Your Rights as a California Taxpayer
The California Department of Tax and Fee Administration (CDTFA) administers the tax program for both business and property taxes for the State of California. Business taxes include:
- California use tax and sales tax
- Fuel tax
- Cigarette tax
- Alcoholic beverage tax
Business taxpayers may take up their concerns directly with the main office of the CDTFA while property tax concerns are addressed by the local county office.
When you deal with the tax agencies of California, you may feel like you do not have any rights. These agencies can be aggressive and overwhelming to most individuals not used to dealing with them.
However, you do have rights, an important detail to remember any time the CDFA contacts you. Below is an overview of your rights as a taxpayer engaging with the California Department of Tax and Fee Administration.
Your Rights During a Sales Tax Audit
Sales and use tax audits are stressful, and some agents do not go out of their way to help you feel calmer. Remembering and exercising your rights during a tax audit can reduce the tension.
During an audit, you have a right to:
- An impartial and fair examination
- A clear explanation of the audit process and the reason for any information requested
- Bring in an accountant, attorney, or other representative to assist you at any point during the audit or an appeal
- Appeal audit findings
- Reimbursement for reasonable appeal fees and expenses if the CDFA staff action was unreasonable
A business tax audit covers the tax returns you have filed in the past three years. If for some reason, you have not filed returns for that period, the law allows the CDFA auditor to back eight years.
Your Rights During the Appeal of a Sales Tax Audit
If you decide to appeal the audit findings, you have 30 days from the date of the Notice of Determination, which is the document you receive with the audit findings. During that time, interest on your tax liability will continue to accrue.
The CDTFA recommends paying the tax portion in full as soon as possible to stop the accrual of interest. Any amounts not due will be refunded with interest at the conclusion of the appeal.
If you miss the deadline to appeal, you will be required to pay your tax liability in full and file a Petition for Redetermination, a claim for refund in order to dispute the amount you owe.
To be awarded full appeal rights, the petition must:
- Be made in writing
- State why you disagree
- Include any facts to support your claim
- Request a hearing
You must respond to all correspondence during the appeal or risk denial of your claim.
The formal appeals process includes an independent review of your case by the CDTFA’s legal department. Several courses of action will be evaluated as a viable resolution.
You have some rights you may exercise regarding the appeals conference:
- Right to a conference held at the CDTFA office most convenient to you
- Right to receive prior notice if the conference will be recorded
- Right to receive a copy of the recording
If your appeal is denied, you are required to pay the liability in full before you can pursue an appeal in a court of law.
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Your Rights During the CDTFA Collection Process
You are legally obligated to report and pay taxes and fees when they are due. If you fail to pay on time and do not respond to their attempts to contact you, the California Department of Tax and Fee Administration can and will attempt to collect the debt, including such means as:
- Filing a lien against your property
- Placing a levy on your wages, bank account and personal property
To avoid missing any correspondence from the CDTFA or any other taxing agency, you must be diligent about updating each agency with your current address and information about changes in business ownership.
During the collection process you have the following rights:
- To be treated courteously and professionally by the CDTFA employees
- To tax clearance to protect yourself from the responsibility for tax debts of your business purchaser or seller
- To be notified 30 days prior to a lien filing
- To free release if the lien is filed in error
- To request a hearing with the staff in a local CDTFA office if you feel a levy is excessive
- To file a claim for reimbursement of bank charges and third-party check fees created by the levy if your bank account is seized
- To be notified 60 days before the CDTFA revokes or suspends your seller’s permit or business license
- To ask the CDTFA to relieve certain penalties if you can show reasonable circumstance causing you to incur them
You also have a right to an Offer in Compromise if all of the following are true:
- The tax or fee liability is on a closed account
- You are no longer associated with the business that incurred the liability
- You do not dispute the amount you owe and
- You are unable to pay the full amount in a reasonable time
There is one circumstance where your right to be notified 30 days prior to the filing of a lien is not upheld and that is when you have received a jeopardy determination.
Your Rights to a Jeopardy Determination Hearing and for Claiming a Refund
A jeopardy determination is a tax bill for immediate payment of the liability. You have several rights regarding this type of tax bill.
You have the right to:
- Establish the jeopardy determination is for an amount not owed, is excessive, or should be delayed
- Request an administrative hearing before a representative of the CDTFA’s Appeals Division to determine if the sale of property seized by the CDTFA would result in irreparable harm to you
You also have the right to claim a refund for payments you made that may have exceeded what you owe. You have to exercise this right within three years of the due date of the return for which the overpayment occurred or six months from the date of the actual overpayment, whichever is later. It must be in writing stating the basis for your claim.
Other Taxpayer Rights
You have the right to confidentiality and the right to know why you are being asked for information.
You have the right to be told how the CDTFA will use any information you provide as well as any penalties or other actions that could occur if you do not respond.
As always, you have the right to prompt, courteous service and fair treatment free from harassment and inappropriate conduct. The following may not be considered in regards to your rights or the conduct of policies:
- National origin
You can obtain copies of your account records from the CDTFA via email or postal mail. You can also receive them directly from the CDFA office that administers your account.
If the tax man cometh, remember … you have rights throughout any process you may go through with the California Department of Tax and Fee Administration. Also, you always have a right to an attorney to help you through the maze of tax laws and to stand compassionately by your side at any time.