(a) In general. Revenue and Taxation Code
section
19133
provides that if any taxpayer fails or refuses to file a return upon notice and
demand by the Franchise Tax Board (FTB), unless the failure is due to
reasonable cause and not willful neglect, the FTB may add a penalty of 25
percent of the amount of tax assessed pursuant to Revenue and Taxation Code
section
19087
or of any deficiency tax assessed by the FTB concerning the assessment for
which the return was required.
(b)
Imposition of Penalty. For individuals subject to tax under Part 10 (Personal
Income Tax Law), the notice and demand penalty under Revenue and Taxation Code
section
19133
will only be imposed by the FTB if:
(1) the
taxpayer fails to timely respond to a current Demand for Tax Return in the
manner prescribed, and
(2) the FTB
has proposed an assessment of tax under the authority of Revenue and Taxation
Code section
19087,
subdivision (a), after the taxpayer failed to timely respond to a Request for
Tax Return or a Demand for Tax Return in the manner prescribed, for any taxable
year that is within the four-taxable-year period immediately preceding the
taxable year for which the current Demand for Tax Return is
issued.
(c) Definitions.
For purposes of this regulation, the following definitions shall apply:
(1) Demand for Tax Return. A "Demand for Tax
Return" means a written notice and demand for a return from the FTB, which
advises the taxpayer that failure to respond in the manner provided and within
the time prescribed will make the taxpayer liable for a penalty under Revenue
and Taxation Code section
19133
for failure to file upon notice and demand.
(2) Request for Tax Return. A "Request for
Tax Return" means a written notice and request for a return from the FTB, which
does not advise the taxpayer that failure to respond in the manner provided and
within the time prescribed and will make the taxpayer liable for a penalty
under Revenue and Taxation Code section
19133
for failure to file upon notice and demand.
(3) Timely Response. A "timely response"
shall mean a response within the time period specified in the Demand for Tax
Return or Request for Tax Return.
(d) Examples. The following examples are
intended to illustrate the provisions of this regulation:
Example 1. Assume Taxpayer X has not filed a California
personal income tax return for the 1999 taxable year. This is the first time
that X has not filed a timely California personal income tax return. As a
result of X's non-filing, the FTB mails a Request for Tax Return to X on
January 15, 2001. When X does not timely respond to the Request for Tax Return,
the FTB issues a Notice of Proposed Assessment (NPA) on March 20, 2001,
assessing tax, a late filing penalty, and interest, but the NPA does not
include a notice and demand penalty under Revenue and Taxation Code section
19133.
Example 2. Assume the same facts as in Example 1, and X
does not file a California personal income tax return for the 2001 taxable
year. Because X received an NPA for not filing a return for 1999, one of the
four taxable years immediately preceding the 2001 taxable year, the FTB issues
a Demand for Tax Return for the 2001 taxable year. If X fails to timely respond
to the Demand for Tax Return, the FTB will issue an NPA that includes tax, a
late filing penalty, interest, and a notice and demand penalty under Revenue
and Taxation Code section
19133.
(e) Applicability Date. The amendments to
subsections (b) and (d) of this regulation are applicable for notice and demand
penalties imposed on a proposed assessment of tax under the authority of
Revenue and Taxation Code section
19087,
on or after January 1, 2020.
Notes
Cal. Code
Regs. Tit. 18, §
19133
1. New
section filed 11-23-2004; operative 12-23-2004 (Register 2004, No.
48).
2. Amendment of subsections (b)(2) and (d) and new subsection
(e) filed 10-19-2021; operative 10-19-2021 pursuant to Government Code section
11343.4(b)(3)
(Register 2021, No. 43).
Note: Authority cited: Section
19503,
Revenue and Taxation Code. Reference: Section 19133, Revenue and Taxation
Code.
1. New section filed
11-23-2004; operative 12-23-2004 (Register 2004, No. 48).
2.
Amendment of subsections (b)(2) and (d) and new subsection (e) filed
10-19-2021; operative 10/19/2021 pursuant to Government Code section
11343.4(b)(3)
(Register
2021, No. 43).
