19031. The Franchise Tax Board may proceed under this article or
Article 5 (commencing with Section 19081) whether or not it requires
a return as an amended return under Section 18622.
19032. As soon as practicable after the return is filed, the
Franchise Tax Board shall examine it and shall determine the correct
amount of the tax.
19033. (a) If the Franchise Tax Board determines that the tax
disclosed by the taxpayer on an original or amended return, including
an amended return reporting federal adjustments pursuant to Section
18622, is less than the tax disclosed by its examination, it shall
mail notice to the taxpayer of the deficiency proposed to be
assessed. In no case shall the determination of the deficiency be
arbitrary or without foundation.
(b) (1) Except as provided in paragraph (2), the Franchise Tax
Board, in connection with the determination described in subdivision
(a), shall examine the original or amended return or related
electronically stored return data.
(2) If the return or return data described in paragraph (1) has
been destroyed or cannot be located after reasonable effort, the
Franchise Tax Board shall request the taxpayer to provide a paper or
electronic copy of the return. If the taxpayer fails to provide a
copy within 30 days, which may be extended an additional 30 days for
reasonable cause, from the date of the request, paragraph (1) shall
not apply.
(c) As used in this section, "electronically stored return data"
means an electronic record of line items from an original or amended
return and accompanying schedules that is routinely created as a
return is processed.
(d) The amendments to this section made by Chapter 414 of the
Statutes of 2000 shall apply to notices of deficiencies proposed to
be assessed issued on or after January 1, 2001.
(e) The notice described in subdivision (a) shall be mailed in a
manner that includes a postmark. For purposes of this subdivision,
postmark means a postal marking made on a letter, package, or
postcard indicating the date on which the item is delivered to the
United States Postal Service.
(f) The amendments made to this section by the act adding this
subdivision shall apply to notices of deficiencies proposed to be
assessed issued on or after January 1, 2008.
19034. (a) Each notice shall set forth the reasons for the proposed
deficiency assessment and the computation thereof.
(b) Each notice shall include the date determined by the Franchise
Tax Board as the last day on which the taxpayer may file a written
protest pursuant to Section 19041. Failure to include this date shall
not invalidate a notice that is otherwise valid.
(c) The amendments made by the act adding this subdivision shall
apply to any notice mailed after December 31, 1999.
19035. In the case of a joint return filed by husband and wife, the
notice of proposed deficiency assessment may be a single joint
notice, except that if the Franchise Tax Board is notified by either
spouse that separate residences have been established, it shall mail
to each spouse, in lieu of the single joint notice, duplicate
originals of the joint notice.
19036. Notwithstanding any provision to the contrary, any interest,
penalty or addition to tax, imposed under Part 10 (commencing with
Section 17001), Part 11 (commencing with Section 23001), or this part
may be assessed and collected in the same manner as if it were a
deficiency.
19041. (a) Within 60 days after the mailing of each notice of
proposed deficiency assessment the taxpayer may file with the
Franchise Tax Board a written protest against the proposed deficiency
assessment, specifying in the protest the grounds upon which it is
based.
(b) Any protest filed with the Franchise Tax Board on or before
the last date specified for filing that protest by the Franchise Tax
Board in the notice of proposed deficiency assessment (according to
Section 19034) shall be treated as timely filed.
(c) The amendments made by the act adding this subdivision shall
apply to any notice mailed after December 31, 1999.
19041.5. (a) Notwithstanding any other provision of this part, Part
10 (commencing with Section 17001), or Part 11 (commencing with
Section 23001), the provisions of Section 6603 of the Internal
Revenue Code, relating to deposits made to suspend the running of
interest on potential underpayments, shall apply, except as otherwise
provided. A deposit shall not be considered a payment of tax for
purposes of filing a claim for refund pursuant to Section 19306,
converting an administrative action to an action on a claim pursuant
to Section 19335, or filing an action pursuant to Section 19384,
until either of the following occurs:
(1) The taxpayer provides a written statement to the Franchise Tax
Board specifying that the deposit shall be a payment of tax for
purposes of Section 19306, 19335, or 19384.
(2) The deposit is used to pay a final tax liability.
(b) Section 6603(d) of the Internal Revenue Code is modified to
substitute the phrase "notice of proposed deficiency assessment under
Article 3 of Chapter 4 of this part" for "30-day letter" in each
place that the phrase "30-day letter" appears.
(c) In the case of any amount held by the Franchise Tax Board as a
deposit in the nature of a cash bond pursuant to the provisions of
this section prior to the amendments made by the act adding this
subdivision, the date that the taxpayer identifies that amount as a
deposit made pursuant to this section, as amended by the act adding
this subdivision, shall be treated as the date that the amount is
deposited for purposes of this section, as amended by the act adding
this subdivision.
19042. If no protest is filed, the amount of the proposed
deficiency assessment becomes final upon the expiration of the 60-day
period provided in Section 19041.
19043. (a) For purposes of this part, "deficiency" means the amount
by which the tax imposed by Part 10 (commencing with Section 17001)
or Part 11 (commencing with Section 23001) exceeds the excess of--
(1) The sum of--
(A) The amount shown as the tax by the taxpayer on an original or
amended return, if an original or amended return was filed, plus
(B) The amounts previously assessed (or collected without
assessment) as a deficiency, over--
(2) The amount of rebates, as defined in paragraph (2) of
subdivision (b), made.
(b) For purposes of this section:
(1) The tax imposed by Part 10 (commencing with Section 17001) and
Part 11 (commencing with Section 23001) and the tax shown on an
original or amended return shall both be determined without regard to
payments on account of estimated tax, and without regard to the
credit under Section 19002.
(2) "Rebate" means so much of an abatement, credit, refund, or
other repayment, as was made on the ground that the tax imposed by
Part 10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) was less than the excess of the amount specified in
paragraph (1) of subdivision (a) over the rebates previously made.
19043.5. (a) (1) If the Franchise Tax Board determines that the
amount of a carryover disclosed by the taxpayer on an original or
amended return, including an amended return reporting federal
adjustments pursuant to Section 18622, is more than the amount of the
carryover disclosed by its own examination, it may mail a notice or
notices to the taxpayer of the proposed carryover adjustment and the
proposed adjusted carryover amount.
(2) For purposes of this section, "carryover" means the amount of
a credit, loss, deduction, or other item that is shown on an original
or amended return for carry forward to a subsequent taxable year.
(b) Except as otherwise provided in this section, the provisions
of this article applicable to a proposed deficiency assessment shall
be applicable to a proposed adjusted carryover amount, including
protest and appeal rights as if that proposed adjusted carryover
amount were a proposed deficiency assessment.
(c) (1) A proposed adjusted carryover amount shall become a final
adjusted carryover amount under this section following a
determination of the board regarding that proposed adjusted carryover
amount that becomes final pursuant to the provisions of Section
19048.
(2) A final adjusted carryover amount shall be binding and
conclusive with respect to the amount of that carryover for purposes
of Part 10 (commencing with Section 17001), this part, and Part 11
(commencing with Section 23001), except in the following
circumstances:
(A) In the event of fraud, malfeasance, or misrepresentation of a
material fact.
(B) Subject to any provision of the Revenue and Taxation Code that
expressly provides that effect be given to that provision
notwithstanding any other law or rule of law.
(C) Subject to any law that is, or becomes, operative with respect
to a taxable year affected by the final adjusted carryover amount.
(D) Subject to any final federal adjustment that is made with
respect to the taxpayer's federal income tax liability for a taxable
year affected by the final adjusted carryover amount.
(E) In an action brought pursuant to provisions of Section 19382.
(d) (1) In any case where there is a final adjusted carryover
amount with respect to a carryover, the taxpayer shall report that
final adjusted carryover amount on an original or amended return for
any subsequent year.
(2) If a taxpayer fails to comply with paragraph (1), then any
adjustment required to make the amount of the carryover shown on the
return for any year consistent with the final adjusted carryover
amount shall be treated as arising out of a mathematical error and
assessed and collected under Section 19051.
(e) Except as provided in subdivision (c), this section shall not
affect the determination, issuance, assessment, collection, or
validity of a deficiency assessment under this part.
19044. (a) If a protest is filed, the Franchise Tax Board shall
reconsider the assessment of the deficiency and, if the taxpayer has
so requested in his or her protest, shall grant the taxpayer or his
or her authorized representatives an oral hearing. Chapter 4.5
(commencing with Section 11400) of Part 1 of Division 3 of Title 2 of
the Government Code does not apply to a hearing under this
subdivision.
(b) The Franchise Tax Board may act on the protest in whole or in
part. In the event the Franchise Tax Board acts on the protest in
part only, the remaining part of the protest shall continue to be
under protest until the Franchise Tax Board acts on that part.
19045. (a) The Franchise Tax Board's action upon the protest,
whether in whole or in part, is final upon the expiration of 30 days
from the date when it mails notice of its action to the taxpayer,
unless within that 30-day period the taxpayer appeals in writing from
the action of the Franchise Tax Board to the board.
(b) (1) The Franchise Tax Board's notice of action upon protest
shall include the date determined by the Franchise Tax Board as the
last day on which the taxpayer may file an appeal with the board.
(2) Any appeal to the board filed by the taxpayer on or before the
date for filing an appeal specified in the notice (pursuant to
paragraph (1)) shall be treated as timely filed.
(c) This section shall apply to any notice mailed after December
31, 1999.
19046. Two copies of the appeal and two copies of any supporting
documents shall be addressed and mailed to the State Board of
Equalization at Sacramento, California. Upon receipt of the appeal,
the board shall provide one copy of the appeal and one copy of any
supporting documents to the Franchise Tax Board at Sacramento,
California.
19047. The board shall hear and determine the appeal and thereafter
shall forthwith notify the taxpayer and the Franchise Tax Board of
its determination and the reasons therefor.
19048. The board's determination becomes final upon the expiration
of 30 days from the time of the determination unless within the
30-day period the taxpayer or the Franchise Tax Board files a
petition for rehearing with the board. In that event the
determination becomes final upon the expiration of 30 days from the
time the board issues its opinion on the petition.
19049. (a) When a deficiency is determined and the assessment
becomes final, the Franchise Tax Board shall mail notice and demand
to the taxpayer for the payment thereof. The deficiency assessed is
due and payable at the expiration of 15 days from the date of the
notice and demand.
(b) The amendments made by Chapter 600 of the Statutes of 1997 are
operative for notices issued on or after January 1, 1998.
(c) The notice described in subdivision (a) shall be mailed in a
manner that includes a postmark. For purposes of this subdivision,
postmark means a postal marking made on a letter, package, or
postcard indicating the date on which the item is delivered to the
United States Postal Service.
(d) The amendments made to this section by the act adding this
subdivision are operative for notices issued on or after January 1,
2008.
19050. A certificate by the Franchise Tax Board or of the board, as
the case may be, of the mailing of the notices specified in this
article is prima facie evidence of the assessment of the deficiency
and of the giving of the notices.
19051. Any amount of tax in excess of that disclosed by the return,
due to a mathematical error, notice of which has been mailed to the
taxpayer, is not a deficiency assessment. The taxpayer has no right
of protest or appeal based on that notice; however, the amount of tax
erroneously omitted in the return may be assessed and collected in
the manner provided in this part as in the case of deficiency
assessments.
19052. Notwithstanding any other provision of this part to the
contrary, adjustments to refundable credits (including credits
claimed on or after January 1, 2001, in accordance with Section
17052.6) may be made pursuant to Section 19054, and claimants shall
have the right to claim a refund of adjusted amounts within the
period provided in Section 19306, 19307, 19308, or 19311, whichever
period expires later.
19054. (a) If on any return or claim for refund of taxes imposed
under Part 10 (commencing with Section 17001) or Part 11 (commencing
with Section 23001), there is an overstatement of the credit for
income tax withheld, or of the amount paid as estimated income tax,
the amount so overstated which is allowed against the tax shown on
the return or which is allowed as a credit or refund may be assessed
by the Franchise Tax Board in the same manner as is provided by
Section 19051 in the case of a mathematical error appearing on the
return.
(b) No unpaid amount of estimated tax under Section 19025 or 19136
shall be assessed.
19057. (a) Except in the case of a false or fraudulent return and
except as otherwise expressly provided in this part, every notice of
a proposed deficiency assessment shall be mailed to the taxpayer
within four years after the return was filed. No deficiency shall be
assessed or collected with respect to the year for which the return
was filed unless the notice is mailed within the four-year period or
the period otherwise provided. For purposes of this chapter, the term
"return" means the return required to be filed by the taxpayer and
does not include a return of any person from whom the taxpayer has
received an item of income, gain, loss, deduction, or credit.
(b) The running of the period of limitations provided in
subdivision (a) on mailing a notice of proposed deficiency assessment
shall, in a case under Title 11 of the United States Code, be
suspended for any period during which the Franchise Tax Board is
prohibited by reason of that case from mailing the notice of proposed
deficiency assessment and for 60 days thereafter.
(c) Where, within the 60-day period ending on the day on which the
time prescribed in this section for the assessment of any tax
imposed under Part 10 (commencing with Section 17001) or Part 11
(commencing with Section 23001) for any taxable year would otherwise
expire, the Franchise Tax Board receives a written document, other
than an amended return or a report required by Section 18622, signed
by the taxpayer showing that the taxpayer owes an additional amount
of that tax for that taxable year, the period for the assessment of
an additional amount in excess of the amount shown on either an
original or amended return shall not expire before the day 60 days
after the day on which the Franchise Tax Board receives that
document.
(d) If a taxpayer determines in good faith that it is an exempt
organization and files a return as an exempt organization under
Section 23772, and if the taxpayer is thereafter held to be a taxable
organization for the taxable year for which the return is filed,
that return shall be deemed the return of the organization for the
purposes of this section.
19058. (a) If the taxpayer omits from gross income an amount
properly includable therein which is in excess of 25 percent of the
amount of gross income stated in the return, a notice of a proposed
deficiency assessment may be mailed to the taxpayer within six years
after the return was filed. Additionally, in the case of a
corporation, a proceeding in court for the collection of the tax may
be commenced without assessment at any time within six years after
the return was filed.
(b) For purposes of this section both of the following shall
apply:
(1) In the case of a trade or business, the term "gross income"
means the total of the amounts received or accrued from the sale of
goods or services (if the amounts are required to be shown on the
return) prior to diminution by the cost of the sales or service.
(2) In determining the amount omitted from gross income, there
shall not be taken into account any amount which is omitted from
gross income stated in the return if the amount is disclosed in the
return, or in a statement attached to the return, in a manner
adequate to apprise the Franchise Tax Board of the nature and amount
of the item.
19059. (a) If a taxpayer is required by subdivision (a) of Section
18622 to report a change or correction by the Commissioner of
Internal Revenue or other officer of the United States or other
competent authority and does report the change or correction within
six months after the final federal determination, or the Internal
Revenue Service reports that change or correction within six months
after the final federal determination, a notice of proposed
deficiency assessment resulting from those adjustments may be mailed
to the taxpayer within two years from the date when the notice is
filed with the Franchise Tax Board by the taxpayer or the Internal
Revenue Service, or within the periods provided in Section 19057,
19058, or 19065, whichever period expires later.
(b) If a taxpayer is required by subdivision (b) of Section 18622
to file an amended return and does file the return within six months
of filing an amended return with the Commissioner of Internal
Revenue, a notice of proposed deficiency assessment in excess of the
self-assessed tax on the amended return, and resulting from the
adjustments may be mailed to the taxpayer within two years from the
date when the amended return is filed with the Franchise Tax Board by
the taxpayer, or within the periods provided in Section 19057,
19058, or 19065, whichever period expires later.
19060. (a) If a taxpayer fails to report a change or correction by
the Commissioner of Internal Revenue or other officer of the United
States or other competent authority or fails to file an amended
return as required by Section 18622, a notice of proposed deficiency
assessment resulting from the adjustment may be mailed to the
taxpayer at any time.
(b) If, after the six-month period required in Section 18622, a
taxpayer or the Internal Revenue Service reports a change or
correction by the Commissioner of Internal Revenue or other officer
of the United States or other competent authority or files an amended
return as required by Section 18622, a notice of proposed deficiency
assessment resulting from the adjustment may be mailed to the
taxpayer within four years from the date the taxpayer or the Internal
Revenue Service notifies the Franchise Tax Board of that change or
correction or files that return.
19061. In case of a deficiency described in Sections 24945 and
24946, and in Sections 1033(a)(2)(C) and 1033(a)(2)(D) of the
Internal Revenue Code, the deficiency may be assessed at any time
prior to the expiration of the time therein provided.
19063. (a) In the case of any tax imposed by Part 10 (commencing
with Section 17001) or Part 11 (commencing with Section 23001) with
respect to any person, the period for assessing a deficiency
attributable to any partnership item of a federally registered
partnership shall not expire before the later of the following:
(1) The date which is five years after the date on which the
partnership return of the federally registered partnership for the
partnership taxable year in which the item arose was filed (or later,
if the date prescribed for filing the return).
(2) If the name or address of the person does not appear on the
partnership return, the date which is one year after the date on
which the information is furnished to the Franchise Tax Board in the
manner and at the place as it may prescribe.
(b) For purposes of this section, "partnership item" means both of
the following:
(1) Any item required to be taken into account for the partnership
taxable year under any provision of subchapter K of Chapter 1 of
Title 26 of the Internal Revenue Code to the extent that regulations
prescribed by the Franchise Tax Board provide that for purposes of
this part that item is more appropriately determined at the
partnership level than at the partner level.
(2) Any other item to the extent affected by an item described in
paragraph (1).
(c) The extensions referred to in subsection (c)(4) of Section
6501 of the Internal Revenue Code, insofar as they relate to
partnership items, may, with respect to any person, be consented by
either of the following:
(1) Except to the extent the Franchise Tax Board is otherwise
notified by the partnership, by a general partner of the partnership.
(2) By any person authorized to do so by the partnership in
writing.
(d) For purposes of this section, "federally registered
partnership" means, with respect to any partnership taxable year, any
partnership for which either of the following apply:
(1) Interests have been offered for sale at any time during that
taxable year or a prior taxable year in any offering required to be
registered with the Securities and Exchange Commission.
(2) At any time during that taxable year or a prior taxable year,
was subject to the annual reporting requirements of the Securities
and Exchange Commission which relate to the protection of investors
in the partnership.
19064. (a) If any person initiates a motion to quash a subpoena, as
provided by Sections 7465 to 7476, inclusive, of the Government
Code, and that person is the person with respect to whose liability
the subpoena is issued (or is the agent, nominee, or other person
acting under the direction or control of that person), then the
running of any period of limitations under Section 19057 (relating to
deficiency assessments), Section 19087 (relating to false or
fraudulent returns), or Section 19704 (relating to criminal
prosecutions) with respect to that person shall be suspended for the
period during which a proceeding, and appeals therein, with respect
to the enforcement of the subpoena is pending.
(b) In the absence of the resolution of the subpoenaed person's
response to a subpoena issued under Section 19504 (power of
examination), the running of any period of limitations under Section
19057 (relating to deficiency assessments), Section 19087 (relating
to false or fraudulent returns), or Section 19704 (relating to
criminal prosecutions) with respect to any person whose liability the
subpoena was issued (other than a person taking action as provided
by subdivision (a)) shall be suspended for the period beginning on
the date which is six months after the service of the subpoena and
ending with the final resolution of that response.
(c) The amendments made by the act adding this subdivision are
operative for any subpoena served after the effective date of the act
adding this subdivision.
19065. If any taxpayer agrees with the United States Commissioner
of Internal Revenue for an extension or renewals thereof of the
period for proposing and assessing deficiencies in federal income
taxes for any year, the period for mailing a notice of a proposed
deficiency shall be four years after the return was filed or six
months after the date of the expiration of the agreed period for
assessing deficiencies in the federal income tax, whichever period
expires the later.
19066. (a) For the purposes of Sections 19057, 19058, and 19065, a
return of tax imposed under Part 10 (commencing with Section 17001)
or Part 11 (commencing with Section 23001) except a return required
by Article 5 (commencing with Section 18661) of Chapter 2 (relating
to withholding), filed before the last day prescribed by law for
filing (determined without regard to any extension of time for filing
the return), shall be considered as filed on that day. For purposes
of Section 19306, payment of any portion of the tax made before the
last day prescribed for the payment of the tax shall be considered
made on the last day.
(b) For purposes of this section, if a return required by Article
5 (commencing with Section 18661) of Chapter 2 (relating to
withholding) or a return of tax imposed by Section 13020 of the
Unemployment Insurance Code (relating to withholding tax on wages),
for any period ending with or within a calendar year is filed before
April 15 of the succeeding calendar year, that return shall be
considered filed on April 15 of that calendar year.
19066.5. In the case of any information that is required to be
reported to the Franchise Tax Board under Section 19141.2 or 19141.5,
the time for assessment of any tax imposed by Part 10 (commencing
with Section 17001), Part 11 (commencing with Section 23001), or this
part with respect to any event or period to which that information
relates shall not expire before the date that is four years after the
date on which the Franchise Tax Board is furnished the information
required to be reported under Section 19141.2 or 19141.5, or within
the periods provided in Section 19057, 19058, 19059, 19060, 19065,
24945, 24946, Section 1033(a)(2)(C) of the Internal Revenue Code, or
Section 1033(a)(2)(D) of the Internal Revenue Code, whichever period
expires later.
19067. (a) Where before the expiration of the time prescribed for
the mailing of a notice of a proposed deficiency assessment, the
taxpayer consents in writing to an assessment after that time, the
assessment may be made at any time prior to the expiration of the
period agreed upon. The period agreed upon may be extended by
subsequent agreements in writing made before the expiration of the
period previously agreed upon.
(b) The Franchise Tax Board shall notify the taxpayer of the
taxpayer's right to refuse to extend the expiration of the time
prescribed for the mailing of a notice of a proposed deficiency
assessment, or to limit that extension to a particular period of
time, on each occasion when the taxpayer is requested to provide the
taxpayer's consent.
(c) The amendments made by the act adding this subdivision shall
apply to any request to extend the expiration of the time prescribed
for the mailing of a notice of a proposed deficiency assessment made
after December 31, 2000.
19031. The Franchise Tax Board may proceed under this article or
Article 5 (commencing with Section 19081) whether or not it requires
a return as an amended return under Section 18622.
19032. As soon as practicable after the return is filed, the
Franchise Tax Board shall examine it and shall determine the correct
amount of the tax.
19033. (a) If the Franchise Tax Board determines that the tax
disclosed by the taxpayer on an original or amended return, including
an amended return reporting federal adjustments pursuant to Section
18622, is less than the tax disclosed by its examination, it shall
mail notice to the taxpayer of the deficiency proposed to be
assessed. In no case shall the determination of the deficiency be
arbitrary or without foundation.
(b) (1) Except as provided in paragraph (2), the Franchise Tax
Board, in connection with the determination described in subdivision
(a), shall examine the original or amended return or related
electronically stored return data.
(2) If the return or return data described in paragraph (1) has
been destroyed or cannot be located after reasonable effort, the
Franchise Tax Board shall request the taxpayer to provide a paper or
electronic copy of the return. If the taxpayer fails to provide a
copy within 30 days, which may be extended an additional 30 days for
reasonable cause, from the date of the request, paragraph (1) shall
not apply.
(c) As used in this section, "electronically stored return data"
means an electronic record of line items from an original or amended
return and accompanying schedules that is routinely created as a
return is processed.
(d) The amendments to this section made by Chapter 414 of the
Statutes of 2000 shall apply to notices of deficiencies proposed to
be assessed issued on or after January 1, 2001.
(e) The notice described in subdivision (a) shall be mailed in a
manner that includes a postmark. For purposes of this subdivision,
postmark means a postal marking made on a letter, package, or
postcard indicating the date on which the item is delivered to the
United States Postal Service.
(f) The amendments made to this section by the act adding this
subdivision shall apply to notices of deficiencies proposed to be
assessed issued on or after January 1, 2008.
19034. (a) Each notice shall set forth the reasons for the proposed
deficiency assessment and the computation thereof.
(b) Each notice shall include the date determined by the Franchise
Tax Board as the last day on which the taxpayer may file a written
protest pursuant to Section 19041. Failure to include this date shall
not invalidate a notice that is otherwise valid.
(c) The amendments made by the act adding this subdivision shall
apply to any notice mailed after December 31, 1999.
19035. In the case of a joint return filed by husband and wife, the
notice of proposed deficiency assessment may be a single joint
notice, except that if the Franchise Tax Board is notified by either
spouse that separate residences have been established, it shall mail
to each spouse, in lieu of the single joint notice, duplicate
originals of the joint notice.
19036. Notwithstanding any provision to the contrary, any interest,
penalty or addition to tax, imposed under Part 10 (commencing with
Section 17001), Part 11 (commencing with Section 23001), or this part
may be assessed and collected in the same manner as if it were a
deficiency.
19041. (a) Within 60 days after the mailing of each notice of
proposed deficiency assessment the taxpayer may file with the
Franchise Tax Board a written protest against the proposed deficiency
assessment, specifying in the protest the grounds upon which it is
based.
(b) Any protest filed with the Franchise Tax Board on or before
the last date specified for filing that protest by the Franchise Tax
Board in the notice of proposed deficiency assessment (according to
Section 19034) shall be treated as timely filed.
(c) The amendments made by the act adding this subdivision shall
apply to any notice mailed after December 31, 1999.
19041.5. (a) Notwithstanding any other provision of this part, Part
10 (commencing with Section 17001), or Part 11 (commencing with
Section 23001), the provisions of Section 6603 of the Internal
Revenue Code, relating to deposits made to suspend the running of
interest on potential underpayments, shall apply, except as otherwise
provided. A deposit shall not be considered a payment of tax for
purposes of filing a claim for refund pursuant to Section 19306,
converting an administrative action to an action on a claim pursuant
to Section 19335, or filing an action pursuant to Section 19384,
until either of the following occurs:
(1) The taxpayer provides a written statement to the Franchise Tax
Board specifying that the deposit shall be a payment of tax for
purposes of Section 19306, 19335, or 19384.
(2) The deposit is used to pay a final tax liability.
(b) Section 6603(d) of the Internal Revenue Code is modified to
substitute the phrase "notice of proposed deficiency assessment under
Article 3 of Chapter 4 of this part" for "30-day letter" in each
place that the phrase "30-day letter" appears.
(c) In the case of any amount held by the Franchise Tax Board as a
deposit in the nature of a cash bond pursuant to the provisions of
this section prior to the amendments made by the act adding this
subdivision, the date that the taxpayer identifies that amount as a
deposit made pursuant to this section, as amended by the act adding
this subdivision, shall be treated as the date that the amount is
deposited for purposes of this section, as amended by the act adding
this subdivision.
19042. If no protest is filed, the amount of the proposed
deficiency assessment becomes final upon the expiration of the 60-day
period provided in Section 19041.
19043. (a) For purposes of this part, "deficiency" means the amount
by which the tax imposed by Part 10 (commencing with Section 17001)
or Part 11 (commencing with Section 23001) exceeds the excess of--
(1) The sum of--
(A) The amount shown as the tax by the taxpayer on an original or
amended return, if an original or amended return was filed, plus
(B) The amounts previously assessed (or collected without
assessment) as a deficiency, over--
(2) The amount of rebates, as defined in paragraph (2) of
subdivision (b), made.
(b) For purposes of this section:
(1) The tax imposed by Part 10 (commencing with Section 17001) and
Part 11 (commencing with Section 23001) and the tax shown on an
original or amended return shall both be determined without regard to
payments on account of estimated tax, and without regard to the
credit under Section 19002.
(2) "Rebate" means so much of an abatement, credit, refund, or
other repayment, as was made on the ground that the tax imposed by
Part 10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) was less than the excess of the amount specified in
paragraph (1) of subdivision (a) over the rebates previously made.
19043.5. (a) (1) If the Franchise Tax Board determines that the
amount of a carryover disclosed by the taxpayer on an original or
amended return, including an amended return reporting federal
adjustments pursuant to Section 18622, is more than the amount of the
carryover disclosed by its own examination, it may mail a notice or
notices to the taxpayer of the proposed carryover adjustment and the
proposed adjusted carryover amount.
(2) For purposes of this section, "carryover" means the amount of
a credit, loss, deduction, or other item that is shown on an original
or amended return for carry forward to a subsequent taxable year.
(b) Except as otherwise provided in this section, the provisions
of this article applicable to a proposed deficiency assessment shall
be applicable to a proposed adjusted carryover amount, including
protest and appeal rights as if that proposed adjusted carryover
amount were a proposed deficiency assessment.
(c) (1) A proposed adjusted carryover amount shall become a final
adjusted carryover amount under this section following a
determination of the board regarding that proposed adjusted carryover
amount that becomes final pursuant to the provisions of Section
19048.
(2) A final adjusted carryover amount shall be binding and
conclusive with respect to the amount of that carryover for purposes
of Part 10 (commencing with Section 17001), this part, and Part 11
(commencing with Section 23001), except in the following
circumstances:
(A) In the event of fraud, malfeasance, or misrepresentation of a
material fact.
(B) Subject to any provision of the Revenue and Taxation Code that
expressly provides that effect be given to that provision
notwithstanding any other law or rule of law.
(C) Subject to any law that is, or becomes, operative with respect
to a taxable year affected by the final adjusted carryover amount.
(D) Subject to any final federal adjustment that is made with
respect to the taxpayer's federal income tax liability for a taxable
year affected by the final adjusted carryover amount.
(E) In an action brought pursuant to provisions of Section 19382.
(d) (1) In any case where there is a final adjusted carryover
amount with respect to a carryover, the taxpayer shall report that
final adjusted carryover amount on an original or amended return for
any subsequent year.
(2) If a taxpayer fails to comply with paragraph (1), then any
adjustment required to make the amount of the carryover shown on the
return for any year consistent with the final adjusted carryover
amount shall be treated as arising out of a mathematical error and
assessed and collected under Section 19051.
(e) Except as provided in subdivision (c), this section shall not
affect the determination, issuance, assessment, collection, or
validity of a deficiency assessment under this part.
19044. (a) If a protest is filed, the Franchise Tax Board shall
reconsider the assessment of the deficiency and, if the taxpayer has
so requested in his or her protest, shall grant the taxpayer or his
or her authorized representatives an oral hearing. Chapter 4.5
(commencing with Section 11400) of Part 1 of Division 3 of Title 2 of
the Government Code does not apply to a hearing under this
subdivision.
(b) The Franchise Tax Board may act on the protest in whole or in
part. In the event the Franchise Tax Board acts on the protest in
part only, the remaining part of the protest shall continue to be
under protest until the Franchise Tax Board acts on that part.
19045. (a) The Franchise Tax Board's action upon the protest,
whether in whole or in part, is final upon the expiration of 30 days
from the date when it mails notice of its action to the taxpayer,
unless within that 30-day period the taxpayer appeals in writing from
the action of the Franchise Tax Board to the board.
(b) (1) The Franchise Tax Board's notice of action upon protest
shall include the date determined by the Franchise Tax Board as the
last day on which the taxpayer may file an appeal with the board.
(2) Any appeal to the board filed by the taxpayer on or before the
date for filing an appeal specified in the notice (pursuant to
paragraph (1)) shall be treated as timely filed.
(c) This section shall apply to any notice mailed after December
31, 1999.
19046. Two copies of the appeal and two copies of any supporting
documents shall be addressed and mailed to the State Board of
Equalization at Sacramento, California. Upon receipt of the appeal,
the board shall provide one copy of the appeal and one copy of any
supporting documents to the Franchise Tax Board at Sacramento,
California.
19047. The board shall hear and determine the appeal and thereafter
shall forthwith notify the taxpayer and the Franchise Tax Board of
its determination and the reasons therefor.
19048. The board's determination becomes final upon the expiration
of 30 days from the time of the determination unless within the
30-day period the taxpayer or the Franchise Tax Board files a
petition for rehearing with the board. In that event the
determination becomes final upon the expiration of 30 days from the
time the board issues its opinion on the petition.
19049. (a) When a deficiency is determined and the assessment
becomes final, the Franchise Tax Board shall mail notice and demand
to the taxpayer for the payment thereof. The deficiency assessed is
due and payable at the expiration of 15 days from the date of the
notice and demand.
(b) The amendments made by Chapter 600 of the Statutes of 1997 are
operative for notices issued on or after January 1, 1998.
(c) The notice described in subdivision (a) shall be mailed in a
manner that includes a postmark. For purposes of this subdivision,
postmark means a postal marking made on a letter, package, or
postcard indicating the date on which the item is delivered to the
United States Postal Service.
(d) The amendments made to this section by the act adding this
subdivision are operative for notices issued on or after January 1,
2008.
19050. A certificate by the Franchise Tax Board or of the board, as
the case may be, of the mailing of the notices specified in this
article is prima facie evidence of the assessment of the deficiency
and of the giving of the notices.
19051. Any amount of tax in excess of that disclosed by the return,
due to a mathematical error, notice of which has been mailed to the
taxpayer, is not a deficiency assessment. The taxpayer has no right
of protest or appeal based on that notice; however, the amount of tax
erroneously omitted in the return may be assessed and collected in
the manner provided in this part as in the case of deficiency
assessments.
19052. Notwithstanding any other provision of this part to the
contrary, adjustments to refundable credits (including credits
claimed on or after January 1, 2001, in accordance with Section
17052.6) may be made pursuant to Section 19054, and claimants shall
have the right to claim a refund of adjusted amounts within the
period provided in Section 19306, 19307, 19308, or 19311, whichever
period expires later.
19054. (a) If on any return or claim for refund of taxes imposed
under Part 10 (commencing with Section 17001) or Part 11 (commencing
with Section 23001), there is an overstatement of the credit for
income tax withheld, or of the amount paid as estimated income tax,
the amount so overstated which is allowed against the tax shown on
the return or which is allowed as a credit or refund may be assessed
by the Franchise Tax Board in the same manner as is provided by
Section 19051 in the case of a mathematical error appearing on the
return.
(b) No unpaid amount of estimated tax under Section 19025 or 19136
shall be assessed.
19057. (a) Except in the case of a false or fraudulent return and
except as otherwise expressly provided in this part, every notice of
a proposed deficiency assessment shall be mailed to the taxpayer
within four years after the return was filed. No deficiency shall be
assessed or collected with respect to the year for which the return
was filed unless the notice is mailed within the four-year period or
the period otherwise provided. For purposes of this chapter, the term
"return" means the return required to be filed by the taxpayer and
does not include a return of any person from whom the taxpayer has
received an item of income, gain, loss, deduction, or credit.
(b) The running of the period of limitations provided in
subdivision (a) on mailing a notice of proposed deficiency assessment
shall, in a case under Title 11 of the United States Code, be
suspended for any period during which the Franchise Tax Board is
prohibited by reason of that case from mailing the notice of proposed
deficiency assessment and for 60 days thereafter.
(c) Where, within the 60-day period ending on the day on which the
time prescribed in this section for the assessment of any tax
imposed under Part 10 (commencing with Section 17001) or Part 11
(commencing with Section 23001) for any taxable year would otherwise
expire, the Franchise Tax Board receives a written document, other
than an amended return or a report required by Section 18622, signed
by the taxpayer showing that the taxpayer owes an additional amount
of that tax for that taxable year, the period for the assessment of
an additional amount in excess of the amount shown on either an
original or amended return shall not expire before the day 60 days
after the day on which the Franchise Tax Board receives that
document.
(d) If a taxpayer determines in good faith that it is an exempt
organization and files a return as an exempt organization under
Section 23772, and if the taxpayer is thereafter held to be a taxable
organization for the taxable year for which the return is filed,
that return shall be deemed the return of the organization for the
purposes of this section.
19058. (a) If the taxpayer omits from gross income an amount
properly includable therein which is in excess of 25 percent of the
amount of gross income stated in the return, a notice of a proposed
deficiency assessment may be mailed to the taxpayer within six years
after the return was filed. Additionally, in the case of a
corporation, a proceeding in court for the collection of the tax may
be commenced without assessment at any time within six years after
the return was filed.
(b) For purposes of this section both of the following shall
apply:
(1) In the case of a trade or business, the term "gross income"
means the total of the amounts received or accrued from the sale of
goods or services (if the amounts are required to be shown on the
return) prior to diminution by the cost of the sales or service.
(2) In determining the amount omitted from gross income, there
shall not be taken into account any amount which is omitted from
gross income stated in the return if the amount is disclosed in the
return, or in a statement attached to the return, in a manner
adequate to apprise the Franchise Tax Board of the nature and amount
of the item.
19059. (a) If a taxpayer is required by subdivision (a) of Section
18622 to report a change or correction by the Commissioner of
Internal Revenue or other officer of the United States or other
competent authority and does report the change or correction within
six months after the final federal determination, or the Internal
Revenue Service reports that change or correction within six months
after the final federal determination, a notice of proposed
deficiency assessment resulting from those adjustments may be mailed
to the taxpayer within two years from the date when the notice is
filed with the Franchise Tax Board by the taxpayer or the Internal
Revenue Service, or within the periods provided in Section 19057,
19058, or 19065, whichever period expires later.
(b) If a taxpayer is required by subdivision (b) of Section 18622
to file an amended return and does file the return within six months
of filing an amended return with the Commissioner of Internal
Revenue, a notice of proposed deficiency assessment in excess of the
self-assessed tax on the amended return, and resulting from the
adjustments may be mailed to the taxpayer within two years from the
date when the amended return is filed with the Franchise Tax Board by
the taxpayer, or within the periods provided in Section 19057,
19058, or 19065, whichever period expires later.
19060. (a) If a taxpayer fails to report a change or correction by
the Commissioner of Internal Revenue or other officer of the United
States or other competent authority or fails to file an amended
return as required by Section 18622, a notice of proposed deficiency
assessment resulting from the adjustment may be mailed to the
taxpayer at any time.
(b) If, after the six-month period required in Section 18622, a
taxpayer or the Internal Revenue Service reports a change or
correction by the Commissioner of Internal Revenue or other officer
of the United States or other competent authority or files an amended
return as required by Section 18622, a notice of proposed deficiency
assessment resulting from the adjustment may be mailed to the
taxpayer within four years from the date the taxpayer or the Internal
Revenue Service notifies the Franchise Tax Board of that change or
correction or files that return.
19061. In case of a deficiency described in Sections 24945 and
24946, and in Sections 1033(a)(2)(C) and 1033(a)(2)(D) of the
Internal Revenue Code, the deficiency may be assessed at any time
prior to the expiration of the time therein provided.
19063. (a) In the case of any tax imposed by Part 10 (commencing
with Section 17001) or Part 11 (commencing with Section 23001) with
respect to any person, the period for assessing a deficiency
attributable to any partnership item of a federally registered
partnership shall not expire before the later of the following:
(1) The date which is five years after the date on which the
partnership return of the federally registered partnership for the
partnership taxable year in which the item arose was filed (or later,
if the date prescribed for filing the return).
(2) If the name or address of the person does not appear on the
partnership return, the date which is one year after the date on
which the information is furnished to the Franchise Tax Board in the
manner and at the place as it may prescribe.
(b) For purposes of this section, "partnership item" means both of
the following:
(1) Any item required to be taken into account for the partnership
taxable year under any provision of subchapter K of Chapter 1 of
Title 26 of the Internal Revenue Code to the extent that regulations
prescribed by the Franchise Tax Board provide that for purposes of
this part that item is more appropriately determined at the
partnership level than at the partner level.
(2) Any other item to the extent affected by an item described in
paragraph (1).
(c) The extensions referred to in subsection (c)(4) of Section
6501 of the Internal Revenue Code, insofar as they relate to
partnership items, may, with respect to any person, be consented by
either of the following:
(1) Except to the extent the Franchise Tax Board is otherwise
notified by the partnership, by a general partner of the partnership.
(2) By any person authorized to do so by the partnership in
writing.
(d) For purposes of this section, "federally registered
partnership" means, with respect to any partnership taxable year, any
partnership for which either of the following apply:
(1) Interests have been offered for sale at any time during that
taxable year or a prior taxable year in any offering required to be
registered with the Securities and Exchange Commission.
(2) At any time during that taxable year or a prior taxable year,
was subject to the annual reporting requirements of the Securities
and Exchange Commission which relate to the protection of investors
in the partnership.
19064. (a) If any person initiates a motion to quash a subpoena, as
provided by Sections 7465 to 7476, inclusive, of the Government
Code, and that person is the person with respect to whose liability
the subpoena is issued (or is the agent, nominee, or other person
acting under the direction or control of that person), then the
running of any period of limitations under Section 19057 (relating to
deficiency assessments), Section 19087 (relating to false or
fraudulent returns), or Section 19704 (relating to criminal
prosecutions) with respect to that person shall be suspended for the
period during which a proceeding, and appeals therein, with respect
to the enforcement of the subpoena is pending.
(b) In the absence of the resolution of the subpoenaed person's
response to a subpoena issued under Section 19504 (power of
examination), the running of any period of limitations under Section
19057 (relating to deficiency assessments), Section 19087 (relating
to false or fraudulent returns), or Section 19704 (relating to
criminal prosecutions) with respect to any person whose liability the
subpoena was issued (other than a person taking action as provided
by subdivision (a)) shall be suspended for the period beginning on
the date which is six months after the service of the subpoena and
ending with the final resolution of that response.
(c) The amendments made by the act adding this subdivision are
operative for any subpoena served after the effective date of the act
adding this subdivision.
19065. If any taxpayer agrees with the United States Commissioner
of Internal Revenue for an extension or renewals thereof of the
period for proposing and assessing deficiencies in federal income
taxes for any year, the period for mailing a notice of a proposed
deficiency shall be four years after the return was filed or six
months after the date of the expiration of the agreed period for
assessing deficiencies in the federal income tax, whichever period
expires the later.
19066. (a) For the purposes of Sections 19057, 19058, and 19065, a
return of tax imposed under Part 10 (commencing with Section 17001)
or Part 11 (commencing with Section 23001) except a return required
by Article 5 (commencing with Section 18661) of Chapter 2 (relating
to withholding), filed before the last day prescribed by law for
filing (determined without regard to any extension of time for filing
the return), shall be considered as filed on that day. For purposes
of Section 19306, payment of any portion of the tax made before the
last day prescribed for the payment of the tax shall be considered
made on the last day.
(b) For purposes of this section, if a return required by Article
5 (commencing with Section 18661) of Chapter 2 (relating to
withholding) or a return of tax imposed by Section 13020 of the
Unemployment Insurance Code (relating to withholding tax on wages),
for any period ending with or within a calendar year is filed before
April 15 of the succeeding calendar year, that return shall be
considered filed on April 15 of that calendar year.
19066.5. In the case of any information that is required to be
reported to the Franchise Tax Board under Section 19141.2 or 19141.5,
the time for assessment of any tax imposed by Part 10 (commencing
with Section 17001), Part 11 (commencing with Section 23001), or this
part with respect to any event or period to which that information
relates shall not expire before the date that is four years after the
date on which the Franchise Tax Board is furnished the information
required to be reported under Section 19141.2 or 19141.5, or within
the periods provided in Section 19057, 19058, 19059, 19060, 19065,
24945, 24946, Section 1033(a)(2)(C) of the Internal Revenue Code, or
Section 1033(a)(2)(D) of the Internal Revenue Code, whichever period
expires later.
19067. (a) Where before the expiration of the time prescribed for
the mailing of a notice of a proposed deficiency assessment, the
taxpayer consents in writing to an assessment after that time, the
assessment may be made at any time prior to the expiration of the
period agreed upon. The period agreed upon may be extended by
subsequent agreements in writing made before the expiration of the
period previously agreed upon.
(b) The Franchise Tax Board shall notify the taxpayer of the
taxpayer's right to refuse to extend the expiration of the time
prescribed for the mailing of a notice of a proposed deficiency
assessment, or to limit that extension to a particular period of
time, on each occasion when the taxpayer is requested to provide the
taxpayer's consent.
(c) The amendments made by the act adding this subdivision shall
apply to any request to extend the expiration of the time prescribed
for the mailing of a notice of a proposed deficiency assessment made
after December 31, 2000.
19031. The Franchise Tax Board may proceed under this article or
Article 5 (commencing with Section 19081) whether or not it requires
a return as an amended return under Section 18622.
19032. As soon as practicable after the return is filed, the
Franchise Tax Board shall examine it and shall determine the correct
amount of the tax.
19033. (a) If the Franchise Tax Board determines that the tax
disclosed by the taxpayer on an original or amended return, including
an amended return reporting federal adjustments pursuant to Section
18622, is less than the tax disclosed by its examination, it shall
mail notice to the taxpayer of the deficiency proposed to be
assessed. In no case shall the determination of the deficiency be
arbitrary or without foundation.
(b) (1) Except as provided in paragraph (2), the Franchise Tax
Board, in connection with the determination described in subdivision
(a), shall examine the original or amended return or related
electronically stored return data.
(2) If the return or return data described in paragraph (1) has
been destroyed or cannot be located after reasonable effort, the
Franchise Tax Board shall request the taxpayer to provide a paper or
electronic copy of the return. If the taxpayer fails to provide a
copy within 30 days, which may be extended an additional 30 days for
reasonable cause, from the date of the request, paragraph (1) shall
not apply.
(c) As used in this section, "electronically stored return data"
means an electronic record of line items from an original or amended
return and accompanying schedules that is routinely created as a
return is processed.
(d) The amendments to this section made by Chapter 414 of the
Statutes of 2000 shall apply to notices of deficiencies proposed to
be assessed issued on or after January 1, 2001.
(e) The notice described in subdivision (a) shall be mailed in a
manner that includes a postmark. For purposes of this subdivision,
postmark means a postal marking made on a letter, package, or
postcard indicating the date on which the item is delivered to the
United States Postal Service.
(f) The amendments made to this section by the act adding this
subdivision shall apply to notices of deficiencies proposed to be
assessed issued on or after January 1, 2008.
19034. (a) Each notice shall set forth the reasons for the proposed
deficiency assessment and the computation thereof.
(b) Each notice shall include the date determined by the Franchise
Tax Board as the last day on which the taxpayer may file a written
protest pursuant to Section 19041. Failure to include this date shall
not invalidate a notice that is otherwise valid.
(c) The amendments made by the act adding this subdivision shall
apply to any notice mailed after December 31, 1999.
19035. In the case of a joint return filed by husband and wife, the
notice of proposed deficiency assessment may be a single joint
notice, except that if the Franchise Tax Board is notified by either
spouse that separate residences have been established, it shall mail
to each spouse, in lieu of the single joint notice, duplicate
originals of the joint notice.
19036. Notwithstanding any provision to the contrary, any interest,
penalty or addition to tax, imposed under Part 10 (commencing with
Section 17001), Part 11 (commencing with Section 23001), or this part
may be assessed and collected in the same manner as if it were a
deficiency.
19041. (a) Within 60 days after the mailing of each notice of
proposed deficiency assessment the taxpayer may file with the
Franchise Tax Board a written protest against the proposed deficiency
assessment, specifying in the protest the grounds upon which it is
based.
(b) Any protest filed with the Franchise Tax Board on or before
the last date specified for filing that protest by the Franchise Tax
Board in the notice of proposed deficiency assessment (according to
Section 19034) shall be treated as timely filed.
(c) The amendments made by the act adding this subdivision shall
apply to any notice mailed after December 31, 1999.
19041.5. (a) Notwithstanding any other provision of this part, Part
10 (commencing with Section 17001), or Part 11 (commencing with
Section 23001), the provisions of Section 6603 of the Internal
Revenue Code, relating to deposits made to suspend the running of
interest on potential underpayments, shall apply, except as otherwise
provided. A deposit shall not be considered a payment of tax for
purposes of filing a claim for refund pursuant to Section 19306,
converting an administrative action to an action on a claim pursuant
to Section 19335, or filing an action pursuant to Section 19384,
until either of the following occurs:
(1) The taxpayer provides a written statement to the Franchise Tax
Board specifying that the deposit shall be a payment of tax for
purposes of Section 19306, 19335, or 19384.
(2) The deposit is used to pay a final tax liability.
(b) Section 6603(d) of the Internal Revenue Code is modified to
substitute the phrase "notice of proposed deficiency assessment under
Article 3 of Chapter 4 of this part" for "30-day letter" in each
place that the phrase "30-day letter" appears.
(c) In the case of any amount held by the Franchise Tax Board as a
deposit in the nature of a cash bond pursuant to the provisions of
this section prior to the amendments made by the act adding this
subdivision, the date that the taxpayer identifies that amount as a
deposit made pursuant to this section, as amended by the act adding
this subdivision, shall be treated as the date that the amount is
deposited for purposes of this section, as amended by the act adding
this subdivision.
19042. If no protest is filed, the amount of the proposed
deficiency assessment becomes final upon the expiration of the 60-day
period provided in Section 19041.
19043. (a) For purposes of this part, "deficiency" means the amount
by which the tax imposed by Part 10 (commencing with Section 17001)
or Part 11 (commencing with Section 23001) exceeds the excess of--
(1) The sum of--
(A) The amount shown as the tax by the taxpayer on an original or
amended return, if an original or amended return was filed, plus
(B) The amounts previously assessed (or collected without
assessment) as a deficiency, over--
(2) The amount of rebates, as defined in paragraph (2) of
subdivision (b), made.
(b) For purposes of this section:
(1) The tax imposed by Part 10 (commencing with Section 17001) and
Part 11 (commencing with Section 23001) and the tax shown on an
original or amended return shall both be determined without regard to
payments on account of estimated tax, and without regard to the
credit under Section 19002.
(2) "Rebate" means so much of an abatement, credit, refund, or
other repayment, as was made on the ground that the tax imposed by
Part 10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) was less than the excess of the amount specified in
paragraph (1) of subdivision (a) over the rebates previously made.
19043.5. (a) (1) If the Franchise Tax Board determines that the
amount of a carryover disclosed by the taxpayer on an original or
amended return, including an amended return reporting federal
adjustments pursuant to Section 18622, is more than the amount of the
carryover disclosed by its own examination, it may mail a notice or
notices to the taxpayer of the proposed carryover adjustment and the
proposed adjusted carryover amount.
(2) For purposes of this section, "carryover" means the amount of
a credit, loss, deduction, or other item that is shown on an original
or amended return for carry forward to a subsequent taxable year.
(b) Except as otherwise provided in this section, the provisions
of this article applicable to a proposed deficiency assessment shall
be applicable to a proposed adjusted carryover amount, including
protest and appeal rights as if that proposed adjusted carryover
amount were a proposed deficiency assessment.
(c) (1) A proposed adjusted carryover amount shall become a final
adjusted carryover amount under this section following a
determination of the board regarding that proposed adjusted carryover
amount that becomes final pursuant to the provisions of Section
19048.
(2) A final adjusted carryover amount shall be binding and
conclusive with respect to the amount of that carryover for purposes
of Part 10 (commencing with Section 17001), this part, and Part 11
(commencing with Section 23001), except in the following
circumstances:
(A) In the event of fraud, malfeasance, or misrepresentation of a
material fact.
(B) Subject to any provision of the Revenue and Taxation Code that
expressly provides that effect be given to that provision
notwithstanding any other law or rule of law.
(C) Subject to any law that is, or becomes, operative with respect
to a taxable year affected by the final adjusted carryover amount.
(D) Subject to any final federal adjustment that is made with
respect to the taxpayer's federal income tax liability for a taxable
year affected by the final adjusted carryover amount.
(E) In an action brought pursuant to provisions of Section 19382.
(d) (1) In any case where there is a final adjusted carryover
amount with respect to a carryover, the taxpayer shall report that
final adjusted carryover amount on an original or amended return for
any subsequent year.
(2) If a taxpayer fails to comply with paragraph (1), then any
adjustment required to make the amount of the carryover shown on the
return for any year consistent with the final adjusted carryover
amount shall be treated as arising out of a mathematical error and
assessed and collected under Section 19051.
(e) Except as provided in subdivision (c), this section shall not
affect the determination, issuance, assessment, collection, or
validity of a deficiency assessment under this part.
19044. (a) If a protest is filed, the Franchise Tax Board shall
reconsider the assessment of the deficiency and, if the taxpayer has
so requested in his or her protest, shall grant the taxpayer or his
or her authorized representatives an oral hearing. Chapter 4.5
(commencing with Section 11400) of Part 1 of Division 3 of Title 2 of
the Government Code does not apply to a hearing under this
subdivision.
(b) The Franchise Tax Board may act on the protest in whole or in
part. In the event the Franchise Tax Board acts on the protest in
part only, the remaining part of the protest shall continue to be
under protest until the Franchise Tax Board acts on that part.
19045. (a) The Franchise Tax Board's action upon the protest,
whether in whole or in part, is final upon the expiration of 30 days
from the date when it mails notice of its action to the taxpayer,
unless within that 30-day period the taxpayer appeals in writing from
the action of the Franchise Tax Board to the board.
(b) (1) The Franchise Tax Board's notice of action upon protest
shall include the date determined by the Franchise Tax Board as the
last day on which the taxpayer may file an appeal with the board.
(2) Any appeal to the board filed by the taxpayer on or before the
date for filing an appeal specified in the notice (pursuant to
paragraph (1)) shall be treated as timely filed.
(c) This section shall apply to any notice mailed after December
31, 1999.
19046. Two copies of the appeal and two copies of any supporting
documents shall be addressed and mailed to the State Board of
Equalization at Sacramento, California. Upon receipt of the appeal,
the board shall provide one copy of the appeal and one copy of any
supporting documents to the Franchise Tax Board at Sacramento,
California.
19047. The board shall hear and determine the appeal and thereafter
shall forthwith notify the taxpayer and the Franchise Tax Board of
its determination and the reasons therefor.
19048. The board's determination becomes final upon the expiration
of 30 days from the time of the determination unless within the
30-day period the taxpayer or the Franchise Tax Board files a
petition for rehearing with the board. In that event the
determination becomes final upon the expiration of 30 days from the
time the board issues its opinion on the petition.
19049. (a) When a deficiency is determined and the assessment
becomes final, the Franchise Tax Board shall mail notice and demand
to the taxpayer for the payment thereof. The deficiency assessed is
due and payable at the expiration of 15 days from the date of the
notice and demand.
(b) The amendments made by Chapter 600 of the Statutes of 1997 are
operative for notices issued on or after January 1, 1998.
(c) The notice described in subdivision (a) shall be mailed in a
manner that includes a postmark. For purposes of this subdivision,
postmark means a postal marking made on a letter, package, or
postcard indicating the date on which the item is delivered to the
United States Postal Service.
(d) The amendments made to this section by the act adding this
subdivision are operative for notices issued on or after January 1,
2008.
19050. A certificate by the Franchise Tax Board or of the board, as
the case may be, of the mailing of the notices specified in this
article is prima facie evidence of the assessment of the deficiency
and of the giving of the notices.
19051. Any amount of tax in excess of that disclosed by the return,
due to a mathematical error, notice of which has been mailed to the
taxpayer, is not a deficiency assessment. The taxpayer has no right
of protest or appeal based on that notice; however, the amount of tax
erroneously omitted in the return may be assessed and collected in
the manner provided in this part as in the case of deficiency
assessments.
19052. Notwithstanding any other provision of this part to the
contrary, adjustments to refundable credits (including credits
claimed on or after January 1, 2001, in accordance with Section
17052.6) may be made pursuant to Section 19054, and claimants shall
have the right to claim a refund of adjusted amounts within the
period provided in Section 19306, 19307, 19308, or 19311, whichever
period expires later.
19054. (a) If on any return or claim for refund of taxes imposed
under Part 10 (commencing with Section 17001) or Part 11 (commencing
with Section 23001), there is an overstatement of the credit for
income tax withheld, or of the amount paid as estimated income tax,
the amount so overstated which is allowed against the tax shown on
the return or which is allowed as a credit or refund may be assessed
by the Franchise Tax Board in the same manner as is provided by
Section 19051 in the case of a mathematical error appearing on the
return.
(b) No unpaid amount of estimated tax under Section 19025 or 19136
shall be assessed.
19057. (a) Except in the case of a false or fraudulent return and
except as otherwise expressly provided in this part, every notice of
a proposed deficiency assessment shall be mailed to the taxpayer
within four years after the return was filed. No deficiency shall be
assessed or collected with respect to the year for which the return
was filed unless the notice is mailed within the four-year period or
the period otherwise provided. For purposes of this chapter, the term
"return" means the return required to be filed by the taxpayer and
does not include a return of any person from whom the taxpayer has
received an item of income, gain, loss, deduction, or credit.
(b) The running of the period of limitations provided in
subdivision (a) on mailing a notice of proposed deficiency assessment
shall, in a case under Title 11 of the United States Code, be
suspended for any period during which the Franchise Tax Board is
prohibited by reason of that case from mailing the notice of proposed
deficiency assessment and for 60 days thereafter.
(c) Where, within the 60-day period ending on the day on which the
time prescribed in this section for the assessment of any tax
imposed under Part 10 (commencing with Section 17001) or Part 11
(commencing with Section 23001) for any taxable year would otherwise
expire, the Franchise Tax Board receives a written document, other
than an amended return or a report required by Section 18622, signed
by the taxpayer showing that the taxpayer owes an additional amount
of that tax for that taxable year, the period for the assessment of
an additional amount in excess of the amount shown on either an
original or amended return shall not expire before the day 60 days
after the day on which the Franchise Tax Board receives that
document.
(d) If a taxpayer determines in good faith that it is an exempt
organization and files a return as an exempt organization under
Section 23772, and if the taxpayer is thereafter held to be a taxable
organization for the taxable year for which the return is filed,
that return shall be deemed the return of the organization for the
purposes of this section.
19058. (a) If the taxpayer omits from gross income an amount
properly includable therein which is in excess of 25 percent of the
amount of gross income stated in the return, a notice of a proposed
deficiency assessment may be mailed to the taxpayer within six years
after the return was filed. Additionally, in the case of a
corporation, a proceeding in court for the collection of the tax may
be commenced without assessment at any time within six years after
the return was filed.
(b) For purposes of this section both of the following shall
apply:
(1) In the case of a trade or business, the term "gross income"
means the total of the amounts received or accrued from the sale of
goods or services (if the amounts are required to be shown on the
return) prior to diminution by the cost of the sales or service.
(2) In determining the amount omitted from gross income, there
shall not be taken into account any amount which is omitted from
gross income stated in the return if the amount is disclosed in the
return, or in a statement attached to the return, in a manner
adequate to apprise the Franchise Tax Board of the nature and amount
of the item.
19059. (a) If a taxpayer is required by subdivision (a) of Section
18622 to report a change or correction by the Commissioner of
Internal Revenue or other officer of the United States or other
competent authority and does report the change or correction within
six months after the final federal determination, or the Internal
Revenue Service reports that change or correction within six months
after the final federal determination, a notice of proposed
deficiency assessment resulting from those adjustments may be mailed
to the taxpayer within two years from the date when the notice is
filed with the Franchise Tax Board by the taxpayer or the Internal
Revenue Service, or within the periods provided in Section 19057,
19058, or 19065, whichever period expires later.
(b) If a taxpayer is required by subdivision (b) of Section 18622
to file an amended return and does file the return within six months
of filing an amended return with the Commissioner of Internal
Revenue, a notice of proposed deficiency assessment in excess of the
self-assessed tax on the amended return, and resulting from the
adjustments may be mailed to the taxpayer within two years from the
date when the amended return is filed with the Franchise Tax Board by
the taxpayer, or within the periods provided in Section 19057,
19058, or 19065, whichever period expires later.
19060. (a) If a taxpayer fails to report a change or correction by
the Commissioner of Internal Revenue or other officer of the United
States or other competent authority or fails to file an amended
return as required by Section 18622, a notice of proposed deficiency
assessment resulting from the adjustment may be mailed to the
taxpayer at any time.
(b) If, after the six-month period required in Section 18622, a
taxpayer or the Internal Revenue Service reports a change or
correction by the Commissioner of Internal Revenue or other officer
of the United States or other competent authority or files an amended
return as required by Section 18622, a notice of proposed deficiency
assessment resulting from the adjustment may be mailed to the
taxpayer within four years from the date the taxpayer or the Internal
Revenue Service notifies the Franchise Tax Board of that change or
correction or files that return.
19061. In case of a deficiency described in Sections 24945 and
24946, and in Sections 1033(a)(2)(C) and 1033(a)(2)(D) of the
Internal Revenue Code, the deficiency may be assessed at any time
prior to the expiration of the time therein provided.
19063. (a) In the case of any tax imposed by Part 10 (commencing
with Section 17001) or Part 11 (commencing with Section 23001) with
respect to any person, the period for assessing a deficiency
attributable to any partnership item of a federally registered
partnership shall not expire before the later of the following:
(1) The date which is five years after the date on which the
partnership return of the federally registered partnership for the
partnership taxable year in which the item arose was filed (or later,
if the date prescribed for filing the return).
(2) If the name or address of the person does not appear on the
partnership return, the date which is one year after the date on
which the information is furnished to the Franchise Tax Board in the
manner and at the place as it may prescribe.
(b) For purposes of this section, "partnership item" means both of
the following:
(1) Any item required to be taken into account for the partnership
taxable year under any provision of subchapter K of Chapter 1 of
Title 26 of the Internal Revenue Code to the extent that regulations
prescribed by the Franchise Tax Board provide that for purposes of
this part that item is more appropriately determined at the
partnership level than at the partner level.
(2) Any other item to the extent affected by an item described in
paragraph (1).
(c) The extensions referred to in subsection (c)(4) of Section
6501 of the Internal Revenue Code, insofar as they relate to
partnership items, may, with respect to any person, be consented by
either of the following:
(1) Except to the extent the Franchise Tax Board is otherwise
notified by the partnership, by a general partner of the partnership.
(2) By any person authorized to do so by the partnership in
writing.
(d) For purposes of this section, "federally registered
partnership" means, with respect to any partnership taxable year, any
partnership for which either of the following apply:
(1) Interests have been offered for sale at any time during that
taxable year or a prior taxable year in any offering required to be
registered with the Securities and Exchange Commission.
(2) At any time during that taxable year or a prior taxable year,
was subject to the annual reporting requirements of the Securities
and Exchange Commission which relate to the protection of investors
in the partnership.
19064. (a) If any person initiates a motion to quash a subpoena, as
provided by Sections 7465 to 7476, inclusive, of the Government
Code, and that person is the person with respect to whose liability
the subpoena is issued (or is the agent, nominee, or other person
acting under the direction or control of that person), then the
running of any period of limitations under Section 19057 (relating to
deficiency assessments), Section 19087 (relating to false or
fraudulent returns), or Section 19704 (relating to criminal
prosecutions) with respect to that person shall be suspended for the
period during which a proceeding, and appeals therein, with respect
to the enforcement of the subpoena is pending.
(b) In the absence of the resolution of the subpoenaed person's
response to a subpoena issued under Section 19504 (power of
examination), the running of any period of limitations under Section
19057 (relating to deficiency assessments), Section 19087 (relating
to false or fraudulent returns), or Section 19704 (relating to
criminal prosecutions) with respect to any person whose liability the
subpoena was issued (other than a person taking action as provided
by subdivision (a)) shall be suspended for the period beginning on
the date which is six months after the service of the subpoena and
ending with the final resolution of that response.
(c) The amendments made by the act adding this subdivision are
operative for any subpoena served after the effective date of the act
adding this subdivision.
19065. If any taxpayer agrees with the United States Commissioner
of Internal Revenue for an extension or renewals thereof of the
period for proposing and assessing deficiencies in federal income
taxes for any year, the period for mailing a notice of a proposed
deficiency shall be four years after the return was filed or six
months after the date of the expiration of the agreed period for
assessing deficiencies in the federal income tax, whichever period
expires the later.
19066. (a) For the purposes of Sections 19057, 19058, and 19065, a
return of tax imposed under Part 10 (commencing with Section 17001)
or Part 11 (commencing with Section 23001) except a return required
by Article 5 (commencing with Section 18661) of Chapter 2 (relating
to withholding), filed before the last day prescribed by law for
filing (determined without regard to any extension of time for filing
the return), shall be considered as filed on that day. For purposes
of Section 19306, payment of any portion of the tax made before the
last day prescribed for the payment of the tax shall be considered
made on the last day.
(b) For purposes of this section, if a return required by Article
5 (commencing with Section 18661) of Chapter 2 (relating to
withholding) or a return of tax imposed by Section 13020 of the
Unemployment Insurance Code (relating to withholding tax on wages),
for any period ending with or within a calendar year is filed before
April 15 of the succeeding calendar year, that return shall be
considered filed on April 15 of that calendar year.
19066.5. In the case of any information that is required to be
reported to the Franchise Tax Board under Section 19141.2 or 19141.5,
the time for assessment of any tax imposed by Part 10 (commencing
with Section 17001), Part 11 (commencing with Section 23001), or this
part with respect to any event or period to which that information
relates shall not expire before the date that is four years after the
date on which the Franchise Tax Board is furnished the information
required to be reported under Section 19141.2 or 19141.5, or within
the periods provided in Section 19057, 19058, 19059, 19060, 19065,
24945, 24946, Section 1033(a)(2)(C) of the Internal Revenue Code, or
Section 1033(a)(2)(D) of the Internal Revenue Code, whichever period
expires later.
19067. (a) Where before the expiration of the time prescribed for
the mailing of a notice of a proposed deficiency assessment, the
taxpayer consents in writing to an assessment after that time, the
assessment may be made at any time prior to the expiration of the
period agreed upon. The period agreed upon may be extended by
subsequent agreements in writing made before the expiration of the
period previously agreed upon.
(b) The Franchise Tax Board shall notify the taxpayer of the
taxpayer's right to refuse to extend the expiration of the time
prescribed for the mailing of a notice of a proposed deficiency
assessment, or to limit that extension to a particular period of
time, on each occasion when the taxpayer is requested to provide the
taxpayer's consent.
(c) The amendments made by the act adding this subdivision shall
apply to any request to extend the expiration of the time prescribed
for the mailing of a notice of a proposed deficiency assessment made
after December 31, 2000.
