2007 California Revenue and Taxation Code Article 3. Deficiency Assessments

CA Codes (rtc:12421-12435)

12421.  As soon as practicable after an insurer's or surplus line
broker's return is filed, the commissioner shall examine it, together
with any information within his or her possession or that may come
into his or her possession, and he or she shall determine the correct
amount of tax of the insurer or surplus line broker.




12422.  (a) If the commissioner determines that the amount of tax
disclosed by the insurer's tax return and assessed by the board is
less than the amount of tax disclosed by his or her examination, he
or she shall propose in writing to the board a deficiency assessment
for the difference.  The proposal shall set forth the basis for the
deficiency assessment and the details of its computation.
   (b) If the commissioner determines that the amount of tax
disclosed by the surplus line broker's tax return is less than the
amount of tax disclosed by his or her examination, he or she shall
propose in writing to the board a deficiency assessment for the
difference.  The proposal shall set forth the basis for the
deficiency assessment and the details of its computation.



12423.  If an insurer or surplus line broker fails to file a return,
the commissioner may require a return by mailing notice to the
insurer or surplus line broker to file a return by a specified date
or he or she may without requiring a return, or upon no return having
been filed pursuant to the demand therefor, make an estimate of the
amount of tax due for the calendar year or years in respect to which
the insurer or surplus line broker failed to file the return.  The
estimate shall be made from any available information which is in the
commissioner's possession or may come into his or her possession,
and the commissioner shall propose in writing to the board a
deficiency assessment for the amount of the estimated tax.  The
proposal shall set forth the basis of the estimate and the details of
the computation of the tax.



12424.  The board shall make a deficiency assessment on the basis of
a proposal submitted to it by the commissioner pursuant to Section
12422 or 12423.


12425.  One or more deficiency assessments may be proposed or made
for the amount of tax due for one or for more than one calendar year.



12426.  In making a deficiency assessment the board may offset an
overpayment for one calendar year against an underpayment for another
calendar year, against penalties and against any interest on an
underpayment.


12427.  The board shall promptly notify the insurer or surplus line
broker of a deficiency assessment made against the insurer or surplus
line broker.


12428.  An insurer or surplus line broker against whom a deficiency
assessment is made under Section 12424 or 12425 may petition for
redetermination of the deficiency assessment within 30 days after
service upon the insurer or surplus line broker of the notice
thereof, by filing with the board a written petition setting forth
the grounds of objection to the deficiency assessment and the
correction sought.  At the time the petition is filed with the board
a copy of the petition shall be filed with the commissioner.
   If a petition for redetermination is not filed within the period
prescribed by this section, the deficiency assessment becomes final
and due and payable at the expiration of that period.



12429.  If a petition for redetermination of a deficiency assessment
is filed within the time allowed under Section 12428, the board
shall reconsider the deficiency assessment and, if the insurer or
surplus line broker has so requested in the petition, shall grant an
oral hearing for the presentation of evidence and argument before the
board or its authorized representative.  The board shall give the
petitioner and the commissioner at least 20 days' notice of the time
and place of hearing.  The hearing may be continued from time to time
as may be necessary.



12430.  The board may decrease or increase the amount of the
deficiency assessment before the deficiency assessment becomes final,
but the amount may be increased only if a claim for the increase is
asserted by the commissioner or the board at or before the hearing.




12431.  The order or decision of the board upon a petition for
redetermination of a deficiency assessment becomes final 30 days
after service on the insurer or surplus line broker of a notice
thereof, and any resulting deficiency assessment is due and payable
at the time the order or decision becomes final.



12432.  Except for a notice given pursuant to Section 12430 or
12431, or in the case of fraud or the failure to file a return, every
notice of a deficiency assessment shall be given within four years
after April 1st of the year following the year for which the amount
of tax is assessed or within four years after the return is filed,
whichever period expires the later.  In the case of failure to file a
return the notice shall be given within eight years after April 1st
of the year following the year for which the amount of tax is
assessed.


12433.  If before the expiration of the time prescribed in Section
12432 for giving of a notice of deficiency assessment the insurer or
surplus line broker has consented in writing to the giving of the
notice after such time, the notice may be given at any time prior to
the expiration of the time agreed upon.  The period so agreed upon
may be extended by subsequent agreements in writing made before the
expiration of the period previously agreed upon.



12434.  Any notice required by this article shall be placed in a
sealed envelope, with postage paid, addressed to the insurer or
surplus line broker at his or her address as it appears in the
records of the commissioner or the board.  The giving of notice shall
be deemed complete at the time of deposit of the notice in the
United States Post Office, or a mailbox, sub-post office, substation
or mail chute or other facility regularly maintained or provided by
the United States Postal Service, without extension of time for any
reason.  In lieu of mailing, a notice may be served personally by
delivering to the person to be served and service shall be deemed
complete at the time of such delivery.  Personal service to a
corporation may be made by delivery of a notice to any person
designated in the Code of Civil Procedure to be served for the
corporation with summons and complaint in a civil action.



12435.  A copy of each notice of a deficiency assessment made by the
board shall be transmitted to the commissioner and the Controller.
The Controller shall keep an appropriate record of all such
assessments and any payments thereon.