Late

International Fuel Tax Agreement (IFTA)

• A 10 percent or fifty-dollar ($50.00) penalty, whichever is greater, will apply if you do not file your tax return or do not pay the tax by the due date. A fifty-dollar ($50.00) penalty will apply if you file a return late, even with zero tax due.

Timber Yield Tax

• A one-hundred-dollar ($100.00) penalty will apply if you do not file your tax return by the due date, even if the return reports zero tax due. A 10 percent or one-hundred-dollar ($100.00) penalty, whichever is greater, will apply if you do not file your tax return and do not pay the tax by the due date.

Cannabis Tax

• In addition to the general 10 percent penalty for late filing and late payment, the Cannabis Tax Law (CTL) imposes a 50 percent failure-to-pay penalty if you do not pay your tax by its due date. For more information, see Revenue and Taxation Code (RTC) section 34013(f).

Example: You are a cannabis retailer with a tax amount due of $1,000 for the reporting period. You file a late return and make a late tax payment. A 10 percent penalty applies for the late payment and the late return filing under the Fee Collections Procedures Law (FCPL). In addition, a 50 percent penalty also applies under the CTL. In this example, the penalty amount is 10 percent per FCPL, plus the 50 percent penalty per the CTL, so a total 60 percent penalty, equaling $600, will apply.

Oil Spill Response Fee

• A $500 penalty will apply if you do not file your annual information report by its due date.

Failure to pay by EFT

The information in this section applies to account holders who are required to pay amounts due by EFT.
If we require you to pay by EFT, but you instead pay by cash, check, or credit card, you will be subject to a 10 percent penalty on the taxes. You must pay by EFT unless we advise you in writing that you are no longer required to do so.

Please note: If you are subject to multiple penalties, such as for late return filing, late payment, and failure to pay by EFT, your penalty will not exceed 10 percent of the amount of tax due.

Late tax prepayments

This section applies to account holders who pay taxes on a prepayment basis.

Interest

Interest generally does not apply to late tax prepayments as long as the full tax is paid by the due date for your return (see the Exception below). However, interest applies to any tax payments, including prepayments, made after the due date of a return. Interest is calculated monthly, starting the day after the return due date through the date the tax is paid. See Late tax return filings and late payments for examples of how interest is calculated. Exception: Sales and use tax account holders will still owe interest applied to a late prepayment if we grant you relief from the prepayment penalty. See Relief from Interest, Penalty, and the Collection Cost Recovery Fee for information on how to request relief.

Penalties

A penalty will apply if your prepayment is late. The Prepayment Chart below shows the program, prepayment requirement, due date, and the late prepayment penalty.

Prepayment Chart

Six percent penalty

If a prepayment is made after the prepayment due date but before the due date for the return, a six percent penalty applies. This amount can be increased to 10 percent if we determine that the prepayment was late as a result of negligence or intentional disregard of the Sales and Use Tax Law or Motor Vehicle Fuel Tax Law, for example, a continued failure to file prepayments or a continued underreporting of prepayments.

If we determine that the 10 percent penalty for negligence or intentional disregard applies, we will send a notice of deficiency determination to allow you an opportunity to dispute the penalty by filing a timely petition for redetermination. For instructions on how to file a petition for redetermination, refer to publication 17, Appeals Procedures: Sales and Use Taxes and Special Taxes.

Ten percent penalty

A 10 percent penalty applies to taxes paid after the due date of the return, including any tax prepayments made after the due date. If you made prepayments for a reporting period and are late on your final payment, the 10 percent penalty applies to your total tax amount due minus any payments and prepayments that are made by the due date.

Escalating penalty

This escalating penalty applies only to Hazardous Waste Generation and Handling Fee. If a prepayment is made after the prepayment due date, an escalating penalty applies based on the following schedule.

Failure to file a return

If we determine that you should have filed a tax return, but you failed to do so, we will send a notice of determination (bill) indicating the amounts you owe, including interest and penalty.

Interest

The interest applied to unpaid taxes applies in the same manner as the interest applied to taxes paid late with a return filed late. See Late tax return filings and late payments for examples of how interest is calculated.

Penalties

The penalty for failure to file a return is 10 percent of the tax amount that is due for each bill. An additional 25 percent penalty applies if the failure to file was due to fraud or intent to evade the tax, and you may be subject to criminal prosecution.

If you fail to timely file your Hazardous Waste Generation and Handling Fee Return, an escalating late return filing penalty between 10 percent to 100 percent will apply. See Escalating penalty for more information.

CDTFA billings

In some instances, we may discover unreported tax amounts due during an examination of accounts or your records. We will determine the amount due and send you a bill, which may include interest and penalty, if applicable.

Nonpayment or late payment of a bill

If we determine you owe tax, we will send you a bill, such as a notice of determination or notice of successor liability. The bill will indicate the amount you owe, including interest, penalty, and the CRF, if applicable. The bill will also explain your appeal rights.

Generally, if you do not pay the tax amount due by the due date on the bill (30 days from the date the bill was issued), an additional 10 percent penalty of the tax amount will apply unless you file an appeal by the due date, which is explained on the bill. Please refer to publication 17 for information about promptly filing an appeal of a bill.

When we make a decision on your appeal, you may receive a notice of redetermination. If you do not pay the tax amount due by the due date for the redetermination (30 days from the date the notice was issued), generally, a 10 percent penalty will apply to any unpaid tax amount due.

Interest continues to accrue on any unpaid tax, whether or not an appeal is filed.

Negligence or fraud

If we find that you did not report tax because of negligence or intentional disregard of the law, a 10 percent penalty will apply to your tax liability. If we find that the tax was not reported due to fraud or with the intent to evade the law, a 25 percent penalty will apply, and you may be subject to criminal penalties.

Failure to timely remit sales tax reimbursement or use tax collected from customers

A 40 percent penalty can apply if you knowingly collect sales tax reimbursement or use tax and do not timely remit it to us. The penalty applies when all of the following conditions are met:

• The unremitted tax averages over $1,500 per month for the reporting period, and
• The unremitted tax exceeds 25 percent of the total amount of tax liability for which sales tax reimbursement or use tax was collected for the period in which the tax was due.

If you can show that the tax was not timely remitted due to a reasonable cause or circumstances beyond your control, the penalty may not apply. For the purpose of this penalty, reasonable cause or circumstances beyond the person’s control include, but are not limited to:

• A death or serious illness of the person or the person’s next of kin.
• An emergency as defined in section 8558 of the Government Code.
• A natural disaster or other catastrophe directly affecting the person’s business operations.
• We did not send returns or other information to the correct address of record, which prevented the person from remitting the tax on time.
• The person failed to make a timely remittance only once over a three-year period or once during the period in which the person was engaged in business, whichever is shorter.
• The person voluntarily corrected the error by reporting the tax unremitted for previous reporting periods before CDTFA contacted the person about the possible errors.

Willfully or knowingly providing incorrect information or withholding information that results in a nonpayment or underpayment of the Hazardous Waste Generation and Handling Fee

For generation and handling fee payments and returns due on and after November 30, 2024, a 300 percent penalty will apply to the amount of the determination if it is proven that a taxpayer willfully or knowingly provided incorrect information or withheld information that resulted in no payment or underpayment of the generation and handling fee.

Examples of evidence of willfully or knowingly providing incorrect information may include, but are not limited to:

• The taxpayer reports certain tonnage of hazardous waste generated in the Department of Toxic Substances Control (DTSC)’s Hazardous Waste Tracking System (HWTS) but reports a lower and inaccurate tonnage to CDTFA, resulting in no payment or underpayment of the generation and handling fee.
• The taxpayer reports certain tonnage of hazardous waste generated in DTSC’s annual Electronic Verification Questionnaire (eVQ) but reports a lower and inaccurate tonnage to CDTFA, resulting in no payment or underpayment of the generation and handling fee.
• The taxpayer receives the annual generation and handling fee notice from DTSC, notifying the taxpayer of the tonnage of waste they generated during a calendar year, but the taxpayer reports a lower and inaccurate tonnage to CDTFA, resulting in no payment or underpayment of the generation and handling fee.

Improper use of a resale certificate

As the holder of a seller’s permit, you may issue a resale certificate to a seller to purchase property that you will resell in the regular course of business. If you issue a resale certificate to a seller in a timely manner and in good faith, the seller from whom you purchase the property will not collect the sales tax or use tax from you.

If you issue a resale certificate with the intent to evade reporting or paying tax reimbursement to the seller when purchasing property, which you know at the time of purchase you will use rather than resell, you may be subject to a misdemeanor under RTC section 7153. Each offense is punishable by a fine of not less than $1,000 and not more than $5,000, imprisonment not exceeding one year, or both fine and imprisonment.

Interest

If you misuse a resale certificate, you will owe the tax that should have been paid plus interest on that tax. Interest is calculated in the same manner as interest for taxes that are paid late. See Late tax return filings and late payments for examples of how interest is calculated.

Penalties

The penalty for the improper use of a resale certificate is $500 for each transaction or 10 percent of the amount of tax due, whichever is higher.

In addition, if you fail to report and pay use tax due on the use of the property purchased improperly with a resale certificate, you may be liable for the 10 percent penalty for negligence or the 25 percent penalty for fraud.

For more information, see Regulation 1668, Sales for Resale.

Misuse of a Certificate of Farming Use

If you issue CDTFA-608, Certificate of Farming Use, to purchase diesel fuel without the diesel fuel tax and know at the time of purchase that you will not use the diesel fuel on a farm for farming purposes, you will be liable for the tax, a penalty in the amount of 25 percent of the tax or $500 (whichever is greater), and interest. If we determine that you misused a Certificate of Farming Use, the tax, applicable penalties, and interest will be immediately due and payable without any period allowed for petition.

Use tax on motor vehicles, aircraft, mobilehomes, vessels, and commercial coaches

In general, you will owe use tax if:

• You purchase motor vehicles, aircraft, mobilehomes, vessels, and commercial coaches from someone who is not engaged in business as a seller of those items (from a private party, for example), and
• You use, store, or otherwise consume the property in California.

If you owe use tax, you must file a return and make a payment to us unless you:

• Purchase a vehicle, undocumented vessel, or commercial coach that must be registered with the Department of Motor Vehicles (DMV). DMV will collect the use tax from you.
• Purchase a mobilehome that must be registered with the California Department of Housing and Community Development (HCD). HCD will collect the use tax from you.

The due date for the use tax payment varies by the item and with whom it is registered. For information on due dates, call our Customer Service Center at 1-800-400-7115 (TTY:711).

Interest

You will owe interest on your use tax amount due if you:

• Pay less than the correct amount due (for example, you may have paid an incorrect amount because the purchase price was understated).
• Do not file a return (including failing to register with DMV or HCD).
• File a return, but do not pay the tax.
• Make a late payment or file a late return.

Interest is due for each month or fraction of a month the tax payment is overdue. If you paid less than the correct amount of tax owed by the due date, the interest applies to the remaining unpaid amount of tax due. See Late tax return filings and late payments for examples of how interest is calculated.

Penalties

One or more of the following penalties may apply to the tax amount due:

• 10 percent for failing to file a return (including failing to register with DMV or HCD).
• 10 percent for late payment.
• 10 percent for late filing of a return.
• 10 percent for negligence.
• 10 percent for failure to pay the correct amount of tax (the 10 percent would apply only to the additional tax due).
• 25 percent for fraud or evasion.
• 50 percent for registering a vehicle, vessel, or aircraft outside California to evade payment of tax.

Businesses operating without permits or licenses

You must obtain a seller’s permit if you are engaged in business in California and intend to sell or lease items that are ordinarily subject to sales tax when sold at retail, even if you make no retail sales. If you do not obtain a valid seller’s permit prior to the date in which the first tax return is due, you are subject to a penalty and interest.

In addition to a seller’s permit, we may require you to obtain other licenses, permits, or accounts depending on the nature of your business. For example, if you are a retailer of cigarettes or tobacco products, you must hold a Cigarette and Tobacco Products Retailer’s License and a seller’s permit.

Penalties

Sales and use tax

In addition to the 10 percent penalty for failure to file a return by its due date, a 50 percent penalty may also apply if we determine you knowingly did not obtain a valid seller’s permit in order to evade the tax before the date the first sales and use tax return was due. The 50 percent penalty applies to the sales and use taxes that should have been paid during the period you were engaged in business in California without a valid seller’s permit. If your taxable sales during the period averaged $1,000 or less per month, the 50 percent penalty does not apply. The 50 percent penalty also does not apply to sales of vehicles, vessels, or aircraft if the transaction is subject to a 50 percent penalty for registering outside of California to evade payment of tax.

Please note: As provided in RTC section 6077(a), retail florists who sell without a valid California seller’s permit are subject to an additional penalty of $500.

Cigarette and tobacco products tax

If you operate as a cigarette or tobacco products distributor without first securing the appropriate licenses, a 25 percent penalty of the tax amount determined to be due or $500, whichever is greater, will apply. This penalty is in addition to the 10 percent penalty for failing to file a return by its due date.

Diesel fuel tax

If you become a diesel fuel supplier without first securing a license, the penalty for an unlicensed person is 25 percent of the amount of tax or $500, whichever is greater. This is in addition to the 10 percent penalty for failure to file a return by its due date.

Motor vehicle fuel tax

If you become a motor vehicle fuel supplier without first securing a license, the penalty for an unlicensed person is 25 percent of the amount of tax. This is in addition to the 10 percent penalty for failure to file a return by its due date.

Cannabis excise tax

Any person or business who is required to be licensed by the Department of Cannabis Control (DCC) and fails to pay the excise taxes will be subject to a penalty of at least one-half of the unpaid taxes (RTC section 34013(f)) in addition to the unpaid cannabis excise taxes. Any unlicensed person who engages in commercial cannabis activity may also be subject to a penalty of 25 percent of the amount of tax or $500, whichever is greater, which will be added to a determination as provided in RTC section 34015.1(a)(2)(A).

Citations

If a citation is issued, the business owners will be required to appear in court and may be subject to fines up to $5,000, imprisonment, or in some cases, both fines and imprisonment. Any back taxes, including penalties and interest, must also be paid. Other penalties may also apply.

For information on the different tax and fee program requirements, visit our Special Taxes and Fees webpage or call our Customer Service Center at 1-800-400-7115 (TTY:711). You may also refer to publication 73, Your California Seller’s Permit, or Regulation 1699, Permits.

Motor vehicle fuel and diesel fuel backup tax

In California, the motor vehicle fuel tax and the diesel fuel tax are due when you remove fuel from the rack (terminal) or import it into California. If the diesel fuel tax or motor vehicle fuel tax was not imposed or was refunded (as applicable) on fuel that is placed into the fuel tank of a motor vehicle, you will owe the fuel tax as a backup tax. In addition to the backup tax, a penalty of 25 percent of the amount of tax or $500, whichever is greater, will be imposed.

Using dyed diesel fuel on California roads or highways

You must not operate a vehicle using dyed diesel fuel on California roads and highways unless you are authorized to do so by federal and state law and are licensed by us as a qualified highway vehicle operator, exempt bus operator, or government entity. The penalty for each violation of unauthorized use of dyed diesel fuel on California roads and highways is $10 for every gallon of dyed diesel fuel involved or $1,000, whichever is greater. The penalty for each subsequent violation will increase by multiplying the penalty amount by the number of prior violations, including the penalty currently being determined and any previous penalties. The penalty is generally imposed against the vehicle owner.

The same penalty applies to a seller of dyed diesel fuel who sells to an unauthorized individual or who does not post proper notice according to RTC section 60102.

For more information, see our Tax Guide for Motor Vehicle Fuel and Diesel Fuel Tax.

Cannabis tax evasion

Any person who willfully evades or attempts (in any manner) to evade the payment of the cannabis excise tax is subject to penalties under RTC section 55363. Violators are subject to fines and, in some cases, imprisonment.

Examples of willfully evading or attempting to evade payment of the cannabis excise tax include, but are not limited to:

• A cannabis retailer collects the cannabis excise tax from its customers but intentionally does not report and pay the cannabis excise tax to us.
• A person who is required to be licensed as a cannabis retailer engages in commercial cannabis activity but intentionally does not collect, report, or pay cannabis excise tax to us.

Cigarette and tobacco products tax violations

Distributors of cigarettes and tobacco products are responsible for reporting and paying the Cigarette and Tobacco Products Tax. Retailers of cigarettes and tobacco products must purchase and possess only tax-paid cigarettes, affixed with a California tax stamp, and tax-paid tobacco products. If a retailer possesses, stores, owns, or sells untaxed cigarettes or tobacco products on which tax is due, but has not been paid by a distributor, we or a law enforcement agency may seize the cigarettes and tobacco products.

If you violate these requirements, it is a misdemeanor. Each offense will be punished by either a fine of no more than $5,000, imprisonment up to one year in county jail, or both the fine and imprisonment.

To support that your retail inventory consists of tax-paid cigarettes and tobacco products, a retailer must retain valid purchase invoices for four years. You must keep the purchase invoices at each retail location for at least one year after the purchase.

For more information, see our Tax Guide for Cigarettes and Tobacco Products.

Swap meets, flea markets, and special events

Operators of swap meets, flea markets, and other special events must prepare special reports and meet other requirements related to those events. Operators who fail to comply with these requirements are subject to a penalty of $1,000 per offense. For more information, refer to publication 111, Operators of Swap Meets, Flea Markets, or Special Events, or contact your local office.

Sales suppression software programs and devices

It is a crime for anyone to knowingly sell, purchase, install, transfer, or possess software programs or devices that are used to hide or remove sales to evade tax.

Using these devices gives an unfair competitive advantage over business owners who comply with the law and pay their fair share of taxes and fees. Violators could face up to three years in county jail, fines of up to $10,000, and will be required to pay all illegally withheld taxes, penalties, and applicable interest and fees.

All sales of counterfeit goods are taxable

If you are convicted of selling or purchasing counterfeit goods, all of your sales and purchases of those counterfeit goods will be considered taxable. This applies whether you are a manufacturer, wholesaler, distributor, or retailer of counterfeit goods. You may no longer claim a resale deduction for the sale of counterfeit goods, and any purchases made of counterfeit goods for subsequent resale will also be taxable.

Counterfeit goods commonly refer to property with a counterfeit mark. In general terms, a counterfeit mark is a mark that is identical with, or substantially indistinguishable from, a mark registered with the United States Patent and Trademark Office. In California, it is illegal for any person to willfully manufacture, intentionally sell, or knowingly possess counterfeit goods for sale.

We may bill you for unpaid sales or use tax within one year after the last day of the calendar month following the date of conviction. By billing convicted counterfeit goods traffickers, we are discouraging the criminal sale of counterfeit goods and leveling the playing field for all businesses.

If you suspect counterfeit goods are being sold, visit the Department of Justice website for the Tax Recovery in the Underground Economy (TRUE) webpage. There, you will find information on how we are teaming up with other agencies to combat illegal business activities and how you can report a crime.

Collection Cost Recovery Fee on past due amounts

We impose a Collection Cost Recovery Fee (CRF) on past-due liabilities. You may be assessed a CRF if you:

• Do not pay your amount due in full within 90 days after the demand notice is issued.
• Do not enter into a payment plan within 90 days after the demand notice is issued, and do not successfully complete the terms of the agreement.

The CRF applies to each final billing greater than $250 that remains unpaid for more than 90 days after the date a demand notice is issued. The CRF may only be imposed if we have sent a demand notice requiring payment and advised you that continued failure to pay the amount due may result in collection action.

Please note: The CRF does not apply to Jet Fuel Tax, Motor Vehicle Fuel Tax, and Insurance Tax (Tax on Insurers).