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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Cigarette and Tobacco Products Tax Law > Chapter 4 > entire chapter

Cigarette and Tobacco Products Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 13. Cigarette Tax
Chapter 4. Determinations

Article 1. Reports and Payments

30181. Due date. [Repealed by Stats. 2003, Ch. 867 (AB 1666), in effect January 1, 2004.]

30181. Due Date (a) If any tax imposed upon cigarettes under this part is not paid through the use of stamps or meter impressions, the tax shall be due and payable monthly on or before the 25th day of the month following the calendar month in which a distribution of cigarettes occurs, or in the case of a sale of cigarettes on the facilities of a common carrier for which the tax is imposed pursuant to Section 30104, the tax shall be due and payable monthly on or before the 25th day of the month following the calendar month in which a sale of cigarettes on the facilities of the carrier occurs.

(b) Each distributor of tobacco products shall file a return using electronic media in the form, as prescribed by the department respecting the distributions of tobacco products and their wholesale cost during the preceding month, and any other information as the department may require to carry out this part. The return shall be filed with the department on or before the 25th day of the calendar month following the close of the monthly period for which it relates, together with a remittance payable to the department, of the amount of tax, if any, due under Article 2 (commencing with Section 30121) or Article 3 (commencing with Section 30131) of Chapter 2 for that period.

(c) To facilitate the administration of this part, the department may require the filing of the returns for longer than monthly periods.

(d) Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

History—Added by Stats. 2003, Ch. 867 (AB 1666), in effect January 1, 2004. Proposition 56, Section 5.5, approved by voters at the November 8, 2016 election, in effect November 9, 2016, substitutes "If" for "When" before "any tax imposed upon cigarettes" and substitutes "this part" for "Article 1 (commencing with Section 30101 … Section 30131) of Chapter 2" after "imposed upon cigarettes under" in subdivision (a); substituted "that" for "which" after "as prescribed by the board," in the first sentence of subdivision (b); and deleted former subdivision (e). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added "using electronic media" after "shall file a return", and substituted "department" for "board, that may…electronic media" after "as prescribed by the" in the first sentence of subdivision (b); and substituted "department" for "board" throughout.

30182. Report by licensed distributor. [Repealed by Stats. 2006, Ch. 70 (AB 2001), in effect January 1, 2007.]

30182. Report by licensed distributor. (a) Except as provided in subdivision (b), a distributor shall file, on or before the 25th day of each month, a report using electronic media in the form as prescribed by the department with respect to distributions of cigarettes and purchases of stamps and meter register units during the preceding month and any other information as the department may require to carry out this part.

(b) Reports shall be authenticated in a form, or pursuant to methods, as may be prescribed by the department.

History—Stats. 1967, p. 2520, operative August 1, 1967, substituted "20th" for "fifteenth." Stats. 1968, p. 1101, in effect November 13, 1968, substituted "25th" for "20th". Stats. 1989, Chapter 634, in effect September 21, 1989, added "(a)" before first paragraph, deleted "the purposes of" before "this part." in subdivision (a), and added subdivision (b). Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003, deleted "on forms prescribed by the board" after "every distributor shall file" in, added "in the form … electronic media" after "a report" to, substituted "any" for "such" after "preceding month, and" in, and added the second sentence to, subdivision (a); deleted ", on forms prescribed by the board," after "shall file" in, added "in the form … electronic media" after "a return" to, substituted "any" for "such" after "preceding month, and", and added the second sentence to, subdivision (b). Stats. 2003, Ch. 890 (AB 71), in effect January 1, 2004, substituted "Except as provided in subdivision (b)," for "On" before "every distributor shall file", added ", on" after "distributor shall file", substituted "that" for "which" after "by the board,", and substituted "with respect to" for "respecting his" after "electronic media" in the first sentence, and deleted the former last sentence "Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the board." in subdivision (a); substituted "Every distributor that elects … shall file a report" for "On or before the 25th day of each month, each distributor shall file a return" before "in the form as prescribed by the board", substituted "that" for "which" after "by the board,", substituted "with respect to" for "respecting his or her" after "electronic media,", substituted "cigarettes and purchases of stamps … meter register settings were purchased," for "tobacco products and their wholesale cost during the preceding month," after "distributions of" in the first sentence, deleted former last sentence "Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board." and added last sentence to subdivision (b); and added subdivisions (c) and (d). Stats. 2006, Ch. 70 (AB 2001), in effect January 1, 2007, substituted "fifth" for "5th" after "on or before the" in the second paragraph of subdivision (b); and deleted the former subdivision (d) which stated "This section shall remain in effect until January 1, 2007, and as of that date is repealed.". Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008, deleted former subdivision (b) and relettered former subdivision (c) as subdivision (b). Stats. 2008, Ch. 179 (SB 1498), in effect January 1, 2009, substituted "a" for "every" after "provided in subdivision (b)," in subdivision (a); and deleted the comma after "form, or pursuant to" and added a comma after "pursuant to methods" in subdivision (b). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added "using electronic media" after "25th day of each month, a report", and substituted "department" for "board, that may… that electronic media" after "as prescribed by the” in the first sentence of subdivision (a); and substituted "department" for "board" throughout.

Note.—SEC. 9. of Stats. 2003. Ch. 867 (AB 1666), effective January 1, 2004, states, The Legislative Analyst, with assistance of, and based on information provided by, the State Board of Equalization, shall, on or before January 1, 2006, prepare a report to the Legislature of the economic impact of this act. The report shall include an evaluation of the State Board of Equalization's ability to collect cigarette tax revenues, additional revenues, if any, generated by the twice-monthly payment program, and the ability of distributors to access security bonds.

30183. Report by registered distributor. (a) On or before the 25th day of each month every distributor required under Section 30108 to collect any tax during the preceding month shall file a report with the department using electronic media in the form as prescribed by the department showing the number of cigarettes with respect to which the distributor was required to collect the tax and any other information as the department may require to carry out the purposes of this part. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

(b) On or before the 25th day of each month, each distributor required to collect any tax during the preceding month pursuant to Section 30108 shall file a return, in the form as prescribed by the department that shows the wholesale cost of tobacco products with respect to which the distributor was required to collect the tax and any other information as the department may require to carry out this part. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

30184. Remittance of tax. The distributor shall submit with each report or return a remittance payable to the board for the amount of tax due.

History—Stats. 1989, Ch. 634, in effect September 21, 1989, added "or return" after "report".

30185. Extension of time. (a) Except as provided in subdivision (b) and otherwise provided in Section 30172, the board for good cause may extend for not to exceed one month the time for making any report or return or paying any amount of tax required under this part. The extension may be granted at any time provided a request therefor is filed with the board within or prior to the period for which the extension may be granted.

(b) (1) In the case of a disaster, the board, for a period not to exceed three months, may extend the time for making any report or return or paying any tax required under this part. The extension may be granted at any time provided a request therefor is filed with the board within or before the period for which the extension may be granted.

(2) For purposes of this section, "disaster" means fire, flood, storm, tidal wave, earthquake, or similar public calamity, whether or not resulting from natural causes.

(c)Any person to whom an extension is granted pursuant to this section shall pay, in addition to the amount of tax, interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5 from the date on which the amount of tax would have been due without the extension to the date of payment.

History—Stats. 1963, p. 1440, in effect September 20, 1963, added the reference to § 30172 and substituted "one month" for "30 days." Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "1 percent" for "one-half of 1 percent." Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … thereof" before "from" in the second paragraph. Stats. 1984, Ch. 1020, effective January 1, 1985, operative July 1, 1985, substituted "modified … thereof" for "adjusted annual rate," substituted "Section 6591.5" for "Section 19269." Stats. 1989, Ch. 634, in effect September 21, 1989, added "or return" after "report" in first paragraph. Stats. 2016, Ch. 257 (AB 1559), in effect September 9, 2016, lettered first paragraph as subdivision (a) and added "provided in subdivision (b) and" after "Except as" in the first sentence of subdivision (a); added new subdivision (b); and lettered former last paragraph as subdivision (c).

30185.5 Extension of time; state of emergency proclamation. (a) Subject to subdivision (c), if the Governor issues a state of emergency proclamation, the department may extend the time, for a period not to exceed three months, for making any report or return or paying any tax required under this part for any person in an area identified in the state of emergency proclamation.

(b) If the department makes an extension pursuant to subdivision (a), any person in an area identified in a state of emergency proclamation shall not be required to file a request for the extension.

(c) The department may make the extension in subdivision (a) only during the first 12 months following the issuance of the state of emergency proclamation or the duration of the state of emergency, whichever is less.

History—Added by Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023.

30186. Report of sales on common carrier. On or before the 25th day of each month, the common carriers and authorized persons specified in Section 30104 shall file, using electronic media, with the department a report of the sales of cigarettes or tobacco products made by them on the facilities of the carriers in California in the preceding calendar month in that detail as the department may prescribe and in the form as prescribed by the department, submitting with the report the amount of the tax due under Section 30104. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

History—Stats. 1967, p. 2520, operative August 1, 1967, substituted "20th" for "fifteenth." Stats. 1968, p. 1101, in effect November 13, 1968, substituted "25th" for "20th". Stats. 1989, Ch. 634, in effect September 21, 1989, added "or tobacco products" after "cigarettes". Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003, substituted "that" for "such" after "calendar month in", deleted "and form" after "detail", added "and in the form … electronic media," after "may prescribe" and added the last sentence. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added ", using electronic media," after "Section 30104 shall file", substituted "department" for "board, which may…electronic media" after "as prescribed by the", and substituted "department" for "board" throughout.

30187. Report of consumer. Every consumer or user subject to the tax resulting from a distribution of cigarettes or tobacco products within the meaning of subdivision (b) of Section 30008 from whom the tax has not been collected under Section 30108 shall, on or before the last day of the month following the end of the quarter, file, using electronic media, with the department a report of the amount of cigarettes or tobacco products received by that person in the preceding calendar quarter in that detail as the department may prescribe and in the form as prescribed by the department, submitting with the report the amount of tax due. Reports shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

History—Stats. 1961, p. 2500, operative July 1, 1961, changed the cross-reference to Section 30008 from subdivision (d) to subdivision (b). Stats. 1967, p. 2521, operative August 1, 1967, substituted "20th" for "15th." Stats. 1968, p. 1101, in effect November 13, 1968, substituted "25th" for "20th". Stats. 1989, Ch. 634, in effect September 21, 1989, added "or tobacco products" after "cigarettes" and added "or her" after "by him". Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003, added commas after "Section 30108 shall" and "tobacco products", substituted "that" for "such" after "calendar month in", deleted "and form" after "detail", added "and in the form … electronic media," after "may prescribe" and added the last sentence. Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008, substituted "last" for "25th" after "on or before the", substituted "the end of the quarter" for "receipt of cigarettes or tobacco products" after "of the month following", added "or tobacco products" after "of the amount of cigarettes", and substituted "quarter" for "month" after "in the preceding calendar" in the first sentence. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added ", using electronic media," after "the end of quarter, file", substituted "that person" for "him or her" after "tobacco products received by", substituted "department" for "board, which may…electronic media" after "as prescribed by the", and substituted "department" for "board" throughout.

30188. Report by wholesaler. On or before the 25th day of each month, every wholesaler shall file a report in the form as prescribed by the board, which may include, but not be limited to, electronic media respecting his or her inventory, purchases, and sales of cigarettes or tobacco products during the preceding month and any other information as the board may require to carry out the purposes of this part. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the board.

History—Added by Stats. 1968, p. 2250, in effect November 13, 1968. Stats. 1999, Ch. 941 (SB 1231), in effect January 1, 2000, added "or tobacco products" after "sales of cigarettes." Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003, deleted "on forms prescribed by the board" after "wholesaler shall file", added "in the form … electronic media" after "a report", added "or her" after "respecting his", substituted "any" for "such" after "preceding month", and added the last sentence.

Article 1.1. Payment by Electronic Funds Transfer1

1Article 1.1 was added by Stats. 2000, Ch. 923 (AB 2894), in effect January 1, 2001.

30190. Electronic funds transfer payments. (a) Any person whose estimated tax liability under this part averages twenty thousand dollars ($20,000) or more per month, as determined by the board pursuant to methods of calculation prescribed by the board, shall remit amounts due by an electronic funds transfer under procedures prescribed by the board.

(b) Any person whose estimated tax liability under this part averages less than twenty thousand dollars ($20,000) per month may elect to remit amounts due by electronic funds transfer with the approval of the board.

(c) Any person remitting amounts due pursuant to subdivision (a) or (b) shall perform electronic funds transfer in compliance with the due dates set forth in Article 1 (commencing with Section 30181). Payment is deemed complete on the date the electronic funds transfer is initiated, if settlement to the state's demand account occurs on or before the banking day following the date the transfer is initiated. If settlement to the state's demand account does not occur on or before the banking day following the date the transfer is initiated, payment is deemed to occur on the date settlement occurs.

(d) Any person remitting taxes by electronic funds transfer shall, on or before the due date of the remittance, file a return for the preceding reporting period in the form and manner prescribed by the board. Any person who fails to timely file the required return shall pay a penalty of 10 percent of the amount of taxes with respect to the period for which the return is required.

(e) Any person required to remit taxes pursuant to this article who remits those taxes by means other than appropriate electronic funds transfer shall pay a penalty of 10 percent of the taxes incorrectly remitted.

(f) Any person who fails to pay any tax to the state or any amount of tax required to be collected and paid to the state, except amounts of determinations made by the board under Article 3 (commencing with Section 30173) or Article 2 (commencing with Section 30201) or Article 3 (commencing with Section 30221), within the time required shall pay a penalty of 10 percent of the tax or amount of tax, in addition to the tax or amount of tax, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date on which the tax became due and payable to the state until the date of payment.

(g) In determining whether a person's estimated tax liability averages twenty thousand dollars ($20,000) or more per month, the board may consider tax returns filed pursuant to this part and any other information in the board's possession.

(h) The penalties imposed by subdivisions (d), (e), and (f) shall be limited to a maximum of 10 percent of the taxes due for any one return. Any person remitting taxes by electronic funds transfer shall be subject to the penalties under this section and not Section 30281.

(i) The board shall promulgate regulations pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code for purposes of implementing this section.

History—Stats. 2005, Ch. 519 (AB 1765), in effect October 4, 2005, but operative January 1, 2006, deleted the former last sentence of subdivision (b) which provided "The election shall be operative for a minimum of one year."

30191. Relief of penalty. If the board finds that a person's failure to make payment by an appropriate electronic funds transfer in accordance with board procedures is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, that person shall be relieved of the penalty provided in subdivision (e) of Section 30190. Any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief.

30192. Definitions. (a) "Electronic funds transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape, so as to order, instruct, or authorize a financial institution to debit or credit an account. Electronic funds transfers shall be accomplished by an automated clearinghouse debit, an automated clearinghouse credit, or by Federal Reserve Wire Transfer (Fedwire).

(b) "Automated clearinghouse" means any federal reserve bank, or an organization established in agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and which authorizes an electronic transfer of funds between these banks or bank accounts.

(c) "Automated clearinghouse debit" means a transaction in which the state, through its designated depository bank, originates an automated clearinghouse transaction debiting the person's bank account and crediting the state's bank account for the amount of tax. Banking costs incurred for the automated clearinghouse debit transaction shall be paid by the state.

(d) "Automated clearinghouse credit" means an automated clearinghouse transaction in which the person through his or her own bank, originates an entry crediting the state's bank account and debiting his or her own bank account. Banking costs incurred for the automated clearinghouse credit transaction charged to the state shall be paid by the person originating the credit.

(e) "Fedwire transfer" means any transaction originated by a person and utilizing the national electronic payment system to transfer funds through the federal reserve banks, when that person debits his or her own bank account and credits the state's bank account. Electronic funds transfers pursuant to Section 30190 may be made by Fedwire only if payment cannot, for good cause, be made according to subdivision (a), and the use of Fedwire is preapproved by the board. Banking costs incurred for the Fedwire transaction charged to the person and to the state shall be paid by the person originating the transaction.

30193. Electronic filing. (a) Any return, report, declaration, statement, or other document required to be made under this part that is filed using electronic media shall be filed and authenticated pursuant to any method or form the board may prescribe.

(b) Notwithstanding any other law, any return declaration, statement, or other document otherwise required to be signed that is filed by the taxpayer using electronic media in a form as required by the board shall be deemed to be a signed, valid original document, including upon reproduction to paper form by the board.

(c) Electronic media includes, but is not limited to, computer modem, magnetic media, optical disk, facsimile machine, or telephone.

History—Added by Stats. 2002, Ch. 459 (AB 1936), in effect January 1, 2003.

Article 2. Deficiency Determinations

30201. Basis of deficiency determination. If the board is dissatisfied with the report or return filed by any person, it may compute and determine the amount to be paid upon the basis of any information available to it. One or more deficiency determinations may be made of the amount of tax due for one or for more than one month.

History—Stats. 1989, Ch. 634, in effect September 21, 1989, added "or return" after "report".

30202. Interest. The amount of the determination, exclusive of penalties, shall bear interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date the amount of the tax, or any portion thereof, should have been reported until the date of payment.

History—Stats. 1967, p. 2521, operative August 1, 1967, substituted "date" for "fifteenth day after the close of the month for which." Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "1 percent" for "one-half of 1 percent." Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "adjusted … 19269" for "rate … thereof" before "from." Stats. 1984, Ch. 1020, effective January 1, 1985, operative July 1, 1985, substituted "Section 6591.5" for "Section 19269."

30203. Offset. In making a determination the board may offset overpayments for a month or months against underpayments for another month or months and against the interest and penalties on the underpayments.

30204. Penalty. If any part of the deficiency for which a deficiency determination is made is due to negligence or intentional disregard of this part or the rules and regulations adopted under this part, a penalty of 10 percent of the amount of the determination shall be added thereto.

30205. Fraud penalty. If any part of the deficiency for which a deficiency determination is made is due to fraud or an intent to evade this part or the rules and regulations adopted under this part, a penalty of 25 percent of the amount of the determination shall be added thereto.

30206. Notice of determination. The department shall give the person written notice of its determination. The notice shall be served in one of the following manners:

(a) By placing the notice in a sealed envelope, with postage paid, addressed to the person at their address as it appears in the records of the department. Service made pursuant to this subdivision shall be deemed complete at the time of deposit of the notice in the United States Post Office, or a mailbox, sub-post office, substation, or mail chute, or other facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason.

(b) By personally delivering the notice to the person to be served. Service made pursuant to this subdivision shall be deemed complete at the time of such delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

(A) The taxpayer requests the notice of determination to be sent electronically via secure transmission.

(B) The department has evidence that the taxpayer no longer receives mail at the address of record and has previously provided an address for electronic mail.

(2) Service provided pursuant to paragraph (1) shall be deemed complete at the time the department electronically transmits the notice via the taxpayer’s secure web portal, without extension of time for any reason.

History—Stats. 1974, Ch. 610, effective January 1, 1975, revised and enlarged the section and deleted the reference to Section 1013 of the C.C.P. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "department" for "board" throughout; substituted "served in one of the following manners:" for "placed" after shall be in second sentence; redesignated remainder of second sentence and third sentence as subdivision (a); added "By placing the notice" before "in a sealed", substituted "their" for "his" before "address" in the first sentence, and substituted "Service made … this subdivision" for "The giving of notice" before "shall be" and added a comma after "substation" and "chute" in the second sentence of new subdivision (a); redesignated fourth and fifth sentences as subdivision (b); substituted "By personally delivering the notice" for "In lieu … by delivering it" before "to the person", deleted "and service" in the new first sentence and added "Service made … this subdivision" before" "shall be" in new second sentence of new subdivision (b); and added subdivision (c).

30207. Statute of limitation. Except in the case of fraud, intent to evade the tax, or failure to make a report or return, every notice of a deficiency determination shall be served within three years after the 25th day of the month following the month for which the amount should have been paid or the report or return was due, or within three years after the report or return was filed, whichever period expires later. In the case of failure to make a report or return, the notice of determination shall be served within eight years after the date the report or return was due.

History—Stats. 1968, p. 1102, in effect November 13, 1968, substituted "25th day … for which" for "date when". Stats. 1993, Ch. 1113, in effect January 1, 1994, added "or return" following "report"; and substituted "paid or the report … return was due" for "reported" at the end of the section. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "served" for "given" after "shall be" in the first sentence and "served" for "mailed" after "shall be" in the second sentence.

30207.1. Limitations; deficiency determination; decedent. In the case of a deficiency arising under this part during the lifetime of a decedent, a notice of deficiency determination shall be served within four months after written request therefor, in the form required by the department, by the fiduciary of the estate or trust or by any other person liable for the tax or any portion thereof.

History—Added by Stats. 1968, p. 2449, in effect November 13, 1968. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "served" for "mailed" after "shall be" and "department," for "board," after "required by the".

30208. Waiver. If before the expiration of the time prescribed in Section 30207 for serving a notice of deficiency determination the taxpayer has consented in writing to the service of the notice after such time, the notice may be served at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

History—Added by Stats. 1965, p. 4441, in effect September 17, 1965. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "serving" for "the mailing of" after "Section 30207 for", "service" for "mailing" after "writing to the", and "served" for "mailed" after "notice may be" in the first sentence.

Article 2.5. Payment by Unlicensed Persons1

1Article 2.5 was added by Stats. 2003, Ch. 890 (AB 71), in effect January 1, 2004.

30210. Immediate liability for tax. If any person becomes a cigarette or tobacco products distributor without first securing a license, the tax, and applicable penalties and interest, if any, become immediately due and payable on account of all cigarettes or tobacco products distributed. All cigarettes or tobacco products manufactured in this state or transported to this state, and no longer in the possession of the unlicensed distributor, are considered to have been distributed.

30211. Penalty. The board shall forthwith ascertain as best it may the amount of the cigarettes or tobacco products distributed and shall determine immediately the tax on that amount, adding to the tax a penalty of 25 percent of the amount of tax or five hundred dollars ($500), whichever is greater, and shall give the unlicensed person notice of that determination per Section 30244 of the Cigarette and Tobacco Products Tax Law. However, where the board determines that the failure to secure a license was due to reasonable cause, the penalty may be waived. Sections 30242 and 30243 shall be applicable with respect to the finality of the determination and the right of the unlicensed person to petition for a redetermination.

Any person seeking to be relieved of the penalty shall file with the board a signed statement setting forth the facts upon which he or she bases the claim for relief. Any person who signs a statement pursuant to this section that asserts the truth of any material matter that he or she knows to be false is guilty of a misdemeanor punishable by imprisonment of up to one year in the county jail, or a fine of not more than one thousand dollars ($1,000), or both the imprisonment and the fine.

History—Stats. 2004, Ch. 82 (AB 2491), in effect June 30, 2004, substituted "give the unlicensed person notice of that" for "issue a jeopardy" after "whichever is greater, and shall" and deleted "to the unlicensed person pursuant to Section 30241 and give the unlicensed person notice" after "of that determination" in the first sentence of the first paragraph.

30212. Seizure and sale of property. The board shall forthwith collect the tax, penalty, and interest due from the unlicensed person by seizure and sale of property in the manner prescribed for the collection of a delinquent monthly tax.

30213. Copy of determination. In the suit, a copy of the jeopardy determination certified by the board shall be prima facie evidence that the unlicensed person is indebted to the state in the amount of the tax, penalties, and interest computed as prescribed by Section 30223.

30214. Cumulative remedies. The foregoing remedies of the state are cumulative.

30215. Applicable penal provisions. No action taken pursuant to this article relieves the unlicensed person in any way from the penal provisions of this part.

30216. Repeal date. [Repealed by Stats. 2006, Ch. 501 (AB 1749), in effect January 1, 2007.]

Article 3. Determinations If No Report or Return Made

30221. Basis of determination; penalty. If any person fails to make a report or return, the board shall make an estimate of the number of cigarettes or the wholesale cost of tobacco products distributed by him or her. The estimate shall be made for the month or months in respect to which the person failed to make a report or return and shall be based upon any information available to the board. Upon the basis of this estimate the board shall compute and determine the amount required to be paid to the state, adding to the sum thus fixed a penalty equal to 10 percent thereof. One or more determinations may be made for one or for more than one month.

History—Stats. 1967, p. 2521, operative August 1, 1967, deleted ", sold or received" following "distributed" in the first sentence. Stats. 1989, Ch. 634, in effect September 21, 1989, added "or return" after "report" in the first and second sentences, added "or the … products" before "distributed" and added "or her" after "him" in the first sentence.

30222. Offset. In making a determination the board may offset overpayments for a month or months against underpayments for another month or months and against interest and penalties on the underpayments.

30223. Interest. The amount of the determination, exclusive of penalties, shall bear interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5 from the date the amount, or any portion thereof, should have been reported until the date of payment.

30224. Fraud penalty. If the failure of a person to file a report is due to fraud or an intent to evade the tax, a penalty of 25 percent of the amount required to be paid by the person, exclusive of penalties, shall be added thereto in addition to the 10 percent penalty provided in Section 30221.

30225. Notice of determination. Promptly after making its determination the department shall give to the person written notice of its estimate and determination, and of the penalty, the notice to be served in the manner prescribed for service of notice of a deficiency determination.

History—Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "department" for "board" after "its determination the" and deleted "personally or by mail" after "served".

Article 4. Jeopardy Determinations

30241. Basis of determination. If the board believes that the collection of any amount of tax required to be paid by any person under this part will be jeopardized by delay, it shall thereupon make a determination of the amount of tax, noting that fact upon the determination. The amount determined is immediately due and payable.

30242. Finality date. If the amount of the tax, interest, and penalty specified in the jeopardy determination is not paid within 10 days after service upon the person of notice of the determination, the determination becomes final, unless a petition for redetermination is filed within the 10 days, and the delinquency penalty and interest provided in Article 6 of this chapter shall attach to the amount specified.

30243. Petition for redetermination; security. The person against whom a jeopardy determination is made may petition for the redetermination thereof pursuant to Article 5 of this chapter. They shall, however, file the petition for redetermination with the department within 10 days after the service upon them of notice of the determination. The person shall at the time of filing the petition for redetermination deposit with the department such security as it may deem necessary to insure compliance with this part. The security may be sold by the department at public sale if it becomes necessary in order to recover any amount due under this part. Notice of the sale may be served upon the person who deposited the security in the same manner as prescribed for service of notice by Section 30206. Upon any such sale, the surplus, if any, above the amount due under this part shall be returned to the person who deposited the security.

History—Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "They" for "He" before "shall" in the second sentence; substituted "department" for "board" throughout; substituted "them" for "him" after "service upon" in the second sentence; deleted "personally or by mail" after "security", and substituted "prescribed" for "precribed" after "manner as" in the fifth sentence.

30243.5. Administrative hearing. In accordance with such rules and regulations as the board may prescribe, the person against whom a jeopardy determination is made may apply for an administrative hearing for one or more of the following purposes:

(a) To establish that the determination is excessive; or

(b) To establish that the sale of property that may be seized after issuance of the jeopardy determination or any part thereof shall be delayed pending the administrative hearing because the sale would result in irreparable injury to the person; or

(d) To request a stay of collection activities.

The application shall be filed within 30 days after service of the notice of jeopardy determination and shall be in writing and state the specific factual and legal grounds upon which it is founded. No security need be posted to file the application and to obtain this hearing. However, if the person does not deposit within the 10-day period prescribed in Section 30243, such security as the board may deem necessary to ensure compliance with this part, the filing of the application shall not operate as a stay of collection activities, except sale of property seized after issuance of the jeopardy determination. Upon a showing of good cause for failure to file a timely application for administrative hearing, the board may allow a filing of the application and grant the person an administrative hearing. The filing of an application pursuant to this section shall not affect provisions of Section 30242 relating to the finality date of the determination or to penalty or interest.

History—Added by Stats. 1977, Ch. 329, operative January 1, 1978.

30244. Service of notice. Any notice required by this article may be served in the manner prescribed for service of notice of a deficiency determination.

History—Added by Stats. 1965, p. 4442, in effect September 17, 1965. Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, deleted "personally or by mail" after "served".

Article 5. Redeterminations

30261. Petition for redetermination. Any person against whom a determination is made under Article 2 (commencing with Section 30201) or 3 (commencing with Section 30221) may petition for a redetermination within 30 days after service upon the person of notice thereof. If a petition for redetermination is not filed within the 30-day period, the determination becomes final at the expiration of the period.

History—Stats. 1982, Ch. 454, in effect January 1, 1983, substituted "Article 2 (commencing with Section 30201) or 3 (commencing with Section 30221)" for "Article 2 or 3 of this chapter" after "under" in the first sentence.

30261.5. Form and content. Every petition for redetermination shall be in writing and shall state the specific grounds upon which the petition is founded. The petition may be amended to state additional grounds at any time prior to the date on which the board issues its order or decision upon the petition for redetermination.

History—Added by Stats. 1967, p. 2329, in effect November 8, 1967.

30262. Oral hearing. If a petition for redetermination is filed within the 30-day period, the board shall reconsider the determination and, if the person has so requested in his petition, shall grant him an oral hearing and shall give him at least 10 days' notice of the time and place of the hearing. The board may continue the hearing from time to time as may be necessary.

30263. Finality date. The order or decision of the department upon a petition for redetermination becomes final 30 days after serving of notice thereof.

History—Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, substituted "department" for "board" after "decision of the" and "serving" for "mailing" after "after".

30264. Due date; penalty. All determinations made by the board under Article 2 or 3 of this chapter are due and payable at the time they become final. If they are not paid when due and payable, a penalty of 10 percent of the amount of the determination, exclusive of interest and penalties, shall be added thereto.

30265. Service of notice. Any notice required by this article shall be served in the manner prescribed for service of notice of a deficiency determination.

History—Stats. 2024, Ch. 499 (SB 1528), in effect January 1, 2025, deleted "personally or by mail" after "served".

30266. Decrease or increase of determination. The board may decrease or increase the amount of the determination before it becomes final, but may increase the amount of the determination only if a claim for increase is asserted by the board at or before the hearing. Unless the 25 percent penalty imposed by Section 30205 or 30224 applies to the amount of the determination as originally made or as increased, the claim for increase shall be asserted within eight years after the date the return for the period for which the increase is asserted is due.

History—Added by Stats. 1996, Ch. 1087, in effect January 1, 1997.

Article 6. Interest and Penalties

30281. Interest and penalties. (a) Any person who fails to pay any tax, except a tax determined by the board under Article 2 (commencing with Section 30201) or Article 3 (commencing with Section 30221), within the time required shall pay a penalty of 10 percent of the amount of the tax, in addition to the tax, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the date on which the tax became due and payable until the date of payment.

(b) Any person who fails to file a return in accordance with the due date set forth in Section 30181 or Section 30183, shall pay a penalty of 10 percent of the amount of the tax with respect to the period for which the return is required.

(c) The penalties imposed by this section shall be limited to a maximum of 10 percent of the tax for which the return is required for any one return.

History—Stats. 1975, Ch. 661, operative to interest accruing on or after January 1, 1976, substituted "1 percent" for "one-half of 1 percent." Stats. 1982, Ch. 5, First Extra Session, in effect May 27, 1982, substituted "(commencing … 30221)" for "or 3" after "Article 2" and "adjusted … 19269" for "rate … thereof" before "from." Stats. 1984, Ch. 1020, effective January 1, 1985, operative July 1, 1985, deleted "of this chapter" before "within the time," substituted "modified … thereof" for "adjusted annual rate," substituted "Section 6591.5" for "Section 19269." Stats. 2000, Ch. 923 (AB 2894), in effect January 1, 2001, added subdivision letter designation (a) before the former sole paragraph, and added subdivisions (b) and (c).

30281.5. Interest; daily basis. [Repealed by Stats. 2016, Ch. 264 (AB 2201), in effect January 1, 2017.]

30281.5. Interest; daily basis.(a) If the department finds, taking into account all facts and circumstances, that it is inequitable to compute interest at the modified adjusted rate per month or fraction thereof, as defined in subdivision (b) of Section 6591.5, interest shall be computed at the modified adjusted daily rate from the date on which the tax was due until the date of payment, if all of the following occur:

(1) The payment of tax was made one business day after the date the tax was due.

(2) The person was granted relief from all penalties that applied to that payment of tax.

(3) The person files a request for an adjustment.

(b) For purposes of this section, "modified adjusted daily rate" means the modified adjusted rate per annum as defined in subdivision (a) of Section 6591.5 determined on a daily basis by dividing the modified adjusted rate per annum by 365.

(c) For purposes of this section, "business day" means any day other than a Saturday, Sunday, or any day designated as a state holiday.

(d) This section shall not apply to any payment made pursuant to a deficiency determination, a determination where no report or return has been filed, or a jeopardy determination issued by the department.

(e) This section shall only apply to electronic payments of taxes.

History—Added by Stats. 2016, Ch. 264 (AB 2201), in effect January 1, 2017. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "adjustment" for "oral hearing before the board" after "request for an" in paragraph (a)(3); deleted subdivision (c); and relettered former subdivisions (d), (e), and (f) as subdivisions (c), (d), and (e), respectively.

Note.—SEC. 1. of Stats. 2010, Ch. 316 (SB 1028), in effect January 1, 2011, states: "It is the intent of the Legislature that California's penalty and interest provisions foster and maintain the current high level of compliance, provide appropriate costs and sanctions for noncompliance, and provide a reasonable and administrable degree of latitude for individual taxpayer circumstances and errors. It is the intent of the Legislature in enacting this act, that the State Board of Equalization strictly and narrowly apply its provisions on a case-by-case basis and only in special circumstances."

30282. Excusable delay. (a) If the department finds that a person's failure to make a timely report or payment is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, the person may be relieved of the penalty provided by Sections 30171, 30190, 30221, 30264, and 30281.

(b) Except as provided in subdivision (c) and (d), any person seeking to be relieved of the penalty shall file with the department a statement under penalty of perjury setting forth the facts upon which the person bases the claim for relief.

(c) (1) Subject to paragraph (2), the department may grant relief of the penalty for any person in an area identified in a state of emergency proclamation made by the Governor for the period the state of emergency proclamation is effective, regardless of whether the person has filed a statement with the department pursuant to subdivision (b).

(2) The department may grant the relief in paragraph (1) only during the first 12 months following the issuance of the state of emergency proclamation or the duration of the state of emergency, whichever is less.

(d) The department shall establish criteria that provide for efficient resolution of requests for relief pursuant to this section.

History—Added by Stats. 1968, p. 1414, in effect November 13, 1968. Stats. 1989, Ch. 768, in effect January 1, 1990, added "30264" after "30221" in first paragraph, and added "or she" after "he" and "or her" after "him" in second paragraph. Stats. 2000, Ch. 1052 (AB 2898), in effect January 1, 2001, added subdivision letter designation (a) before first paragraph, added "30190," after "Sections 30171," in subdivision (a); added subdivision letter designation (b) before second paragraph, substituted "Except as provided in subdivision (c), any" for "Any" before "person seeking to be relieved" in the first sentence of subdivision (b); and added subdivision (c). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "department" for "board" throughout; substituted "subdivisions (c) and (d)" for "subdivision (c)" after "Except as provided in" and substituted "the person bases the" for "he or she bases his or her" after "the facts upon which" in subdivision (b); added subdivision (c); and relettered former subdivision (c) as subdivision (d).

30283. Relief from interest; disaster. (a) If the department finds that a person's failure to make a timely return or payment was due to a disaster, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the interest provided by Sections 30171, 30185, 30190, 30223, and 30281.

(b) Except as provided in subdivision (c) and (d), any person seeking to be relieved of the interest shall file with the department a statement under penalty of perjury setting forth the facts upon which the person bases their claim for relief.

(c) (1) Subject to paragraph (2), the department may grant relief of the interest for any person in an area identified in a state of emergency proclamation made by the Governor for the period the state of emergency proclamation is effective, regardless of whether the person has filed a statement with the department pursuant to subdivision (b).

History—Added by Stats. 1981, Ch. 947, in effect January 1, 1982. Stats. 2000, Ch. 923 (AB 2894), in effect January 1, 2001, added "30190" after "Sections 30185" in the first paragraph; added "or she" after "upon which he" and added "or her" after "bases his" in the second paragraph. Stats. 2005, Ch. 519 (AB 1765), in effect October 4, 2005, but operative January 1, 2006, added "30171" after "interest provided by Sections" in the first paragraph. Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "department" for "board" throughout; redesignated former first sentence as subdivision (a) and former second sentence as subdivision (b); substituted "Except as provided in subdivision (c) and (d), any" for "Any" before "person seeking" and substituted "the person bases their" for "he or she bases his or her" after "facts upon which" in subdivision (b); and added subdivision (c).

30283.5. Relief of interest. (a) The board, in its discretion, may relieve all or any part of the interest imposed on a person by this part where the failure to pay tax is due in whole or in part to an unreasonable error or delay by an employee of the board acting in his or her official capacity.

(b) For purposes of this section, an error or delay shall be deemed to have occurred only if no significant aspect of the error or delay is attributable to an act of, or a failure to act by, the taxpayer.

(c) Any person seeking relief under this section shall file with the board a statement under penalty of perjury setting forth the facts on which the claim for relief is based and any other information which the board may require.

(d) The board may grant relief only for interest imposed on tax liabilities that arise during taxable periods commencing on or after January 1, 2000.

History—Added by Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000. Stats. 2001, Ch. 251 (AB 1123), in effect January 1, 2002, substituted "this part" for "Sections 30171, 30223, and 30281" after "interest imposed on a person by" in subdivision (a).

30284. Penalty interest rates. [Repealed by Stats. 1985, Ch. 20, effective March 29, 1985, operative July 1, 1985.]

30284. Reasonable reliance on written advice; relief of tax, penalty, and interest. (a) If the board finds that a person's failure to make a timely report, return, or payment is due to the person's reasonable reliance on written advice from the board, the person may be relieved of the taxes imposed by this part and any penalty or interest thereto.

(b) For purposes of this section, a person's failure to make a timely report, return, or payment shall be considered to be due to reasonable reliance on written advice from the board, only if the board finds that all of the following conditions are satisfied:

(1) The person requested in writing that the board advise him or her whether a particular activity or transaction is subject to tax under this part. The specific facts and circumstances of the activity or transaction shall be fully described in the request.

(2) The board responded in writing to the person regarding the written request for advice, stating whether or not the described activity or transaction is subject to tax, or stating the conditions under which the activity or transaction is subject to tax.

(3) The liability for taxes applied to a particular activity or transaction which occurred before either of the following:

(A) Before the board rescinded or modified the advice so given, by sending written notice to the person of the rescinded or modified advice.

(B) Before a change in statutory or constitutional law, a change in the board's regulations, or a final decision of a court, which renders the board's earlier written advice no longer valid.

(1) A copy of the person's written request to the board and a copy of the board's written advice. (2) A statement under penalty of perjury setting forth the facts on which the claim for relief is based.

(3) Any other information which the board may require.

(d) Only the person making the written request shall be entitled to rely on the board's written advice to that person.

History—Added by Stats. 1990, Ch. 987, in effect January 1, 1991.

30285. Relief of spouse. (a) Under regulations prescribed by the board, if:

(1) A tax liability under this part was understated by a failure to file a return or report, or both, required to be filed under this part, by the omission of an amount properly includable therein, or by erroneous deductions or credits claimed on a return or report, or both, and the understatement of tax liability is attributable to one spouse; or any amount of the tax reported on a return or report, or both, was unpaid and the nonpayment of the reported tax liability is attributable to one spouse.

(2) The other spouse establishes that he or she did not know of, and had no reason to know of, that understatement or nonpayment.

(3) Taking into account whether or not the other spouse significantly benefited directly or indirectly from the understatement or the nonpayment and taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax attributable to that understatement or nonpayment, then the other spouse shall be relieved of liability for tax (including interest, penalties, and other amounts) to the extent that the liability is attributable to that understatement or nonpayment of tax.

(b) For purposes of this section, the determination of the spouse to whom items of understatement or nonpayment are attributable shall be made without regard to community property laws.

(c) This section shall apply to all calendar months subject to the provisions of this part, but shall not apply to any calendar month that is more than five years from the final date on the board- issued determination, five years from the return or report due date for nonpayment on a return or report, or one year from the first contact with the spouse making a claim under this section; or that has been closed by res judicata, whichever is later.

(d) For purposes of paragraph (2) of subdivision (a), "reason to know" means whether or not a reasonably prudent person would have had reason to know of the understatement or nonpayment.

(e) For purposes of this section, with respect to a failure to file a return or report, or both, or an omission of an item from the return or report, or both, "attributable to one spouse" may be determined by whether a spouse rendered substantial service as a distributor of cigarettes or tobacco products or who sells or accepts orders for cigarettes or tobacco products to be transported to a consumer in this state from somewhere out of this state to which the understatement is attributable. If neither spouse rendered substantial services as a distributor, then the attribution of applicable items of understatement shall be treated as community property. An erroneous deduction or credit shall be attributable to the spouse who caused that deduction or credit to be entered on the return or report, or both.

(f) Under procedures prescribed by the board, if, taking into account all the facts and circumstances, it is inequitable to hold the other spouse liable for any unpaid tax or any deficiency (or any portion of either) attributable to any item for which relief is not available under subdivision (a), the board may relieve the other spouse of that liability.

(g) For purposes of this section, registered domestic partners, as defined in Section 297 of the Family Code, have the same rights, protections, and benefits as provided by this section, and are subject to the same responsibilities, obligations, and duties as imposed by this section, as are granted to and imposed upon spouses.

(h) The relief provided by this section shall apply retroactively to liabilities arising prior to the effective date of this section.

History—Added by Stats. 2007, Ch. 342 (AB 1748), in effect January 1, 2008.

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Business Taxes Law Guide—Revision 2024

Cigarette and Tobacco Products Tax Law

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Division 2. Other Taxes Part 13. Cigarette Tax Chapter 4. Determinations

Article 1. Reports and Payments

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Article 2. Deficiency Determinations

Article 2.5. Payment by Unlicensed Persons

Article 3. Determinations If No Report or Return Made

Article 4. Jeopardy Determinations

Article 5. Redeterminations

Article 6. Interest and Penalties

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Article 4. Jeopardy Determinations

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Article 6. Interest and Penalties

Division 2. Other Taxes
Part 13. Cigarette Tax
Chapter 4. Determinations

Article 3. Determinations
If No Report or Return Made