Article 6 - Interest and Penalties

California Revenue and Taxation Code — §§ 38451-38455

Sections (7)

Amended by Stats. 2021, Ch. 432, Sec. 35. (SB 824) Effective January 1, 2022.

(a)Subject to subdivision (c), a person who fails to pay any tax to the state or any amount of tax required to be collected and paid to the state, except amounts of determinations made by the California Department of Tax and Fee Administration under Articles 2 or 3 of this chapter, within the time required shall pay a penalty of 10 percent of the tax or amount of the tax, in addition to the tax or the amount of tax, plus interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5 from the date on which the tax or the amount of tax required to be collected became due and payable to the state until the date of payment.

(b)Subject to subdivision (c), a person who fails to file a return in accordance with the due date set forth in Section 38401 or the due date established by the California Department of Tax and Fee Administration in accordance with Section 38404, shall pay a penalty of one hundred dollars ($100).

(c)A person who is liable for the penalties described in this section shall pay either the penalty described in subdivision (a) or the penalty described in subdivision (b), whichever is greater.

§ 38451.5

Added by Stats. 2021, Ch. 432, Sec. 36. (SB 824) Effective January 1, 2022.

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

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

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

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

(b)For purposes of this section:

(1)“Business day” means any day other than a Saturday, Sunday, or any day designated as a state holiday.

(2)“Department” means the California Department of Tax and Fee Administration.

(3)“Modified adjusted daily rate” means the modified adjusted rate per annum as defined in subdivision (a) of Section 6591.5 determined on a daily basis by dividing the modified adjusted rate per annum by 365.

(c)This section shall not apply to any payment made pursuant to a deficiency determination, a determination if no

return has been filed, or a jeopardy determination issued by the department.

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

§ 38452

Amended by Stats. 2022, Ch. 474, Sec. 45. (SB 1496) Effective January 1, 2023.

(a)If the department finds that a person’s failure to make a timely return or payment is due to reasonable cause and circumstances beyond the person’s control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty provided by Sections 38421 and 38451.

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

(c)(1) Subject to paragraph (2), the department may grant relief of

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

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

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

§ 38453

Amended by Stats. 2022, Ch. 474, Sec. 46. (SB 1496) Effective January 1, 2023.

(a)If the department finds that a person’s failure to make a timely return or payment was due to a disaster, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the interest provided by Sections 38405, 38423, and 38451.

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

(c)(1) Subject to paragraph (2), the department may grant relief of the interest for any person in an area identified in

a state of emergency proclamation made by the Governor for the period the state of emergency proclamation is effective, regardless of whether the person has filed a statement with the department pursuant to subdivision (b).

§ 38454

Added by Stats. 1990, Ch. 987, Sec. 6.5.

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

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

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

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

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

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

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

(c)Any person seeking relief under this section shall file with the board all of the following:

(1)A copy of the person’s written request to the board and a copy of the board’s written advice.

(2)A statement under penalty of perjury setting forth the facts on which the claim for relief is based.

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

(d)Only the person making the written request shall be entitled to rely on the board’s

written advice to that person.

§ 38454.5

Added by Stats. 2007, Ch. 342, Sec. 44. Effective January 1, 2008. Section applicable retroactively as prescribed in subd. (h) and clarified in Sec. 60 of Ch. 342.

(a)Under regulations prescribed by the board, if:

(1)A tax liability under this part was understated by a failure to file a return required to be filed under this part, by the omission of an amount properly includable therein, or by erroneous deductions or credits claimed on a return, and the understatement of tax liability is

attributable to one spouse; or any amount of the tax reported on a return was unpaid and the nonpayment of the reported tax liability is attributable to one spouse.

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

(3)Taking into account whether or not the other spouse significantly benefited directly or indirectly from the understatement or the nonpayment and taking into account all other facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax attributable to that understatement or nonpayment,

then the other spouse shall be relieved of liability for tax (including

interest, penalties, and other amounts) to the extent that the liability is attributable to that understatement or nonpayment of tax.

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

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

(d)For purposes of paragraph (2) of subdivision (a), “reason to know”

means whether or not a reasonably prudent person would have had reason to know of the understatement or nonpayment.

(e)For purposes of this section, with respect to a failure to file a return or an omission of an item from the return, “attributable to one spouse” may be determined by whether a spouse rendered substantial service as a timber owner who harvests timber or causes it to be harvested, is first to acquire title to felled or downed timber from an exempt person or agency, or without authorization, harvests or causes to be harvested timber owned by another to which the understatement is attributable. If neither spouse rendered substantial services as a timber owner, then the attribution of applicable items of understatement shall be treated as community property. An erroneous deduction or credit shall be attributable to the spouse who caused that deduction or credit to be entered on the return.

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

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

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

section.

§ 38455

Amended by Stats. 2001, Ch. 251, Sec. 27. Effective January 1, 2002.

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

(b)For purposes of this section, an error or delay shall be deemed to have occurred only if the person filed a timely report and no significant aspect of the error or delay is attributable to an act of, or a

failure to act by, the taxpayer.

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

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