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Business Taxes Law Guide—Revision 2024

BTLG Table of Contents > Emergency Telephone Users Surcharge Act > Chapter 7 > entire chapter

Emergency Telephone Users Surcharge Act

Revenue and Taxation Code

Division 2. Other Taxes
Part 20. Emergency Telephone Users Surcharge Act

Chapter 7. Administration.

Article 1. Regulations, Records and Reports

41128. Enforcement by department; rulings and regulations. The department shall enforce the provisions of this part and may prescribe, adopt, and enforce rules and regulations relating to the administration and enforcement of this part. The department shall not prescribe, adopt, or enforce any rule or regulation that has the effect, directly or indirectly, of altering the terms and conditions of service of a service supplier serving the general public, other than the imposition of the surcharges.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; added "," after "adopt", substituted "that" for "which" after "regulation" in the second sentence. Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, substituted "surcharges" for "surcharge" after "imposition of the" in the second sentence.

41129. Service supplier records. Every service supplier or seller in this state shall keep such records pertaining thereto in such form as the department may require.

History—Stats. 2019, Ch. 54 (SB 96), substituted "department" for "board," and added "or seller" after "service supplier".

41130. Examination of records and returns. Upon proper notification to the service supplier or seller, the department or its authorized representative shall have the right to inspect and audit all records and returns of the service supplier or seller at all reasonable times.

History—Stats. 2019, Ch. 54 (SB 96), substituted "department" for "board," and added "or seller" after "service supplier".

41131. Access to records of P.U.C., political subdivisions and public agencies. The department shall have full access to records of the Public Utilities Commission, and any political subdivision or public agency of this state that regulates, operates or owns a public utility, which pertain to the furnishing of telephone communication services in this state.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "The".

41132. Information confidential; tax preparer. (a) Except as otherwise provided by law, any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns under Chapter 4 (commencing with Section 41050), or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly does either of the following, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than one thousand dollars ($1,000) or imprisoned no more than one year, or both, together with the costs of prosecution:

(1) Discloses any information furnished to him or her for, or in connection with, the preparation of the return.

(2) Uses that information for any purpose other than to prepare, or assist in preparing, the return.

(b) Subdivision (a) shall not apply to disclosure of information if that disclosure is made pursuant to the person's consent or pursuant to a subpoena, court order, or other compulsory legal process.

History—Added by Stats. 2000, Ch. 1052 (AB 2898), in effect January 1, 2001.

41133. Department determines which accounts are eligible. (a) The department shall determine which service supplier’s or seller’s accounts are eligible for the managed audit program in a manner that is consistent with the efficient use of its auditing resources and the maximum effectiveness of the program.

(b) A service supplier or seller is not required to participate in the managed audit program.

History—Added by Stats. 2014, Ch. 105 (AB 2009), operative January 1, 2015. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "The", added "or seller’s" after "service supplier’s" throughout.

41133.1. Eligibility. A service supplier’s or seller’s account is eligible for the managed audit program only if the service supplier or seller meets all of the following criteria:

(a) The service supplier’s or seller’s business involves few or no statutory exemptions.

(b) The service supplier’s or seller’s business involves a single or small number of clearly defined taxability issues.

(c) The service supplier or seller pays a surcharge pursuant to this part and agrees to participate in the managed audit program.

(d) The service supplier or seller has the resources to comply with the managed audit instructions provided by the department.

History—Added by Stats. 2014, Ch. 105 (AB 2009), operative January 1, 2015. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added "seller’s" after "A service supplier’s" and added "or seller" before "meets all" in the first paragraph; added "or seller’s" after "The service supplier’s" in subdivision (a); added "or seller’s" after "The service supplier’s" in subdivision (b); substituted "or seller pays a surcharge" for "is taxed" after "The service supplier" in subdivision (c); added "or seller" after "The service supplier" and substituted "department" for "board" in subdivision (d).

41133.2. Information required to conduct self-audit. (a) If the department selects a service supplier’s or seller’s account for a managed audit, all of the following apply:

(1) The department shall identify all of the following:

(A) The audit period covered by the managed audit.

(B) The types of transactions covered by the managed audit.

(D) The records to be reviewed by the service supplier or seller.

(E) The manner in which the types of transactions are to be scheduled for review.

(F) The time period for completion of the managed audit.

(G) The time period for the payment of the liability and interest.

(H) Any other criteria that the department may require for completion of the managed audit.

(2) The service supplier or seller shall:

(A) Examine its records and returns to determine if it has any unreported surcharge liability for the audit period.

(B) Make available to the department for verification all computations and records and returns examined pursuant to subparagraph (A).

(b) The information provided by the service supplier or seller pursuant to paragraph (2) of subdivision (a) is the same information that is required for the completion of any other audit that the department may conduct.

History—Added by Stats. 2014, Ch. 105 (AB 2009), operative January 1, 2015. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; added "or seller’s" or "or seller" after "service supplier’s" or "service supplier" throughout; and substituted "surcharge" for "tax" after "unreported" in subparagraph (a)(2)(A).

41133.3. Authority to examine records. This article does not limit the department’s authority to inspect and audit all records and returns of a service supplier or seller under Section 41130.

History—Added by Stats. 2014, Ch. 105 (AB 2009), operative January 1, 2015. Stats. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "This" for "Nothing in this" before "article", substituted "does not limit" for "limits" after "article", substituted "department’s" for "board’s" before "authority", and added "or seller" before "under Section".

41133.4. Interest on liabilities. Upon completion of the managed audit and verification by the department, interest on any unpaid liability shall be computed at one-half the rate that would otherwise be imposed for liabilities covered by the audit period. Payment of the liabilities and interest shall be made within the time period specified by the department. If the requirements for the managed audit are not satisfied, the department may proceed to examine the records of the service supplier or seller in a manner to be determined by the department under law.

History—Added by Stats. 2014, Ch. 105 (AB 2009), operative January 1, 2015. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; added "or seller" after "records of the service supplier" in the second sentence.

Article 2. Disposition of Proceeds

41135. State Emergency Telephone Number Account; 988 State Suicide and Behavioral Health Crisis Services Fund. (a) All amounts required to be paid to the state under this part shall be paid to the department in the form of remittances payable to the California Department of Tax and Fee Administration. The department shall transmit the revenues to the State Treasurer to be deposited in the State Treasury to either the credit of the State Emergency Telephone Number Account in the General Fund, or the 988 State Suicide and Behavioral Health Crisis Services Fund, depending on the apportionment of the revenues arising from each surcharge.

(b) The department, in consultation with the Office of Emergency Services, may adopt regulations to implement the apportionment of the revenues from each surcharge.

(c) The department shall submit an annual report to the Office of Emergency Services on revenue generated by the 988 surcharge.

History—Stats. 2019, Ch. 54 (SB 96), substituted "department" for "board," and added "Department of Tax and Fee Administration" after "California" and deleted "State Board of Equalization of the State of". Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, lettered former paragraph as subdivision (a), substituted "revenues" for "payments" after "transmit the", added "either" after "Treasury to", and substituted "or the 988 State Suicide and Behavioral Health Crisis Services Fund, depending on the apportionment of the revenues arising from each surcharge" for "which is hereby created" after "General Fund," in the second sentence; added subdivisions (b) and (c).

41136. Disposition of funds. (a) From the funds in the State Emergency Telephone Number Account, all amounts of the 911 surcharge collected shall, when appropriated by the Legislature, be spent solely for the following purposes:

(1) To pay refunds authorized by this part.

(2) To pay the department for the cost of the administration of the 911 surcharge under this part.

(3) To pay the Office of Emergency Services for its costs in administration of the "911" emergency telephone number system.

(4) To pay bills submitted to the Office of Emergency Services by service suppliers or communications equipment companies for the installation of, and ongoing expenses for, the following communications services supplied to local agencies in connection with the "911" emergency phone number system:

(A) A basic system, defined as 911 systems, including, but not limited to, Next Generation 911, and the subsequent technologies, and interfaces needed to deliver 911 voice and data information from the 911 caller to the emergency responder and the subsequent technologies, and interfaces needed to send information, including, but not limited to, alerts and warnings, to potential 911 callers.

(B) A basic system with telephone central office identification.

(D) Approved incremental costs.

(5) To pay claims of local agencies for approved incremental costs, not previously compensated for by another governmental agency.

(6) To pay claims of local agencies for incremental costs and amounts, not previously compensated for by another governmental agency, incurred prior to the effective date of this part, for the installation and ongoing expenses for the following communication services supplied in connection with the "911" emergency telephone number system:

(B) A basic system with telephone central office identification.

(D) Approved incremental costs. Incremental costs shall not be allowed unless the costs are concurred in by the Office of Emergency Services.

(b) (1) From the funds in the 988 State Suicide and Behavioral Health Crisis Services Fund, all amounts of the 988 surcharge collected shall be spent for purposes identified in Section 53123.4 of the Government Code. However, before funds are disbursed as provided in Section 53123.4 of the Government Code, funds shall be used for all of the following:

(A) To pay refunds authorized by this part.

(B) To pay the department for the cost of the administration of the 988 surcharge under this part.

(2) The remainder of the revenue shall be disbursed to the Office of Emergency Services for the purposes identified in Section 53123.4 of the Government Code.

History—Stats. 1994, Ch. 146, in effect January 1, 1995, added "expenses for the following" after "installation and ongoing" in subdivision (d); substituted "Incremental costs shall … unless costs are" for "Such incremental costs shall not be allowed unless such costs are recommended by the advisory committee and" in subparagraph (f)(4). Stats. 1997, Ch. 887 (AB 1198), in effect October 12, 1997, added subdivision (g). Stats. 1998, Ch. 485 (AB 2803), in effect January 1, 1999, substituted "Division of Telecommunications" for "Telecommunications Division" following "To pay the" in subdivision (g). Stats. 1999, Ch. 83 (SB 966), in effect January 1, 2000, added "of," after "for the installation", added a comma after "ongoing expenses for", and added "to" after "communications services supplied" in subdivision (d) and substituted "Division of Telecommunications of the Department of General Services" for "Communications Division" in paragraph (4) of subdivision (h). Stats. 2009, Ch. 489 (AB 912), in effect January 1, 2010, added "A minimum of one-half of 1 percent of the charges … surcharge applies as follows:" after ", when appropriated by the Legislature, … for the following purposes:" to the new subdivision (a); redesignated former subdivisions (a), (b), (c), and (d) as paragraphs (a)(1), (a)(2), (a)(3), and (a)(4), respectively; redesignated former paragraphs (d)(1), (d)(2), (d)(3), and (d)(4) as subparagraphs (a)(4)(A), (a)(4)(B), (a)(4)(C), and (a)(4)(D), respectively; redesignated former subdivisions (e) and (f) as paragraphs (a)(5) and (a)(6), respectively; redesignated former paragraphs (f)(1), (f)(2), (f)(3), and (f)(4) as (a)(6)(A), (a)(6)(B), (a)(6)(C), and (a)(6)(D), respectively; added new subdivision (b); deleted former subdivision (g); and substituted "office of the State Chief Information Officer" for "Department of General Services" throughout the entire section. Stats. 2010, Ch. 328 (SB 1330), in effect January 1, 2011, added a comma after "to which the surcharge applies" in subdivision (a) and substituted "telephone" for "phone" after "in connection with the "911" emergency" in paragraph (6) of subdivision (a). Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "office of the State Chief Information Officer" throughout the section; and deleted paragraph (3) of subdivision (b) which read "This subdivision shall remain in effect only until December 31, 2011.". Stats. 2013, Ch. 353 (SB 820), in effect September 26, 2013, deleted the introductory clause, deleted "(a) A", added "From the funds in the State Emergency Telephone Number Account, a" before "minimum of one-half", deleted "services" after "intrastate telephone communications", substituted "shall, when appropriated by the Legislature, be spent solely for the following purposes:" for "as follows:" after "the surcharge applies"; redesignated former paragraphs (a)(1), (a)(2), (a)(3), and (a)(4) as subdivisions (a), (b), (c), and (d), respectively; redesignated former subparagraphs a)(4)(A), (a)(4)(B), (a)(4)(C), and (a)(4)(D) as paragraphs (d)(1), (d)(2), (d)(3), and (d)(4), respectively; redesignated former paragraphs (a)(5) and (a)(6) as subdivisions (e) and (f), respectively; redesignated former subparagraphs (a)(6)(A), (a)(6)(B), (a)(6)(C), and (a)(6)(D), as paragraphs (f)(1), (f)(2), (f)(3), and (f)(4); deleted former subdivision (b) which read: "(b) (1) For the purposes of paragraph (5) of subdivision (a), the term incremental costs shall include a maximum of one-quarter of 1 percent of the charges for intrastate telephone communications services and VoIP service to which the surcharge applies for a one-time payment to Primary Public Safety Answering Points for the cost necessary to recruit and train additional personnel necessary to accept wireless enhanced "911" calls from within their jurisdiction routed directly to their call centers. (2) Funds allocated pursuant to this subdivision shall supplement, and not supplant, existing funding for these services." Stats. 2019, Ch. 54 (SB 96), substituted "all amounts of the surcharge collected" for "a minimum of…the surcharge applies" in the first sentence, substituted "department" for "State Board of Equalization," and substituted "A basic system, defined as…to potential 911 callers" for "A basic system." in paragraph (1) of subdivisions (d) and (f). Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, lettered former first paragraph as subdivision (a), redesignated former subdivisions (a), (b), (c), and (d) as paragraphs (1), (2), (3), and (4); redesignated former paragraphs (1), (2), (3) and (4) as subparagraphs (A), (B), (C) and (D) in former subdivision (d); redesignated former subdivisions (e) and (f) as paragraphs (5) and (6); redesignated former paragraphs (1), (2), (3), and (4) as subparagraphs (A), (B), (C), and (D) in former subdivision (f); added subdivision (b). Stats. 2023, Ch. 42 (AB 118), July 10, 2023, substituted "other state departments" for "the Office of Emergency Services" after "To pay", substituted "their" for "its" before "costs" and substituted "&" for "and" before "Crisis" in subparagraph (C) of paragraph (1) of subdivision (b).

Note.—Sec. 1, Stats. 2009, Ch. 489 (AB 912) provided the following Legislative findings and declarations:

(a) The Warren-911-Emergency Assistance Act establishes the number "911" as the primary emergency telephone number of use in this state.

(b) The Emergency Telephone Users Surcharge Act generally imposes a surcharge on amounts paid by every person in the state for intrastate telephone service and is imposed at a percentage rate range, established in 1980, of between one-half of 1 percent and three-quarters of 1 percent. This surcharge is annually estimated to provide revenues to fund "911" emergency telephone system costs for the current fiscal year. The rate range has remained unchanged since 1980.

(c) In 2005, there were over five million "911" calls, over eight million "911" calls in 2006, and an estimated 12 million "911" calls in 2007. This represents a 119 percent increase in "911" calls over those past two years alone. The Department of the California Highway Patrol, a Public Safety Answering Point, receives approximately 750,000 "911" calls monthly at its 24 answering points statewide.

(d) This rapid increase has made it difficult for Public Safety Answering Points, including the Department of the California Highway Patrol, to meet the 10-second answering guideline recommended by the National Emergency Number Association and accepted by the industry, potentially affecting the safety and well-being of "911" callers.

(e) "911" call volumes continue to grow and additional personnel with the appropriate training and skills, including language skills, is needed to meet the 10-second answering guideline.

Note.—Sec. 1, Stats. 2022, Ch. 747 (AB 988) provided the following Legislative intent:

(a) It is the intent of the Legislature to implement the National Suicide Hotline Designation Act of 2020, in compliance with the Federal Communication Commission’s rules designating "988" as a three-digit number for the National Suicide Prevention Hotline, now known as the 988 Suicide and Crisis Lifeline, to assure all persons residing in and visiting the State of California have access to the "988" suicide prevention and other behavioral health crisis hotline and care 24 hours per day, seven days per week.

(b) It is the intent of the Legislature that the 988 system in California operate as an emergency suicidal, mental health, and substance use disorder crisis system that provides compassionate, appropriate, and easily accessible care to save lives and reduce law enforcement engagement, arrests, hospitalizations, and deaths.

(1) By July 16, 2022, the federally established go-live date for the 988 number will be prepared to receive and respond to the anticipated call volume in the first year of operation of 988.

(2) By June 30, 2024, the California Health and Human Services Agency and the Office of Emergency Services will develop a plan for the statewide coordination of 988, 911, and behavioral health crisis services. The plan will be based on a five-year implementation plan that includes a landscape analysis of existing services and describes how to expand, improve, and link services with the goal of fully implementing the 988 system by January 1, 2030.

41136.1. Funds held in trust for future appropriation. For each fiscal year, moneys in the State Emergency Telephone Number Account not appropriated for a purpose specified in Section 41136 shall be held in trust for future appropriation for upcoming, planned "911" emergency telephone number projects that have been approved by the Office of Emergency Services, even if the projects have not yet commenced.

History—Added by Stats. 2006, Ch. 73 (SB 1597), in effect January 1, 2007. Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services". Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency".

41137. Payments to suppliers. The Office of Emergency Services shall pay, from funds appropriated from the State Emergency Telephone Number Account by the Legislature, as provided in Section 41138, bills submitted by service suppliers or communications equipment companies for the installation and ongoing costs of the following communication services provided to local agencies by service suppliers in connection with the "911" emergency telephone number system:

(a) A basic system, defined as 911 systems, including, but not limited to, Next Generation 911, and the subsequent technologies, and interfaces needed to deliver 911 voice and data information from the 911 caller to the emergency responder and the subsequent technologies, and interfaces needed to send information, including, but not limited to, alerts and warnings, to potential 911 callers.

(b) A basic system with telephone central office identification.

(d) Approved incremental costs that have been concurred in by the Office of Emergency Services.

History—Stats. 1994, Ch. 146, in effect January 1, 1995, substituted "that have been" for "which have been recommended by the advisory committee and" in subdivision (d). Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services" or "Communications Division" throughout section. Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency" throughout the section. Stats. 2019, Ch. 54 (SB 96), substituted "A basic system, defined as…to potential 911 callers" for "A basic system." in subdivisions (a). Stats. 2020, Ch. 370 (SB 1371), in effect January 1, 2021, added "to" after "services provided" in paragraph 1 of the section.

41137.1. Payments to local agencies. The Office of Emergency Services shall pay, from funds appropriated from the State Emergency Telephone Number Account by the Legislature, as provided in Section 41138, claims submitted by local agencies for approved incremental costs and for the cost of preparation of final plans submitted to the Office of Emergency Services for approval on or before October 1, 1978, as provided in Section 53115 of the Government Code.

History—Stats. 1978, Ch. 352, effective July 4, 1978, added language following "incremental costs". Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services" or "Communications Division" throughout section. Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency" throughout the section.

41138. Conditions for payment. (a) It is the intent of the Legislature that the reimbursement rates for "911" emergency telephone number equipment shall not exceed specified amounts negotiated with each interested supplier and approved by the Office of Emergency Services. The Office of Emergency Services shall negotiate supplier pricing to ensure cost-effectiveness and the best value for the "911" emergency telephone number system. The Office of Emergency Services shall pay those bills as provided in Section 41137 only under the following conditions:

(1) The Office of Emergency Services shall have received the local agency's "911" emergency telephone number system plan by July 1 of the prior fiscal year and approved the plan by October 1 of the prior fiscal year.

(2) The Legislature has appropriated in the Budget Bill an amount sufficient to pay those bills.

(3) The Office of Emergency Services has reviewed and approved each line item of a request for funding to ensure the necessity of the proposed equipment or services and the eligibility for reimbursement.

(4) The amounts to be paid do not exceed the pricing submitted by the supplier and approved by the Office of Emergency Services. Extraordinary circumstances may warrant spending in excess of the established rate, but shall be preapproved by the Office of Emergency Services. In determining the reimbursement rate, the Office of Emergency Services shall utilize the approved pricing submitted by the supplier providing the equipment or service.

(b) This section shall not be construed to limit an agency’s ability to select a supplier or procure telecommunications equipment as long as the supplier's pricing is preapproved by the Office of Emergency Services. Agencies shall be encouraged to procure equipment on a competitive basis. Any amount in excess of the pricing approved by the Office of Emergency Services shall not be reimbursed.

History—Stats. 1996, Ch. 746, in effect January 1, 1997, added subdivision letter (a), added "It is the intent … by the department." as the first sentence of, and substituted "negotiate supplier pricing … shall pay those" for "pay such" in the second sentence of, subdivision (a), substituted "agency's" for "agencies" after "received the local" and substituted "the" for "such" after "year and approved" in paragraph (1) of, substituted "those" for "such" after "sufficient to pay" in paragraph (2) of, substituted "department has reviewed … eligibility for reimbursement" for "amounts to be paid shall not exceed the contract or established tariff rates for the costs of telephone equipment" in paragraph (3) of, substituted "do not exceed … equipment or service." for "shall not exceed approved incremental costs." in paragraph (4) of, subdivision (a), and added subdivision (b). Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "department" throughout section. Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency" throughout the section; inserted a hyphen between "cost" and "effectiveness" in subdivision (a); and substituted "This" for "Nothing in this" and added "not" after "section shall" in the first sentence of subdivision (b).

41139. Date of commencing payments. From funds appropriated by the Legislature from the Emergency Telephone Number Account, the Office of Emergency Services shall begin paying bills as provided in Sections 41137, 41137.1, and 41138 in the 1977–78 fiscal year for plans submitted by local agencies by July 1, 1976, to the Office of Emergency Services which the Office of Emergency Services has approved.

History—Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "department", deleted "such" after "shall begin paying" and added a comma after "July 1, 1976". Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency" throughout the section.

41140. Payment for previous costs. The Office of Emergency Services shall reimburse local agencies, from funds appropriated from the Emergency Telephone Number Account by the Legislature, for amounts not previously compensated for by another governmental agency, which have been paid by agencies for approved incremental costs or to service suppliers or communication equipment companies for the following communications services supplied in connection with the "911" emergency telephone number, provided local agency plans had been approved by the Office of Emergency Services:

(b) A basic system with telephone central office identification.

(d) Approved incremental costs.

History—Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services" or "department", deleted "such" twice after "which have been paid by" and after "number, provided", and substituted "telephone" for "phone" after "emergency" in the first sentence, and redesignated former paragraphs (1), (2), (3), and (4) as (a), (b), (c), and (d). Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency" throughout the section. Stats. 2019, Ch. 54 (SB 96), substituted "A basic system, defined as…to potential 911 callers" for "A basic system." in subdivisions (a).

41141. Claims for payment. Claims for reimbursement shall be submitted by local agencies to the Office of Emergency Services, which shall determine payment eligibility and shall reduce the claim for charges that exceed the approved incremental costs, approved contract amounts, or the established tariff rates for costs. No claim shall be paid until funds are appropriated by the Legislature.

History—Stats. 1980, Ch. 1035, operative January 1, 1981, substituted present wording of first sentence following "agencies" for former wording and deleted former second sentence. Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Communications Division in the Department of General Services", substituted "that" for "which" after "reduce the claim for charges", and deleted "such" after "established tariff rates for". Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency".

41142. Failure of Legislature to appropriate funds. Notwith-standing any other provision of this article, if the Legislature fails to appropriate an amount sufficient to pay bills submitted to the Office of Emergency Services by service suppliers or communications equipment companies for the installation and ongoing communications services supplied local agencies in connection with the "911" emergency telephone number system, and to pay claims of local agencies which, prior to the effective date of this part, paid amounts to service suppliers or communications equipment companies for the installation and ongoing expenses in connection with the "911" emergency telephone number system, the obligation of service suppliers and local agencies to provide "911" emergency telephone service shall terminate and service shall not again be required until the Legislature has appropriated an amount sufficient to pay those bills or claims. This part shall not preclude local agencies from purchasing or acquiring any communication equipment from companies other than the telephone service suppliers.

History—Stats. 2010, Ch. 404 (AB 2408), in effect January 1, 2011, substituted "California Technology Agency" for "Department of General Services", substituted "telephone" for "phone" twice after "connection with the "911" emergency", deleted "such" after "terminate and", and substituted "those" for "such" after "an amount sufficient to pay". Stats. 2013, Ch. 28 (SB 71), in effect June 27, 2013, substituted "Office of Emergency Services" for "California Technology Agency"; and substituted "This" for "Nothing in this" and added "not" after "part shall" in the last sentence.

Article 2.5. Violations*

* Article 2.5 was added by Stats. 1986, Ch. 1361, effective January 1, 1987.

41143. Penalty. Any person who fails or refuses to file a return or report required to be made or who fails or refuses to furnish a supplemental report or other data required by the department, or who renders a false or fraudulent report is guilty of a misdemeanor and may be punished by a fine not exceeding five hundred dollars ($500) for each offense.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "required by the".

41143.4. Felony provisions. Notwithstanding any other provision of this part, any person who violates this part with intent to defeat or evade the determination of an amount due required by law to be made is guilty of a felony when the amount of tax liability aggregates twenty-five thousand dollars ($25,000) or more in any 12-consecutive-month period. The determination shall be approved by the director or their designee. Each offense shall be punished by a fine of not less than five thousand dollars ($5,000) and not more than twenty thousand dollars ($20,000), or imprisonment for 16 months, two years, or three years, or by both the fine and imprisonment in the discretion of the court.

History—Added by Stats. 1987, Ch. 1064, effective January 1, 1988. Stats. 1989, Ch. 654, in effect January 1, 1990, substituted "Deputy Director, Business Taxes," for "administrator of the excise taxes" and "designee" for "supervisor". Stats. 1995, Ch. 555, in effect January 1, 1996, substituted "any person who violates this part" for "any violation of this part by any person" after "of this part," in the first sentence, and substituted "executive director or his or her" for "Deputy Director, Business Taxes, or that person's" after "approved by the" and added "by" after "three years, or" in the second sentence. Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, deleted "executive" before "director" and substituted "their" for "his or her" before "designee" in the second sentence.

41143.8. Prosecution. Any prosecution for violation of any of the penal provisions of this part shall be instituted within three years after commission of the offense or within two years after the violation is discovered, whichever is later.

Note.—Sec. 41. Stats. 1986, Ch. 1361 required that:

(a) On January 15 of each year from 1988 to 1992, inclusive, the State Board of Equalization and the Franchise Tax Board shall submit a report to the Legislature on implementation of the provisions of this act, with the exception of Section 40 of this act (for which separate reporting requirements are set out).

(b) The revenue and taxation policy committees of each house of the Legislature shall hold a public hearing no later than June 30 of each year from 1988 to 1992, inclusive, on the reports submitted pursuant to subdivision (a).

(c) The intent of this section is to assure the Legislature the opportunity to oversee the implementation of this act. The intent of the Legislature in enacting this act is to improve enforcement and voluntary compliance with the tax system and cash-pay reporting rules. The intent of the Legislature in enacting this act is not to cause harassment of or undue burden on innocent taxpayers.

Sec. 41. applies to the following Revenue and Taxation Code Sections: 6069, 6071, 6366, 6366.1, 6368.1, 6452, 6455, 6776, 6777, 7154, 8404, 9355, 30481, 32556, 40188, 41143, and 44186.

Article 3. Notices

41144. Notices. A certificate by the department or an employee of the department stating that a notice required by this part was given by mailing or personal service shall be prima facie evidence in any administrative or judicial proceeding of the fact and regularity of the mailing of personal service in accordance with any requirement of this part for the giving of notice. Unless otherwise specifically required, any notice required by this part to be mailed or served may be given by mailing or personal service in the manner provided for giving notice of a deficiency determination.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout.

Article 4. Purpose

41150. Purpose. (a) The Legislature hereby declares and finds that to enable public agencies to implement "911" emergency phone systems required by the provisions of Chapter 1005 of the 1972 Regular Session (Article 6 (commencing with Section 53100) of Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code) it is necessary that a surcharge be imposed upon each access line in the state and upon the purchase of prepaid mobile telephony services in this state for access to the 911 emergency communication system. This act will provide funding for basic 911, as defined in Section 41136, and the technology and interfaces needed to deliver 911 voice and data information from the 911 caller to the emergency responder and the subsequent technologies, and interfaces needed to send information, including, but not limited to, alerts and warnings, to potential 911 callers. In addition, this part will provide funding for incremental costs.

(b) The Legislature hereby finds and declares that to enable public agencies to implement the 988 Suicide and Crisis Lifeline required by the provisions of the Miles Hall Lifeline and Suicide Prevention Act (Article 6.3 (commencing with Section 53123.1) of Chapter 1 of Part 1 of Division 2 of Title 5 of the Government Code) it is necessary that a surcharge be imposed upon access lines purchased by every person in the state for access to the 988 Suicide and Crisis Lifeline. This act, as amended by the act adding this subdivision, will provide funding, in part, for 988 centers and mobile crisis team operations and services.

History—Stats. 2019, Ch. 54 (SB 96), substituted "access line purchased" for "amounts paid," deleted "intrastate telephone" and added "access to the 911 emergency," deleted "services in this state," and added "system" after "communication" in the first sentence, substituted the second and third sentences, which previously read, "This bill will provide funding for basic 911, basic 911 (including telephone central office identification) 911 with selective routing or a combination of the above. These services will include incoming 911 lines/trunks, 911 answering positions including common control equipment, transfer lines and transfer positions.," with "This act will…to potential 911 callers." Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, added "each" after "imposed upon", substituted "line" for "lines purchased by every person" before "in the state" and added "and upon the purchase of prepaid mobile telephony services in this state" before "for access" in the first sentence. Stats. 2022, Ch. 747 (AB 988), effective September 29, 2022, lettered former paragraph as subdivision (a) and added subdivision (b).

41152. Legislative intent. The Legislature finds and declares all of the following:

(a) Access to emergency telephone service has been a longstanding goal of the state.

(b) The Emergency Telephone Users Surcharge Act remains an important means for making emergency telephone service available to every person in this state.

(c) Every reasonable means should be employed by telephone corporations and every provider of telephone quality communication to ensure that every person using their service is informed of and is afforded the opportunity to use emergency telephone service, regardless of the means by which emergency telephone calls are placed.

(d) The furnishing of emergency telephone service is in the public interest and should be supported fairly and equitably by every telephone corporation and every provider of telephone quality communication in a way that is equitable, nondiscriminatory, and competitively neutral.

History—Added by Stats. 2008, Ch. 17 (SB 1040), in effect May 21, 2008.

Article 5. The California Taxpayers' Bill of Rights*

* Added by Stats. 1992, Ch. 438, in effect January 1, 1993.

41160. Administration. The department shall administer this article. Unless the context indicates otherwise, the provisions of this article shall apply to this part.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "The".

41161. Taxpayers' Rights Advocate. (a) The department shall establish the position of the Taxpayers' Rights Advocate. The advocate or that person’s designee shall be responsible for facilitating resolution of taxpayer complaints and problems, including any taxpayer complaints regarding unsatisfactory treatment of taxpayers by department employees and staying actions where taxpayers have suffered or will suffer irreparable loss as the result of those actions. Applicable statutes of limitation shall be tolled during the pendency of a stay. Any penalties and interest that would otherwise accrue shall not be affected by the granting of a stay.

(b) The advocate shall report directly to the director of the department.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "that person’s" for "his or her" after "advocate or" and deleted "," after "employees" in the second sentence of subdivision (a); substituted "director" for "executive officer" after "directly to the" in subdivision (b).

41162. Education and information program. (a) The department shall develop and implement an education and information program directed at, but not limited to, all of the following groups:

(1) Taxpayers newly registered with the department.

(2) Department audit and compliance staff.

(b) The education and information program shall include all of the following:

(1) A program of written communication with newly registered taxpayers explaining in simplified terms their duties and responsibilities.

(2) Participation in seminars and similar programs organized by federal, state, and local agencies.

(3) Revision of taxpayer educational materials currently produced by the department that explain the most common areas of taxpayer nonconformance in simplified terms.

(4) Implementation of a continuing education program for audit and compliance personnel to include the application of new legislation to taxpayer activities and areas of recurrent taxpayer noncompliance or inconsistency of administration.

History—Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000, added "and compliance" after "program for audit" in paragraph (4) of subdivision (b). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; deleted subdivision (c).

41163. Annual hearing for taxpayer proposals. [Repealed by Stats. 2021, Ch. 432, in effect January 1, 2022.]

41163. Annual hearing for taxpayer proposals. The department shall conduct an annual hearing to allow industry representatives and individual taxpayers to present proposals on changes to the Emergency Telephone Users Surcharge Act to further improve voluntary compliance and the relationship between taxpayers and the government.

History—Added by Stats. 2023, Ch. 511 (SB 889), in effect January 1, 2024.

41164. Preparation of statements by department. The department shall prepare and publish brief but comprehensive statements in simple and nontechnical language that explain procedures, remedies, and the rights and obligations of the department and taxpayers. As appropriate, statements shall be provided to taxpayers with the initial notice of audit, the notice of proposed additional surcharges, any subsequent notice of surcharge due, or other substantive notices. Additionally, the department shall include this language for statements in the annual tax information bulletins that are mailed to taxpayers.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout, substituted "surcharges" for "taxes" after "proposed additional", and substituted "surcharge" for "tax" after "subsequent notice of".

41165. Limit on uses of revenue collected or assessed. (a) The total amount of revenue collected or assessed pursuant to this part shall not be used for any of the following:

(1) To evaluate individual officers or employees.

(2) To impose or suggest production quotas or goals, other than quotas or goals with respect to accounts receivable.

(b) The department shall certify in its annual report submitted pursuant to Section 15616 of the Government Code that revenue collected or assessed is not used in a manner prohibited by subdivision (a).

(c) This section shall not prohibit the setting of goals and the evaluation of performance with respect to productivity and the efficient use of time.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "The" in subdivision (b); substituted "This" for "Nothing in this" before "section" and added "not" before "prohibit" in subdivision (c).

41166. Evaluation of employee's contact with taxpayers. The department shall develop and implement a program that will evaluate an individual employee's or officer's performance with respect to that person’s contact with taxpayers. The development and implementation of the program shall be coordinated with the Taxpayers' Rights Advocate.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "The" and substituted "that person’s" for "his or her" after "with respect to".

41167. Plan to timely resolve claims and petitions. The department shall, in cooperation with the Taxpayers' Rights Advocate, and other interested taxpayer-oriented groups, develop a plan to reduce the time required to resolve petitions for redetermination and claims for refunds. The plan shall include determination of standard timeframes and special review of cases which take more time than the appropriate standard timeframe.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" after "The".

41168. Procedures relating to review conferences. Procedures of the department, relating to appeals staff review conferences before a staff attorney or supervising tax auditor independent of the assessing department, shall include all of the following:

(a) Any conference shall be held at a reasonable time at a department office that is convenient to the taxpayer.

(b) The conference may be recorded only if prior notice is given to the taxpayer and the taxpayer is entitled to receive a copy of the recording.

(c) The taxpayer shall be informed prior to any conference that the taxpayer has a right to have present at the conference an attorney, accountant, or other designated agent.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "the taxpayer" for "he or she" after "conference that" and substituted "an" for "his or her" before "attorney," in subdivision (c).

41169. Reimbursement to taxpayer. (a) Every taxpayer is entitled to be reimbursed for any reasonable fees and expenses related to a hearing before the department if all of the following conditions are met:

(1) The taxpayer files a claim for the fee and expenses with the department within one year of the date the decision of the department becomes final.

(2) The department, in its sole discretion, finds that the action taken by the department staff was unreasonable.

(3) The department decides that the taxpayer be awarded a specific amount of fees and expenses related to the hearing, in an amount determined by the department in its sole discretion.

(b) To determine whether the department staff has been unreasonable, the department shall consider whether the department staff has established that its position was substantially justified.

(1) Fees and expenses incurred after the date of the notice of determination, jeopardy determination, or a claim for refund.

(2) If the department finds that the staff was unreasonable with respect to certain issues but reasonable with respect to other issues, the amount of reimbursed fees and expenses shall be limited to those that relate to the issues where the staff was unreasonable.

(d) Any proposed award by the department pursuant to subdivision (a) shall be available as a public record for at least 10 days prior to the effective date of the award.

(e) The amendments to this section by the act adding this subdivision shall be operative for claims filed on or after January 1, 2000.

History—Stats. 1995, Ch. 555, in effect January 1, 1996, substituted "board" for "State Board of Control" after "expenses with the" in paragraph (1) of, substituted "decides" for "makes a recommendation to the State Board of Control" after "The board" in paragraph (3) of, and deleted paragraph (4) which read: "The State Board of Control concurs with the recommendation and orders the board to provide reimbursement of fees and expenses to the taxpayer." from, subdivision (a); and added subdivision (d). Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000, added "within one year of the date the decision of the board becomes final" after "with the board" in paragraph (1) of, and substituted "in an amount determined by the board in its sole discretion" for "which shall be determined by the board" after "to the hearing," in paragraph (3) of, subdivision (a), substituted "board staff has … was substantially justified" for "taxpayer has established that the position of the board staff was not substantially justified" after "consider whether the" in subdivision (b), and added subdivision (e). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "the notice of determination, jeopardy determination, or a claim" for "filing petitions for redetermination and claims" after "the date of" in paragraph (c)(1).

41170. Investigation for nontax administration purposes. (a) An officer or employee of the department acting in connection with any law administered by the department shall not knowingly authorize, require, or conduct any investigation of, or surveillance over, any person for nontax administration related purposes.

(b) Any person violating subdivision (a) shall be subject to disciplinary action in accordance with the State Civil Service Act, including dismissal from office or discharge from employment.

(c) This section shall not apply with respect to any otherwise lawful investigation concerning organized crime activities.

(d) The provisions of this section are not intended to prohibit, restrict, or prevent the exchange of information where the person is being investigated for multiple violations which include emergency telephone users surcharge violations.

(e) For the purposes of this section:

(1) "Investigation" means any oral or written inquiry directed to any person, organization, or governmental agency.

(2) "Surveillance" means the monitoring of persons, places, or events by means of electronic interception, overt or covert observations, or photography, and the use of informants.

History—Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "acting in" and substituted "department" for "board" before "shall not" in subdivision (a).

41171. Settlement of disputed tax liabilities. [Repealed by Stats. 1995, Ch. 497, in effect January 1, 1996.]

41171. Settlement authority. (a) It is the intent of the Legislature that the department, its staff, and the Attorney General pursue settlements as authorized under this section with respect to surcharge matters in dispute that are the subject of protests, appeals, or refund claims, consistent with a reasonable evaluation of the costs and risks associated with litigation of these matters.

(b) (1) Except as provided in paragraph (2), no recommendation of settlement shall be submitted to the director for approval unless and until that recommendation has been submitted by the chief counsel to the Attorney General. Within 30 days of receiving that recommendation, the Attorney General shall review the recommendation and advise the chief counsel, in writing, the of their conclusions as to whether the recommendation is reasonable from an overall perspective. The chief counsel shall, with each recommendation of settlement submitted to the director also submit the Attorney General's written conclusions obtained pursuant to this paragraph.

(2) (A) A settlement of any civil surcharge matter in dispute involving a reduction of surcharge or penalties in settlement, the total of which reduction of surcharge and penalties in settlement does not exceed eleven thousand five hundred dollars ($11,500) may be approved by the director.

(B) Beginning on July 1, 2029, and each fifth fiscal year thereafter, the department shall adjust the amount specified in subparagraph (A) by increasing that amount by a percentage amount equal to the increase in the California Consumer Price Index, as calculated by the Department of Finance with the resulting amount rounded to the nearest one hundred dollars ($100). The first adjustment pursuant to this subparagraph shall be a percentage amount equal to the increase in the California Consumer Price Index from January 1, 2024, to January 1, 2029. Subsequent fifth fiscal year adjustments shall cover subsequent five-year periods. The incremental change shall be added to the previously adjusted amount.

(c) Whenever a reduction of surcharge, or penalties, or total surcharge and penalties in settlement in excess of five hundred dollars ($500) is approved pursuant to this section, there shall be placed on file, for at least one year, in the office of the director of the department a public record with respect to that settlement. The public record shall include all of the following information:

(1) The name or names of the surcharge payers who are parties to the settlement.

(2) The total amount in dispute.

(3) The amount agreed to pursuant to the settlement.

(4) A summary of the reasons why the settlement is in the best interests of the State of California.

(5) (A) For any settlement approved by the director, except those settlements approved pursuant to paragraph (2) of subdivision (b), the Attorney General's conclusion as to whether the recommendation of settlement was reasonable from an overall perspective.

(B) The public record shall not include any information that relates to any trade secret, patent, process, style of work, apparatus, business secret, or organizational structure that, if disclosed, would adversely affect the surcharge payer or the national defense.

(d) The director shall not participate in the settlement of surcharge matters pursuant to this section, except as provided in subdivision (e).

(e) (1) Any recommendation for settlement shall be approved or disapproved by the director within 45 days of the submission of that recommendation to the director. Any recommendation for settlement that is not either approved or disapproved by the director within 45 days of the submission of that recommendation shall be deemed approved.

(2) Where the director disapproves a recommendation for settlement, at the discretion of the director and chief counsel, the matter shall be remanded to staff for further negotiation, and may be resubmitted to the director, in the same manner and subject to the same requirements as the initial submission.

(f) All settlements entered into pursuant to this section shall be final and nonappealable, except upon a showing of fraud or misrepresentation with respect to a material fact.

(g) The Legislature finds that it is essential for fiscal purposes that the settlement program authorized by this section be expeditiously implemented. Accordingly, Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any determination, rule, notice, or guideline established or issued by the department in implementing and administering the settlement program authorized by this section.

(h) The amendments made to this section by the act adding this subdivision shall apply to any settlements approved on or after January 1, 2024.

History—Added by Stats. 1995, Ch. 497, in effect January 1, 1996. Stats. 2003, Ch. 605 (SB 1060), in effect January 1, 2004, added ", for at least one year," after "placed on file" to subdivision (c). Stats. 2006, Ch. 364 (AB 3076), in effect January 1, 2007, substituted "Except as provided in paragraph (3) and subject" for "Subject" before "to paragraph (2)" in paragraph (1) of, added ", itself," after "submitted to the board" in the first and third sentences of paragraph (2) of, and added paragraph (3) to subdivision (b); added ", or penalties, or total surcharge and penalties" after "a reduction of surcharge" in the first paragraph of, and substituted "For any settlement approved by the board, itself, the" for "The" before "Attorney General's conclusion" in the first sentence of paragraph (5) of subdivision (c); and added ", itself," after "disapproved by the board" in the second sentence of paragraph (1) of subdivision (e). Stats. 2023. Ch. 511 (SB 889) in effect January 1, 2024, substituted "department," for "State Board of Equalization" before "its staff" in subdivision (a); deleted paragraph (1) and renumbered paragraph (2) to (1) and paragraph (3) to (2)(A), substituted "Except as provided in paragraph (2), no recommendation" for "No recommendation" before "of settlement", substituted "director for approval" for "board, itself," after "submitted to" and deleted "executive director or" before "chief counsel" in the first sentence of new paragraph (1), substituted "advise the chief counsel," for "advise" before "in writing,", substituted "of their" for "the executive director or chief counsel of the board of his or her" before "conclusions" in the second sentence of new paragraph(1), deleted "executive director or" before "chief counsel" after "The", substituted "director," for "board, itself," before "also submit" in third sentence of new paragraph (1), substituted "eleven thousand five hundred dollars ($11,500)" for "five thousand dollars ($5,000)" after "exceed" and substituted "director." for "executive director and chief counsel, jointly. The executive director shall notify the board, itself, of any settlement approved pursuant to this paragraph." after "approved by the" in subparagraph (A) of new paragraph (2) and added new subparagraph (B) in new paragraph (2) in subdivision (b); deleted "executive" before "director" and substituted "department" for "board" before "a public" in the first sentence, substituted "director, except those settlements approved pursuant to paragraph (2) of subdivision (b)," for "board, itself," before "the Attorney" in new subparagraph (A) of paragraph (5), lettered second paragraph to subparagraph (B) of subdivision (c),; substituted "director" for "members of the State Board of Equalization" after "The" in subdivision (d); substitute "director" for "board, itself," before "within", substitute "director." for "board." after "to the" in first sentence of paragraph (1), substitute "director" for "board" before "within" in second sentence of paragraph (1), deleted third sentence of paragraph (1), deleted first sentence of paragraph (2), substituted "director" for "board" before "disapproved", added "at the discretion of the director and chief counsel" after "settlement’, deleted "board" before "staff", substituted "director," for "board" before "in the same" and substituted "submission." for "submission, at the discretion of the executive director or chief counsel." after "initial" in former second sentence in paragraph (2) of subdivision (e); deleted subdivision (g) and (h); relettered subdivision (i) to (g) and added new subdivision (h).

Text of Section Operative October 1, 2013, Through January 1, 2028

41171.5. Offers in compromise. (a) Beginning on January 1, 2007, the director of the department, or their delegates, may compromise any final surcharge liability.

(b) For purposes of this section, "a final surcharge liability" means any final surcharge liability arising under Part 20 (commencing with Section 41001), or related interest, additions to the surcharge, penalties, or other amounts assessed under this part.

(c) (1) Offers in compromise shall be considered only for liabilities that were generated from a business that has been discontinued or transferred, where the surcharge payer making the offer no longer has a controlling interest or association with the transferred business or has a controlling interest or association with a similar type of business as the transferred or discontinued business.

(2) Notwithstanding paragraph (1), a qualified final surcharge liability may be compromised regardless of whether the business has been discontinued or transferred or whether the surcharge payer has a controlling interest or association with a similar type of business as the transferred or discontinued business. All other provisions of this section that apply to a final surcharge liability shall also apply to a qualified final surcharge liability, and a compromise shall not be made under this subdivision unless all other requirements of this section are met. For purposes of this subdivision, a "qualified final surcharge liability" means either of the following:

(A) That part of a final surcharge liability, including related interest, additions to the surcharge, penalties, or other amounts assessed under this part, arising from a transaction or transactions in which the department finds no evidence that the service supplier collected the surcharge from the service user or other person and which was determined against the service supplier under Article 3 (commencing with Section 41070), Article 4 (commencing with Section 41080), or Article 5 (commencing with Section 41085) of Chapter 4.

(B) That part of a final surcharge liability, including related interest, additions to the surcharge, penalties, or other amounts assessed under this part, determined under Article 3 (commencing with Section 41070), Article 4 (commencing with Section 41080), and Article 5 (commencing with Section 41085) of Chapter 4 against a service user who is a consumer that is not required to register with the department under Article 3 (commencing with Section 41040) of Chapter 2.

(3) A qualified final surcharge liability may not be compromised with any of the following:

(A) A surcharge payer who previously received a compromise under paragraph (2) for a liability, or a part thereof, arising from a transaction or transactions that are substantially similar to the transaction or transactions attributable to the liability for which the surcharge payer is making the offer.

(B) A business that was transferred by a surcharge payer who previously received a compromise under paragraph (2) and who has a controlling interest or association with the transferred business, when the liability for which the offer is made is attributable to a transaction or transactions substantially similar to the transaction or transactions for which the surcharge payer's liability was previously compromised.

(C) A business in which a surcharge payer who previously received a compromise under paragraph (2) has a controlling interest or association with a similar type of business for which the surcharge payer received the compromise, when the liability of the business making the offer arose from a transaction or transactions substantially similar to the transaction or transactions for which the surcharge payer's liability was previously compromised.

(d) The department may, in its discretion, enter into a written agreement that permits the surcharge payer to pay the compromise in installments for a period not exceeding one year. The agreement may provide that such installments shall be paid by electronic funds transfers or any other means to facilitate the payment of each installment.

(e) A surcharge payer that has received a compromise under paragraph (2) of subdivision (c) may be required to enter into any collateral agreement that is deemed necessary for the protection of the interests of the state. A collateral agreement may include a provision that allows the department to reestablish the liability, or any portion thereof, if the surcharge payer has sufficient annual income during the succeeding five-year period. The department shall establish criteria for determining "sufficient annual income" for purposes of this subdivision.

(f) A surcharge payer that has received a compromise under paragraph (2) of subdivision (c) shall file and pay by the due date all subsequently required emergency telephone users surcharge returns for a five-year period from the date the liability is compromised, or until the surcharge payer is no longer required to file emergency telephone users surcharge returns, whichever period is earlier.

(g) Offers in compromise shall not be considered where the surcharge payer has been convicted of felony tax evasion under this part during the liability period.

(h) For amounts to be compromised under this section, the following conditions shall exist:

(1) The surcharge payer shall establish that:

(A) The amount offered in payment is the most that can be expected to be paid or collected from the surcharge payer's present assets or income.

(B) The surcharge payer does not have reasonable prospects of acquiring increased income or assets that would enable the surcharge payer to satisfy a greater amount of the liability than the amount offered, within a reasonable period of time.

(2) The department shall have determined that acceptance of the compromise is in the best interest of the state.

(i) A determination by the department that it would not be in the best interest of the state to accept an offer in compromise in satisfaction of a final surcharge liability shall not be subject to administrative appeal or judicial review.

(j) (1) Offers for liabilities with a fraud or evasion penalty shall require a minimum offer of the unpaid surcharge and fraud or evasion penalty.

(2) The minimum offer may be waived if it can be shown that the surcharge payer making the offer was not the person responsible for perpetrating the fraud or evasion. This authorization to waive only applies to partnership accounts where the intent to commit fraud or evasion can be clearly attributed to a partner of the surcharge payer.

(k) When an offer in compromise is either accepted or rejected, or the terms and conditions of a compromise agreement are fulfilled, the department shall notify the surcharge payer in writing. In the event an offer is rejected, the amount posted will either be applied to the liability or refunded, at the discretion of the surcharge payer.

(l) When more than one surcharge payer is liable for the debt, such as with spouses or partnerships or other business combinations, including, but not limited to, surcharge payers who are liable through dual determination or successor's liability, the acceptance of an offer in compromise from one liable surcharge payer shall reduce the amount of the liability of the other surcharge payers by the amount of the accepted offer.

(m) Whenever a compromise of surcharges or penalties or total surcharges and penalties in excess of five hundred dollars ($500) is approved, there shall be placed on file for at least one year in the office of the director of the department a public record with respect to that compromise. The public record shall include all of the following information:

(1) The name of the surcharge payer.

(2) The amount of unpaid surcharges and related penalties, additions to surcharges, interest, or other amounts involved.

(3) The amount offered.

(4) A summary of the reason why the compromise is in the best interest of the state.

The public record shall not include any information that relates to any trade secrets, patent, process, style of work, apparatus, business secret, or organizational structure, that if disclosed, would adversely affect the surcharge payer or violate the confidentiality provisions of Section 41132. A list shall not be prepared and releases shall not be distributed by the department in connection with these statements.

(n) A compromise made under this section may be rescinded, all compromised liabilities may be reestablished, without regard to any statute of limitations that otherwise may be applicable, and no portion of the amount offered in compromise refunded, if either of the following occurs:

(1) The department determines that a person did any of the following acts regarding the making of the offer:

(A) Concealed from the department property belonging to the estate of a surcharge payer or other person liable for the surcharge.

(B) Received, withheld, destroyed, mutilated, or falsified a book, document, or record or made a false statement, relating to the estate or financial condition of the surcharge payer or other person liable for the surcharge.

(2) The surcharge payer fails to comply with any of the terms and conditions relative to the offer.

(o) A person who, in connection with an offer or compromise under this section, or offer of that compromise to enter into that agreement, willfully does either of the following shall be guilty of a felony and, upon conviction, shall be fined not more than fifty thousand dollars ($50,000) or imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or both, together with the costs of investigation and prosecution:

(1) Conceals from an officer or employee of this state property belonging to the estate of a surcharge payer or other person liable in respect of the surcharge.

(2) Receives, withholds, destroys, mutilates, or falsifies a book, document, or record, or makes a false statement, relating to the estate or financial condition of the surcharge payer or other person liable in respect of the surcharge.

(p) For purposes of this section, "person" means the surcharge payer, a member of the surcharge payer's family, a corporation, agent, fiduciary, or representative of, or another individual or entity acting on behalf of, the surcharge payer, or another corporation or entity owned or controlled by the surcharge payer, directly or indirectly, or that owns or controls the surcharge payer, directly or indirectly.

(q) This section shall remain in effect only until January 1, 2028, and as of that date is repealed.

History—Added by Stats. 2006, Ch. 364 (AB 3076), in effect January 1, 2007. Stats. 2008, Ch. 222 (AB 2047), in effect January 1, 2009, redesignated former subdivision "(c)" to be "(c)(1)" and added paragraphs (2) and (3) in subdivision (c); added subdivisions (d), (e), (f), and (g); relettered former subdivisions (d), (e), (f), (g), (h), (i), (j), (k), (l), and (m) as (h), (i), (j), (k), (l), (m), (n), (o), (p), and (q), respectively; and added subdivision (r). Stats. 2011, Ch. 15 (AB 109), in effect April 4, 2011, operative October 1, 2011, substituted "pursuant to subdivision (h) of Section 1170 of the Penal Code" for "in the state prison" after "($50,000) or imprisoned" in subdivision (p).Stats. 2012, Ch. 285 (SB 1548), in effect January 1, 2013, substituted "A" for "Any" or "an" for "any" throughout the section; substituted "the surcharge" for "surcharges" after "additions to" in subdivision (b); substituted "a" for "no" after "final surcharge liability, and" and added "not" after "compromise shall" in paragraph (2) of subdivision (c); added "the" after "additions to" in subparagraphs (c)(2)(A) and (c)(2)(B); substituted "41132" for "41131" and revised the last sentence in the last paragraph of subdivision (n); deleted "any" after "from the board" in subparagraph (1)(A) of subdivision (o); substituted "another" for "any other" in subdivision (q); and substituted "2018" for "2013" in subdivision (r). Stats. 2017, Ch. 272 (AB 525), in effect January 1, 2018, substituted "2023" for "2018" after "until January 1," and deleted ", unless a later enacted statute, that is enacted before January 1, 2018, deletes or extends that date" after "date is repealed" in subdivision (r). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "department" for "board" throughout; redesignated paragraph (a)(1) as subdivision (a); deleted "executive" before "director", deleted "and chief counsel" after "director", deleted "where the reduction of fees is seven thousand five hundred dollars ($7,500) or less" after "liability", and deleted paragraphs (2) and (3) from subdivision (a); substituted "that" for " which" after "agreement" in subdivision (d); deleted subdivision (e) and relettered former subdivisions (f), (g) (h), (i), (j), (k), (l), (m), (n), (o), (p), (q) and (r) as (e), (f), (g) (h), (i), (j), (k), (l), (m), (n), (o), (p), and (q); deleted "executive" before "director" in first paragraph of relettered subdivision (m); substituted "2028" for "2023" after "January 1," in relettered subdivision (q).

Note.—SEC 1 of Stats 2011, Ch. 15 (AB 109), in effect April 4, 2011, states: "This act is titled and may be cited as the 2011 Realignment Legislation addressing public safety."

Note.—SEC 636 of Stats 2011, Ch. 15 (AB 109) in effect April 4, 2011, states: "This act will become operative no earlier than July 1, 2011, and only upon creation of a community corrections grant program to assist in implementing this act and upon an appropriation to fund the grant program."

Note.—The Community Corrections Grant Program referred to in SEC 636 of Stats. 2011, Ch. 15 (AB 109), as amended by SEC 68 of Stats. 2011, Ch. 39 (AB 117), was created by SEC 3 of Stats. 2011, Ch. 40 (AB 118), operative October 1, 2011.

Text of Section Operative January 1, 2028

41171.5. Offers in compromise. (a) The director of the department, or their delegates, may compromise any final surcharge liability.

(c) Offers in compromise shall be considered only for liabilities that were generated from a business that has been discontinued or transferred, where the surcharge payer making the offer no longer has a controlling interest or association with the transferred business or has a controlling interest or association with a similar type of business as the transferred or discontinued business.

(d) Offers in compromise shall not be considered where the surcharge payer has been convicted of felony tax evasion under this part during the liability period.

(e) For amounts to be compromised under this section, the following conditions shall exist:

(1) The surcharge payer shall establish that:

(A) The amount offered in payment is the most that can be expected to be paid or collected from the surcharge payer's present assets or income.

(2) The department shall have determined that acceptance of the compromise is in the best interest of the state.

(f) A determination by the department that it would not be in the best interest of the state to accept an offer in compromise in satisfaction of a final surcharge liability shall not be subject to administrative appeal or judicial review.

(g) (1) Offers for liabilities with a fraud or evasion penalty shall require a minimum offer of the unpaid surcharge and fraud or evasion penalty.

(h) When an offer in compromise is either accepted or rejected, or the terms and conditions of a compromise agreement are fulfilled, the department shall notify the surcharge payer in writing. In the event an offer is rejected, the amount posted will either be applied to the liability or refunded, at the discretion of the surcharge payer.

(i) When more than one surcharge payer is liable for the debt, such as with spouses or partnerships or other business combinations, including, but not limited to, surcharge payers who are liable through dual determination or successor's liability, the acceptance of an offer in compromise from one liable surcharge payer shall reduce the amount of the liability of the other surcharge payers by the amount of the accepted offer.

(j) Whenever a compromise of surcharges or penalties or total surcharges and penalties in excess of five hundred dollars ($500) is approved, there shall be placed on file for at least one year in the office of the director of the department a public record with respect to that compromise. The public record shall include all of the following information:

(1) The name of the surcharge payer.

(2) The amount of unpaid surcharges and related penalties, additions to surcharges, interest, or other amounts involved.

(3) The amount offered.

(4) A summary of the reason why the compromise is in the best interest of the state.

(k) A compromise made under this section may be rescinded, all compromised liabilities may be reestablished, without regard to any statute of limitations that otherwise may be applicable, and no portion of the amount offered in compromise refunded, if either of the following occurs:

(1) The department determines that a person did any of the following acts regarding the making of the offer:

(A) Concealed from the department property belonging to the estate of a surcharge payer or other person liable for the surcharge.

(B) Received, withheld, destroyed, mutilated, or falsified a book, document, or record, or made a false statement, relating to the estate or financial condition of the surcharge payer or other person liable for the surcharge.

(2) The surcharge payer fails to comply with any of the terms and conditions relative to the offer.

(l) A person who, in connection with an offer or compromise under this section, or offer of that compromise to enter into that agreement, willfully does either of the following shall be guilty of a felony and, upon conviction, shall be fined not more than fifty thousand dollars ($50,000) or imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or both, together with the costs of investigation and prosecution:

(1) Conceals from an officer or employee of this state property belonging to the estate of a surcharge payer or other person liable in respect of the surcharge.

(m) For purposes of this section, "person" means the surcharge payer, a member of the surcharge payer's family, a corporation, agent, fiduciary, or representative of, or another individual or entity acting on behalf of, the surcharge payer, or another corporation or entity owned or controlled by the surcharge payer, directly or indirectly, or that owns or controls the surcharge payer, directly or indirectly.

(n) This section shall become operative on January 1, 2028.

History—Added by Stats. 2008, Ch. 222 (AB 2047), in effect January 1, 2009, operative January 1, 2013. Stats. 2011, Ch. 15 (AB 109), in effect April 4, 2011, operative October 1, 2011, substituted "pursuant to subdivision (h) of Section 1170 of the Penal Code" for "in the state prison" after "($50,000) or imprisoned" in subdivision (l). Stats. 2012, Ch. 285 (SB 1548), in effect January 1, 2013, substituted "A" for "Any" or "an" for "any" throughout the section; substituted "the surcharge" for "surcharges" after "additions to" in subdivision (b); substituted "41132" for "41131" and revised the last sentence in the last paragraph of subdivision (j); deleted "any" after ""of this state" in subparagraph (1)(A) of subdivision (l); substituted "another" for "any other" in subdivision (m); and substituted "2018" for "2013" in subdivision (n). Stats. 2017, Ch. 272 (AB 525), in effect January 1, 2018, substituted "2023" for "2018" after "January 1," in subdivision (n). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, substituted "department" for "board" throughout the section; redesignated paragraph (a)(1) as subdivision (a); deleted "executive" before "director", deleted "and chief counsel" after "director", deleted "where the reduction of fees is seven thousand five hundred dollars ($7,500) or less" after "liability", and deleted paragraphs (2) and (3) from subdivision (a); deleted "executive" before "director" in first paragraph of subdivision (j); and substituted "2028" for "2023" after "January 1," in subdivision (n).

Note.—SEC 1 of Stats 2011, Ch. 15 (AB 109), in effect April 4, 2011, states: "This act is titled and may be cited as the 2011 Realignment Legislation addressing public safety."

41172. Release of levy. (a) The California Department of Tax and Fee Administration shall release any levy or notice to withhold issued pursuant to this part on any property in the event that the expense of the sale process exceeds the liability for which the levy is made.

(b) (1)(A) The Taxpayers' Rights Advocate may order the release of any levy or notice to withhold issued pursuant to this part or, within 90 days from the receipt of funds pursuant to a levy or notice to withhold, order the return of any amount up to two thousand three hundred dollars ($2,300) of moneys received, upon his or her finding that the levy or notice to withhold threatens the health or welfare of the taxpayer or his or her spouse and dependents or family.

(B) The amount the Taxpayers' Rights Advocate may return to each taxpayer subject to a levy or notice to withhold, is limited to two thousand three hundred dollars ($2,300), or the adjusted amount as specified in paragraph (2), in any monthly period.

(C) The Taxpayers' Rights Advocate may order amounts returned in the case of a seizure of property as a result of a jeopardy determination, subject to the amounts set or adjusted pursuant to this section and if the ultimate collection of the amount due is no longer in jeopardy.

(2) (A) The California Department of Tax and Fee Administration shall adjust the two-thousand-three-hundred-dollar ($2,300) amount specified in paragraph (1) as follows:

(i) On or before March 1, 2016, and on or before March 1 each year thereafter, the California Department of Tax and Fee Administration shall multiply the amount applicable for the current fiscal year by the inflation factor adjustment calculated based on the percentage change in the Consumer Price Index, as recorded by the California Department of Industrial Relations for the most recent year available, and the formula set forth in paragraph (2) of subdivision (h) of Section 17041. The resulting amount will be the applicable amount for the succeeding fiscal year only when the applicable amount computed is equal to or exceeds a new operative threshold, as defined in subparagraph (B).

(ii) When the applicable amount equals or exceeds an operative threshold specified in subparagraph (B), the resulting applicable amount, rounded to the nearest multiple of one hundred dollars ($100), shall be operative for purposes of paragraph (1) beginning July 1 of the succeeding fiscal year.

(B) For purposes of this paragraph, "operative threshold" means an amount that exceeds by at least one hundred dollars ($100) the greater of either the amount specified in paragraph (1) or the amount computed pursuant to subparagraph (A) as the operative adjustment to the amount specified in paragraph (1).

(c) The California Department of Tax and Fee Administration shall not sell any seized property until it has first notified the taxpayer in writing of the exemptions from levy under Chapter 4 (commencing with Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure.

(d) Except as provided in subparagraph (C) of paragraph (1) of subdivision (b), this section shall not apply to the seizure of any property as a result of a jeopardy determination.

History—Stats. 1993, Ch. 589, in effect January 1, 1994, added "of Division 2" after "(commencing with Section 703.010)" and added "Part 2 of" after "Title 9 of" in subdivision (b). Stats. 1995, Ch. 555, in effect January 1, 1996, substituted "that the" for "of any of the following: (1) The" after "in the event" in subdivision (a); substituted subdivision letter "(b)" for paragraph number "(2)" and substituted "may order the … of moneys received" for "orders the release of the levy or notice to withhold" after "Taxpayers' Rights Advocate" in subdivision (b); and relettered former subdivisions (b) and (c) as (c) and (d), respectively. Stats. 2015, Ch. 789 (AB1277), in effect January 1, 2016, redesignated former subdivision (b) as (b)(1)(A), substituted "two thousand three hundred dollars ($2,300)" for "one thousand five hundred dollars ($1,500)" after "any amount up to" in, added subparagraphs (B) and (C) to paragraph (1) in, and added paragraph (2) in, subdivision (b); substituted "Except as provided in subparagraph (C) of paragraph (1) of subdivision (b), this" for "This", and substituted "determination" for "assessment" in subdivision (d). Stats. 2018, Ch. 181 (SB 1507), in effect January 1, 2019, deleted "release or" in paragraph (b)(1)(B), and tsubstituted "California Department of Tax and Fee Administration"for "board" in subdivisions (a), (b), and (c).

41172.5. Return of property. (a) If any property has been levied upon, the property or the proceeds from the sale of the property shall be returned to the taxpayer if the department determines any one of the following:

(1) The levy on the property was not in accordance with the law.

(2) The taxpayer has entered into and is in compliance with an installment payment agreement pursuant to Section 41127.5 to satisfy the surcharge liability for which the levy was imposed, unless that or another agreement allows for the levy.

(3) The return of the property will facilitate the collection of the surcharge liability or will be in the best interest of the state and the taxpayer.

(b) Property returned under paragraphs (1) and (2) of subdivision (a) is subject to the provisions of Section 41174.

History—Added by Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000. Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" before "determines" in subdivision (a); substituted "surcharge" for "tax" before "liability" in paragraphs (a)(2) and (a)(3).

41173. Exemptions from levy. Exemptions from levy under Chapter 4 (commencing with Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure shall be adjusted for purposes of enforcing the collection of debts under this part to reflect changes in the California Consumer Price Index whenever the change is more than 5 percent higher than any previous adjustment.

History—Stats. 1993, Ch. 589, in effect January 1, 1994, added "of Division 2" after "(commencing with Section 703.010)" and added "Part 2 of" after "Title 9 of".

41174. Claim for reimbursement of bank charges by taxpayer. (a) A taxpayer may file a claim with the department for reimbursement of bank charges and any other reasonable third-party check charge fees incurred by the taxpayer as the direct result of an erroneous levy or notice to withhold, erroneous processing action, or erroneous collection action by the department. Bank and third-party charges include a financial institution's or third party's customary charge for complying with the levy or notice to withhold instructions and reasonable charges for overdrafts that are a direct consequence of the erroneous levy or notice to withhold, erroneous processing action, or erroneous collection action. The charges are those paid by the taxpayer and not waived or reimbursed by the financial institution or third party. Each claimant applying for reimbursement shall file a claim with the department that shall be in a form as may be prescribed by the department. In order for the department to grant a claim, the department shall determine that both of the following conditions have been satisfied:

(1) The erroneous levy or notice to withhold, erroneous processing action, or erroneous collection action was caused by department error.

(2) Prior to the erroneous levy or notice to withhold, erroneous processing action, or erroneous collection action, the taxpayer responded to all contacts by the department and provided the department with any requested information or documentation sufficient to establish the taxpayer's position. This provision may be waived by the department for reasonable cause.

(b) Claims pursuant to this section shall be filed within 90 days from the date the bank and third-party charges were incurred by the taxpayer. Within 30 days from the date the claim is received, the department shall respond to the claim. If the department denies the claim, the taxpayer shall be notified in writing of the reason or reasons for the denial of the claim.

History—Stats. 2001, Ch. 543 (SB 1185), added "and any other … check charge fees" after "of bank charges" in subdivision (a), added "and third party" prior to "charges include a" in subdivision (a), added "or third party's" after "a financial institution's" in subdivision (a), added "or third party" after "the financial institution" in subdivision (a), effective January 1, 2002. Stats. 2013, Ch. 253 (SB 442), in effect January 1, 2014, added ", erroneous processing action, or erroneous collection action" after "erroneous levy or notice to withhold" throughout the section; substituted "or reimbursed" for "for reimbursement" after "taxpayer and not waived", and added "erroneous" after "Prior to the" in the first sentence of paragraph (2) of, subdivision (a); and substituted "the bank and third-party charges were incurred by the taxpayer" for "of the levy or notice to withhold" after "90 days from the date" in the first sentence of subdivision (b). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout.

41175. Preliminary notice to taxpayer prior to lien. (a) At least 30 days prior to the filing or recording of liens under Chapter 14 (commencing with Section 7150) or Chapter 14.5 (commencing with Section 7220) of Division 7 of Title 1 of the Government Code, the department shall mail to the taxpayer a preliminary notice. The notice shall specify the statutory authority of the department for filing or recording the lien, indicate the earliest date on which the lien may be filed or recorded, and state the remedies available to the taxpayer to prevent the filing or recording of the lien. In the event tax liens are filed for the same liability in multiple counties, only one preliminary notice shall be sent.

(b) If the department determines that filing a lien was in error, it shall mail a release to the taxpayer and the entity recording the lien as soon as possible, but no later than seven days, after this determination and receipt of lien recording information. The release shall contain a statement that the lien was filed in error. In the event the erroneous lien is obstructing a lawful transaction, the department shall immediately issue a release of lien to the taxpayer and the entity recording the lien.

(c) When the department releases a lien erroneously filed, notice of that fact shall be mailed to the taxpayer and, upon the request of the taxpayer, a copy of the release shall be mailed to the major credit reporting companies in the county where the lien was filed.

(d) (1) The department may release or subordinate a lien if the department determines any of the following:

(A) Release or subordination will facilitate the collection of the surcharge liability.

(B) Release or subordination will be in the best interest of the state and the taxpayer.

(C) Release or subordination will be in the best interest of the state and another person that is not the taxpayer but that holds an interest with the taxpayer in the property that is subject to the lien.

(2) The amendments added to this subdivision do not constitute a change in, and are declaratory of, existing law.

History—Stats. 1999, Ch. 929 (AB 1638), in effect January 1, 2000, added subdivision (d). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "surcharge" for "tax" in subdivision (d). Stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2023, redesignated subdivision (d) as paragraph (d)(1); substituted "any of the following:" for "that the release or…the taxpayer." after "determines" and added subparagraphs (A), (B) and (C) in redesignated paragragh (d)(1); added paragraph (2) in subdivision (d).

41176. Disregard by department employee or officer. (a) If any officer or employee of the department recklessly disregards department-published procedures, a taxpayer aggrieved by that action or omission may bring an action for damages against the state in superior court.

(b) In any action brought under subdivision (a), upon finding of liability on the part of the state, the state shall be liable to the plaintiff in an amount equal to the sum of all of the following:

(1) Actual and direct monetary damages sustained by the plaintiff as a result of the actions or omissions.

(2) Reasonable litigation costs, including any of the following:

(A) Reasonable court costs.

(B) Prevailing market rates for the kind or quality of services furnished in connection with any of the following:

(i) The reasonable expenses of expert witnesses in connection with the civil proceeding, except that no expert witness shall be compensated at a rate in excess of the highest rate of compensation for expert witnesses paid by the state.

(ii) The reasonable cost of any study, analysis, engineering report, test, or project that is found by the court to be necessary for the preparation of the party's case.

(iii) Reasonable fees paid or incurred for the services of attorneys in connection with the civil proceeding, except that those fees shall not be in excess of seventy-five dollars ($75) per hour unless the court determines that an increase in the cost of living or a special factor, including the limited availability of qualified attorneys for the proceeding, justifies a higher rate.

(c) In the awarding of damages under subdivision (b), the court shall take into consideration the negligence or omissions, if any, on the part of the plaintiff that contributed to the damages.

(d) Whenever it appears to the court that the taxpayer's position in the proceeding brought under subdivision (a) is frivolous, the court may impose a penalty against the plaintiff in an amount not to exceed ten thousand dollars ($10,000). A penalty so imposed shall be paid upon notice and demand from the department and shall be collected as a surcharge imposed under this part.

History—Stats. 2006, Ch. 538 (SB 1852), in effect January 1, 2007, substituted "that" for "which" after "on the part of the plaintiff" in subdivision (c). Stats. 2021, Ch. 432 (SB 824), in effect January 1, 2022, substituted "department" for "board" throughout; substituted "state" for "State of California" throughout; substituted "including" for "such as" after "special factor," in subparagraph (b)(2)(B)(iii); substituted "subdivision" for "subdivisions" after "brought under" in the first sentence of subdivision (d); substituted "surcharge" for "tax" before "imposed under" in the second sentence of subdivision (d).

Uncodified Sections

1. Multiagency task force. (a) The multiagency task force established pursuant to Executive Order D-51-86 (hereinafter referred to as "task force") shall include among its goals and objectives the following:

(1) To deter tax evasion by maximizing recoveries from blatant tax evaders and violators of cash-pay reporting laws, utilizing all penalties which are available to the taxing and enforcement agencies under existing law.

(2) To reduce enforcement costs by eliminating duplicative audits and investigations.

(3) To generate greater voluntary taxpayer compliance and to deter tax and cash-pay violations by publicizing the efforts of the task force.

(4) To provide opportunities for auditors and investigators from tax and enforcement agencies to become familiar with other agencies' laws and enforcement procedures.

(5) To concentrate its efforts in investigating and prosecuting violations of cash-pay and tax laws by employers with five or more employees and by individuals who are habitual or willfull violators of those laws.

(b) In addition to the responsibilities cited in Executive Order D-51-86, the task force shall be empowered to do all of the following:

(1) Identify areas of blatant violations and noncompliance with tax and cash-pay laws.

(2) Solicit referrals from the tax and enforcement agencies represented on the task force committee of instances of blatant violations and noncompliance with tax and cash-pay laws.

(3) Conduct audits, investigations, and referrals for prosecution of violations referred by other agencies and in the identified areas of violations and noncompliance, using all enforcement powers available in existing laws and regulations.

(4) Establish an advertised telephone "hotline" for referrals from the public.

(5) Publicize the activities of the task force.

(6) Keep the audit and investigative staff of the tax and enforcement agencies represented on the task force committee fully informed of the activities of the task force.

(7) Develop procedures for improved information sharing among the agencies represented on the task force committee, consistent with restrictions on disclosure of confidential tax information in existing law, for the purpose of improving enforcement.

(8) Based on the activities of the task force, evaluate the need for any law changes to do any of the following:

(A) Eliminate barriers to interagency information sharing.

(B) Improve agencies' ability to audit, investigate, and prosecute tax and cash-pay violations.

(D) Eliminate duplication and improve cooperation among the participating agencies.

(c) The task force shall report to the Governor, the Senate and Assembly Revenue and Taxation Committees, and the Commission on California State Government Organization and Economy every six months during the period it is in existence, beginning on March 1, 1987, regarding the activities of the task force. The reports shall include, but not be limited to, all of the following:

(1) The number of cases of blatant violations and noncompliance with tax and cash-pay laws identified, audited or investigated, and referred for prosecution.

(2) Actions taken by the task force to publicize its activities.

(3) Efforts made by the task force to establish an advertised telephone "hotline" for referrals from the public.

(4) Procedures developed for improved information sharing among the agencies represented on the task force.

(5) Steps taken by the task force to improve cooperation among participating agencies, reduce duplication of effort, and improve voluntary compliance.

(6) Recommendations for any law changes needed to accomplish the goals described in paragraph (8) of subdivision (b).

History—Added by Sec. 40, Stats. 1986, Ch. 1361, effective January 1, 1987.

Laws, Regulations and Annotations

Search

Business Taxes Law Guide—Revision 2024

Emergency Telephone Users Surcharge Act

Revenue and Taxation Code

Division 2. Other Taxes Part 20. Emergency Telephone Users Surcharge Act

Chapter 7. Administration.

Article 1. Regulations, Records and Reports

Article 2. Disposition of Proceeds

Article 2.5. Violations

Article 3. Notices

Article 4. Purpose

Article 5. The California Taxpayers' Bill of Rights

Uncodified Sections

Article 1. Regulations, Records and Reports

Article 2. Disposition of Proceeds

Article 2.5. Violations*

Article 3. Notices

Article 4. Purpose

Article 5. The California Taxpayers' Bill of Rights*

Text of Section Operative October 1, 2013, Through January 1, 2028

Text of Section Operative January 1, 2028

Uncodified Sections

Division 2. Other Taxes
Part 20. Emergency Telephone Users Surcharge Act