2007 California Revenue and Taxation Code Part 10.7. Taxpayers\' Bill Of Rights

CA Codes (rtc:21001-21028)

21001.  This part shall be known and may be cited as the
"Katz-Harris Taxpayers' Bill of Rights Act."



21002.  The Legislature finds and declares that taxes are the most
sensitive point of contact between citizens and their government, and
that there is a delicate balance between revenue collection and
freedom from government oppression.  It is the intent of the
Legislature to place guarantees in California law to ensure that the
rights, privacy, and property of California taxpayers are adequately
protected during the process of the assessment and collection of
taxes.
   The Legislature further finds that the California tax system is
based largely on self-assessment, and the development of
understandable tax laws and taxpayers informed of those laws will
improve both self-assessment and the relationship between taxpayers
and government.  It is the further intent of the Legislature to
promote improved taxpayer self-assessment by improving the clarity of
tax laws and efforts to inform the public of the proper application
of those laws.
   The Legislature further finds and declares that the purpose of any
tax proceeding between the Franchise Tax Board and a taxpayer is the
determination of the taxpayer's correct tax liability.  It is the
intent of the Legislature that, in the furtherance of this purpose,
the Franchise Tax Board may inquire into, and shall allow the
taxpayer every opportunity to present, all relevant information
pertaining to the taxpayer's liability.



21003.  The Franchise Tax Board shall administer this part.  Unless
the context indicates otherwise, the provisions of this part shall
apply to Part 10 (commencing with Section 17001) and Part 11
(commencing with Section 23001).
   For purposes of this part, "board" means the Franchise Tax Board.



21004.  (a) The board shall establish the position of the Taxpayers'
Rights Advocate.  The advocate or his or her designee shall be
responsible for coordinating resolution of taxpayer complaints and
problems, including any taxpayer complaints regarding unsatisfactory
treatment of taxpayers by board employees.  The advocate shall report
directly to the executive officer of the board.
   (b) The advocate or his or her designee shall give highest
priority to reviewing and taking prompt and appropriate action,
including staying actions where taxpayers have suffered or will
suffer irreparable loss as the result of board action.  Applicable
statutes of limitation shall be tolled during the pendency of a
stay.  Any penalties and interest which would otherwise accrue shall
not be affected by the granting of a stay.



21005.  (a) The board, in consultation with the Taxpayers' Rights
Advocate, shall develop and implement a taxpayer education and
information program directed at, but not limited to, the following:
   (1) Taxpayer or industry groups identified in the annual report
described in Section 21006.
   (2) Board audit and compliance staff.
   (3) (A) Identifying forms, procedures, regulations, or laws which
are confusing and lead to taxpayer errors.
   (B) Taking appropriate action, including recommending remedial
legislation to change those items identified pursuant to subparagraph
(A).
   (b) The education and information program shall include all of the
following:
   (1) Communication with the taxpayer groups specified in Section
21006 which explains in simplified terms the most common errors made
by the taxpayers or industry group and how those errors may be
avoided or corrected.
   (2) Participating in small business seminars and similar programs
organized by state and local agencies.
   (3) Revision of taxpayer educational materials currently produced
by the board to explain in simplified terms the most common errors
made by taxpayers and how those errors may be avoided or corrected.
   (4) Implementation of a continuing education program for audit
personnel to include the application of new legislation to taxpayer
activities and to minimize recurrent taxpayer noncompliance or
inconsistency of administration.



21006.  (a) The board shall perform annually a systematic
identification of areas of recurrent taxpayer noncompliance and shall
report its findings to the Legislature on December 1 of each year.
   (b) As part of the identification process described in subdivision
(a), the board shall do both of the following:
   (1) Compile and analyze sample data from its audit process,
including, but not limited to, all of the following:
   (A) The statute or regulation violated by the taxpayer.
   (B) The amount of tax involved.
   (C) The industry or business engaged in by the taxpayer.
   (D) The number of years covered in the audit period.
   (E) Whether professional tax preparation assistance was utilized
by the taxpayer.
   (F) Whether income tax or bank and corporation tax returns were
filed by the taxpayer.
   (2) Conduct an annual hearing before the board itself where
industry representatives and individual taxpayers are allowed to
present their proposals on changes to the Personal Income Tax Law or
the Corporation Tax Law which may further facilitate achievement of
the legislative findings.
   (c) The board shall include in its report recommendations for
improving taxpayer compliance and uniform administration, including,
but not limited to, all of the following:
   (1) Changes in statute or board regulations.
   (2) Improvement of training of board personnel.
   (3) Improvement of taxpayer communication and education.
   (4) Increased enforcement capabilities.



21007.  The board shall prepare and publish brief but comprehensive
statements in simple and nontechnical language which explain
procedures, remedies, and the rights and obligations of the board and
taxpayers.  As appropriate, these statements shall be provided to
taxpayers with the initial notice of audit, the notice of proposed
additional taxes, any subsequent notice of tax due, or other
substantive notices.  Additionally, the board shall include an
appropriate statement in the tax booklets which are mailed annually
to individuals and corporations.  The board also shall include an
appropriate statement in the tax booklets informing taxpayers they
may be requested by the board to furnish a copy of California or
federal tax returns that are the subject of or related to a federal
audit.


21008.  (a) The amount of revenue collected or assessed by the board
shall not be used for any of the following:
   (1) To evaluate individual officers or employees.
   (2) To impose or suggest production quotas or goals.
   (b) The board shall annually certify by letter to the Legislature
that revenue collected or assessed is not used in a manner prohibited
by subdivision (a).


21009.  (a) The board shall develop and implement a program which
will evaluate an individual employee's or officer's performance with
respect to his or her contact with taxpayers.  The development and
implementation of the program shall be coordinated with the Taxpayers'
Rights Advocate.
   (b) The board shall report to the Legislature on the
implementation of this program in its annual report.




21010.  No later than July 1, 1989, the board shall, in cooperation
with the State Board of Equalization, the State Bar of California,
the California Society of Certified Public Accountants, the Taxpayers'
Rights Advocate, and other interested taxpayer-oriented groups,
develop a plan to reduce the time required to resolve amended return
claims for refund, protests, and appeals.  The plan shall include
determination of standard time frames and special review of cases
which take more time than the appropriate standard time frame.



21011.  Procedures of the board, relating to protest hearings before
board audit staff or legal staff, shall include all of the
following:
   (a) Any hearing shall be held at a reasonable time at a board
office which is  convenient to the taxpayer when possible.
   (b) The hearing may be recorded only if prior notice is given to
the taxpayer and the taxpayer is entitled to receive a copy of the
recording.
   (c) The taxpayer shall be informed prior to any hearing that he or
she has a right to have present at the hearing his or her designated
agent.



21012.  (a) If a person's failure to make a timely return or payment
is due to the person's reasonable reliance on written advice from
the board, the person may be relieved of the taxes assessed or any
interest, additions to tax, and penalties added thereto,  as follows:

   (1) Taxes shall only be relieved, and any interest, additions to
tax, and penalties added thereto, if the person's failure to make a
timely return or payment was due to a person's reasonable reliance on
the written advice of a legal ruling by the chief counsel, and only
if the board itself finds all the conditions satisfied.
   (2) In the event that the person relied on written advice of other
than a chief counsel ruling, taxes shall not be relieved.  Interest,
additions to tax, and penalties may be waived if the board staff
finds all the conditions satisfied.
   (b) For purposes of subdivision (a), all of the following
conditions shall be satisfied:
   (1) The person or the person's representative requested in writing
that the board advise him or her whether a particular activity or
transaction is subject to tax under the tax laws administered by that
agency, and the specific facts and circumstances of the activity or
transaction were fully described in the request.  If the request is
for a legal ruling, the request shall specifically so state.
   (2) The board responded in writing to the person regarding the
written request for advice, stating whether or not the described
activity or transaction is subject to tax, or stating the conditions
under which the activity or transaction is subject to tax.  In the
case where a chief counsel ruling is issued, the ruling shall be
signed by the chief counsel or his or her designee.
   (3) In reasonable reliance on the board's written advice, the
person did not remit the tax due.
   (4) The liability for taxes applied to a particular activity or
transaction which occurred before the board rescinded or modified the
advice so given, by sending written notice to the person of the
rescinded or modified  advice.
   (5) The tax consequences expressed in the board's written advice
were not subsequently changed by any of the following:
   (A) A change in statutory law or case law.
   (B) A change in federal interpretation in cases where the board's
written advice was predicated upon federal interpretation.
   (C) A change in material facts or circumstances relating to the
taxpayer.
   (c) Any person seeking relief under this section shall file with
the board all of the following:
   (1) A copy of the person's written request to the board and a copy
of the board's written advice.
   (2) A statement signed under penalty of perjury, setting forth the
facts on which the claim is based.
   (3) Any other information which the board may require.
   (d) Only the person making the written request shall be entitled
to rely on the board's written advice to that person.
   (e) If written advice is issued pursuant to this section, it shall
include a declaration that the tax consequences expressed in the
advice may be subject to change for any of the reasons specified in
paragraph (5) of subdivision (b) and that it is the duty of the
taxpayer to be aware of any of these possible changes.
   (f) This section does not apply if the taxpayer's request for
written advice pursuant to paragraph (1) of subdivision (b) contained
a misrepresentation or omission of one or more material facts.
   (g) For purposes of subdivision (a), the board shall waive only
that portion of tax, penalties, interest, and additions to tax
attributable to the actions taken by the taxpayer after receipt of
the written advice of the board which were in reasonable reliance on
the written advice.
   (h) Chief counsel rulings shall be issued as provided in published
guidelines.


21013.  (a) (1) Every taxpayer is entitled to be reimbursed for any
reasonable fees and expenses related to an appeal before the State
Board of Equalization if all of the following conditions are met:
   (A) The taxpayer files a claim for the fee and expenses with the
State Board of Equalization.
   (B) The State Board of Equalization, in its sole discretion, finds
that the action taken by the Franchise Tax Board staff was
unreasonable.
   (2) For purposes of this section:
   (A) Fees and expenses related to an appeal before the State Board
of Equalization do not include fees and expenses incurred in cases
where an appeal has been filed, but resolved before the Franchise Tax
Board's written statement of its position has been submitted to the
State Board of Equalization.
   (B) Fees may be awarded in excess of the fees paid or incurred if
the fees are less than the reasonable fees because an individual
representing the taxpayer is entitled to be reimbursed for no fee or
for a fee which, taking into account all the facts and circumstances,
is no more than a nominal fee.  This subparagraph shall apply only
if the award is paid to the individual or the individual's employer.

   (b) (1) To determine whether the Franchise Tax Board staff has
been unreasonable, the State Board of Equalization shall consider
whether the Franchise Tax Board has established that its position in
the appeal was substantially justified.
   (2) For purposes of paragraph (1), the position of the Franchise
Tax Board shall be presumed not to be substantially justified if its
staff did not follow its applicable published guidance in the appeal.
  This presumption may be rebutted.
   (3) For purposes of paragraph (2), the term "applicable published
guidance" means either of the following:
   (A) A regulation, legal ruling, notice, information release, or
announcement.
   (B) Any chief counsel ruling or determination letter issued to a
taxpayer.
   (c) The amount of reimbursed fees and expenses shall be determined
by the State Board of Equalization and shall be limited to the
following:
   (1) Fees and expenses incurred after the date of a notice of
proposed deficiency assessment or jeopardy assessment, or a denial of
a claim for refund.
   (2) If the State Board of Equalization finds that the Franchise
Tax Board staff was unreasonable with respect to certain issues but
reasonable with respect to other issues, the amount of reimbursed
fees and expenses shall be limited to those which relate to the
issues where the Franchise Tax Board staff was unreasonable.
   (d) Any proposed determination by the State Board of Equalization
pursuant to this section shall be available as a public record for at
least 10 days prior to the effective date of that determination.
   (e) The amendments made by the act amending this subdivision are
effective for fees and expenses incurred more than 180 days after the
effective date of the act amending this subdivision.



21014.  (a) An officer or employee of the board acting in connection
with any  law administered by the board shall not knowingly
authorize, require, or conduct any investigation of, or surveillance
over, any person for nontax administration related purposes.
   (b) Any person violating subdivision (a) shall be subject to
disciplinary action in accordance with the State Civil Service Act,
including dismissal from office or discharge from employment.
   (c) This section shall not apply with respect to any otherwise
lawful investigation concerning organized crime activities.
   (d) The provisions of this section are not intended to prohibit,
restrict, or prevent the exchange of information where the person is
being investigated for multiple violations which include income or
franchise tax violations.
   (e) For the purposes of this section:
   (1) "Investigation" means any oral or written inquiry directed to
any person, organization, or governmental agency.
   (2) "Surveillance" means the monitoring of persons, places, or
events by means of electronic interception, overt or covert
observations, or photography, and the use of informants.
   (f) This section shall not be construed to prohibit audits by the
board on behalf of the Fair Political Practices Commission for
purposes of administering and enforcing the Political Reform Act of
1974 (Title 9 (commencing with Section 81000) of the Government
Code).  This section also shall not be construed to prohibit the
board from carrying out its duties with respect to other nontax laws.



21015.  (a) The board may either refrain from imposing or waive the
penalties authorized under Section 19011 and subdivision (a) of
Section 19141.5, where it is determined, on a case-by-case basis,
that the failure to comply did not jeopardize the best interests of
the state and is not due to any willful neglect or any intent not to
comply.
   (b) This section shall be operative for penalties that may be or
were assessed or imposed on or after January 1, 1995.



21015.5.  (a) (1) No levy may be made on any property or property
right of any person unless the board has notified the person in
writing of his or her rights as described in subparagraph (C) of
paragraph (3) before the levy is made.  Except as provided in
subdivision (f), the notice shall be required only once for the
taxable period to which the unpaid tax specified in subparagraph (A)
of paragraph (3) relates.  The notice shall not be required if the
unpaid tax for which notice would otherwise be required under this
paragraph is consolidated for collection purposes with a preexisting
unpaid tax for which notice has been given under this paragraph.
   (2) The notice required by paragraph (1) shall be made by
first-class mail to the address of record not less than 30 days
before the day of the first levy with respect to the amount of the
unpaid tax for the taxable period.  Notice under paragraph (1) is not
required if previous mail to the same address was returned
undelivered with no forwarding address.
   (3) The notice required under paragraph (1) shall specify, in
simple and nontechnical terms, all of the following:
   (A) The amount of unpaid tax.
   (B) A telephone number to call in the event of any questions.
   (C) The right of the person to request a review during the 30-day
period described in paragraph (2).
   (D) The proposed action or actions that may be taken by the
Franchise Tax Board and the rights of the person with respect to the
action or actions, including a brief statement that sets forth all of
the following:
   (i) The provisions of California law relating to levy and sale of
property.
   (ii) The procedures applicable to the levy and sale of property
under California law.
   (iii) The independent departmental administrative review available
to the taxpayers with respect to the levy and sale and the
procedures to obtain that review.
   (iv) The alternatives available to taxpayers that could prevent
levy on property, including installment agreements under Section
19008.
   (v) California legal requirements and procedures with respect to
the release of levy.
   (b) (1) The Taxpayers' Rights Advocate shall establish procedures
for an independent departmental administrative review for taxpayers
who request review under subparagraph (C) of paragraph (3) of
subdivision (a).
   (2) A person shall be entitled to only one review under this
section with respect to the taxable period to which the unpaid tax
specified in subparagraph (A) of paragraph (3) of subdivision (a)
relates.
   (3) An independent departmental administrative review under this
subdivision shall be conducted by an officer or employee, or officers
or employees, who have had no prior involvement with respect to the
unpaid tax specified in subparagraph (A) of paragraph (3) of
subdivision (a) before the first review under this section or Section
19225.  A taxpayer may waive the requirement of this paragraph.
Administrative review under this subdivision is not subject to
Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3
of the Government Code.
   (c) (1) The person or persons conducting the independent
departmental administrative review shall obtain verification that the
requirements of any applicable law or administrative procedures have
been met by the board.
   (2) The taxpayer may raise during the review any relevant issue
relating to the unpaid tax or the lien, including any of the
following:
   (A) Appropriate spousal defenses.
   (B) Challenges to the appropriateness of collection actions.
   (C) Offers of collection alternatives, that may include the
posting of a bond, the substitution of other assets, an installment
agreement, or an offer-in-compromise.
   (3) The determination of the person or persons conducting the
review under this subdivision shall take into consideration all of
the following:
   (A) The verification presented under paragraph (1).
   (B) The issues raised under paragraph (2).
   (C) Whether any proposed collection action balances the need for
the efficient collection of taxes with the legitimate concern of the
person that any collection action not be more intrusive than
necessary.
   (4) An issue may not be raised during the review if:
   (A) The issue was raised and considered at a previous review under
this section or in any other administrative or judicial proceeding.

   (B) The person seeking to raise the issue participated
meaningfully in the review or proceeding.
   This paragraph does not apply to any issue with respect to a
change in circumstances of that person that affects the
determination.
   (d) If review is requested under subparagraph (C) of paragraph (3)
of subdivision (a), the levy actions that are the subject of the
requested review shall be suspended for the period during which the
review is pending.  In no event shall any period expire before the
15th day after the day upon which there is a final determination in
the review.
   (e) This section does not apply if the board has made a finding
under Section 19081 or Section 19082 that the collection of tax is in
jeopardy except that the taxpayer shall be given the opportunity for
the review described in this section within a reasonable period of
time after the levy.
   (f) If the board holds in abeyance the collection of a liability
imposed under Part 10 (commencing with Section 17001) or Part 10.2
(commencing with Section 18401), that is final and otherwise due and
payable, for a period in excess of six months from the date the hold
is first placed on the account, the board shall thereafter mail to
the taxpayer a notice prior to issuing a levy or filing or recording
a notice of state tax lien.
   (g) This section is operative for collection actions initiated
after the date which is 180 days after the effective date of the act
adding this section.


21015.6.  (a) No levy may be made on the principal residence of any
innocent investor or the proceeds from the sale or other transaction
involving the principal residence of an innocent investor upon
notification to the Franchise Tax Board that the residence is the
principal residence of an innocent investor and substantiation of
both of the following:
   (1) The basis for that levy is an underpayment of any tax imposed
under Part 10 (commencing with Section 17001) for any taxable year
ending on or before December 31, 2000, that is attributable to an
abusive tax shelter.
   (2) The principal residence is owned by an innocent investor.
   (b) Any state tax lien recorded under Chapter 14 (commencing with
Section 7150) of Division 7 of Title 1 of the Government Code,
including a state tax lien described under Section 522(c)(2)(B) of
Title 11 of the United States Code, relating to state tax liens after
bankruptcy, on the principal residence of an innocent investor shall
be released without satisfaction of the lien upon notification to
the Franchise Tax Board that the residence is the principal residence
of an innocent investor and substantiation of both of the following:

   (1) The basis for that lien is an underpayment of any tax imposed
under Part 10 (commencing with Section 17001) for any taxable year
ending on or before December 31, 2000, that is attributable to an
abusive tax shelter.
   (2) The owner of that principal residence is an innocent investor.

   (c) For purposes of this section:
   (1) "Abusive tax shelter" shall satisfy both of the following
requirements:
   (A) Be a potentially abusive tax shelter within the meaning of
Section 6112 of the Internal Revenue Code.
   (B) With respect to which either of the following has occurred:
   (i) The Internal Revenue Service has imposed a penalty under
Section 6700 or 6701 of the Internal Revenue Code.
   (ii) The Franchise Tax Board has imposed a penalty under Section
19177 or 19178.
   (2) "Innocent investor" means any individual (or the spouse or
former spouse of that individual) that satisfies each of the
following requirements:
   (A) Is liable for underpayment of any tax imposed under Part 10
(commencing with Section 17001) for any taxable year ending on or
before December 31, 2000, that is attributable to ownership of an
interest in an abusive tax shelter.
   (B) Had no responsibility for the creation, promotion, operation,
management, or control of the abusive tax shelter.
   (C) During the tax years to which the underpayment described in
subparagraph (A) relates, reasonably believed that the tax treatment
of an item attributable to an abusive tax shelter was, more likely
than not, the proper tax treatment.
   (3) "Principal residence" includes any property that qualifies as
a declared homestead as defined in Section 704.910 of the Code of
Civil Procedure.
   (d) Notification required by this section shall be made in the
manner prescribed in forms and instructions of the Franchise Tax
Board.
   (e) (1) If, after January 1, 2002, the Franchise Tax Board has
received proceeds from the sale of a principal residence by either
levy or the satisfaction of a lien, the amounts received shall be
returned to the owner upon notification to the Franchise Tax Board
that the residence was the principal residence of an innocent
investor and substantiation as specified in subdivision (a) or (b).
The notification shall be made in writing and shall be considered a
request for the return of the proceeds from the sale of the principal
residence.
   (2) If the Franchise Tax Board fails to mail notice of denial of
the request for the return of the proceeds from the sale of the
principal residence within six months after the date the request was
submitted, the owner may, prior to the mailing of the notice of
denial of the request, consider the request denied and may, in
accordance with subdivision (f), bring an action against the
Franchise Tax Board for the return of the proceeds from the sale of
the principal residence.
   (3) Amounts returned pursuant to paragraph (1) shall include
interest at the adjusted annual rate established under Section 19521
from the date the amounts are received by the Franchise Tax Board
until the date the amounts are returned.
   (4) Any amounts required to be returned pursuant to this
subdivision shall first be credited against any amount due from the
owner (other than an underpayment of tax described in subparagraph
(A) of paragraph (2) of subdivision (c)) and the balance, if any,
shall be returned to the owner.
   (5) No amount may be credited or returned pursuant to this
subdivision unless the notification and substantiation described in
paragraph (1) occur before the expiration of the one-year period
beginning on the date the proceeds are received by the Franchise Tax
Board.
   (f) (1) If the Franchise Tax Board denies a request for the return
of the proceeds from the sale of a principal residence, the owner of
the residence may bring an action against the Franchise Tax Board
for the return, in whole or in part, of the proceeds the Franchise
Tax Board received by levy or in satisfaction of a lien.
   (2) The action described in paragraph (1) must be filed within one
year from the date the proceeds are received by the Franchise Tax
Board or within 90 days after the Franchise Tax Board notifies the
owner of the denial of his or her request for the return of the
proceeds from the sale of the principal residence, whichever period
expires later.
   (3) Except as otherwise provided in this subdivision, an action
brought pursuant to this subdivision shall be governed by the
provisions of law applicable to an action authorized under Section
19382.



21016.  (a) The board shall release any levy issued pursuant to Part
10.2 (commencing with Section 18401) on any property in the event of
any circumstances deemed appropriate by the board, including, but
not limited to, the following:
   (1) The expense of the sale process to the state exceeds the
liability for which the levy is made.
   (2) The Taxpayers' Rights Advocate orders the release of the levy
upon his or her finding that the levy threatens the health or welfare
of the taxpayer or his or her spouse and dependents or family.
   (3) The proceeds from the sale would not result in a reasonable
reduction of the debt.
   (4) The levy was issued not in accordance with administrative
procedures.
   (5) The taxpayer has entered into an installment payment agreement
under Section 19008 to satisfy the tax liability for which the levy
was made, unless that or another agreement allows for the levy.
   (6) The release of the levy will facilitate the collection of the
tax liability or will be in the best interest of the taxpayer and the
state.
   (b) The board shall not sell any seized property until it has
first notified the taxpayer in writing of the exemptions from levy
under Chapter 4 (commencing with Section 703.010) of Title 9 of the
Code of Civil Procedure.
   (c) This section shall not apply to the seizure of any property as
a result of a jeopardy assessment authorized by Article 5
(commencing with Section 19081) of Chapter 4 of Part 10.2.
   (d) In the case of a levy on salary or wages payable to or
received by the taxpayer, in accordance with Chapter 5 (commencing
with Section 706.010) of Division 2 of Title 9 of the Code of Civil
Procedure, upon agreement with the taxpayer that the tax is not
collectible, the board shall release the levy as soon as practicable.
  This subdivision shall not apply if the debt for which the levy is
issued has been discharged from collectibility pursuant to Section
16301.6 of the Government Code, except if the debt is satisfied.
   (e) The amendments made by the act adding this subdivision are
operative for salary or wages subject to levy on or after the
effective date of the act adding this subdivision.



21017.  Exemptions from levy under Chapter 4 (commencing with
Section 703.010) of Title 9 of the Code of Civil Procedure shall be
adjusted for purposes of enforcing the collection of debts under Part
10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) of Division 2 to reflect changes in the  California
Consumer Price Index whenever the change is more than 5 percent
higher than any previous adjustment.



21018.  (a) A person may file a claim with the board for
reimbursement of charges or fees imposed on the person by an
unrelated business entity as the direct result of an erroneous levy,
erroneous processing action, or erroneous collection action by the
board. Charges that may be reimbursed include an unrelated business
entity's usual and customary charge for complying with the levy
instructions and reasonable charges for overdrafts that are a direct
consequence of the erroneous levy, erroneous processing action, or
erroneous collection action and are paid by the person and not waived
by the unrelated business entity or otherwise reimbursed. Each
claimant applying for reimbursement shall file a claim with the board
which shall be in such form as may be prescribed by the board. In
order for the board to grant a claim, the board shall determine that
all of the following conditions have been satisfied:
   (1) The erroneous levy, erroneous processing action, or erroneous
collection action was caused by an error made by the board.
   (2) Prior to the erroneous levy, erroneous processing action, or
erroneous collection action, the person responded to all contacts by
the board and provided the board with any requested information or
documentation sufficient to establish the person's position. This
provision may be waived by the board for reasonable cause.
   (3) The charge or fee has not been waived by the unrelated
business entity or otherwise reimbursed.
   (b) Claims pursuant to this section shall be filed within 90 days
from the date of the erroneous levy, erroneous processing action, or
erroneous collection action. Within 30 days from the date the claim
is received, the board shall respond to the claim. If the board
denies a claim, the claimant shall be notified in writing of the
reason or reasons for the denial of the claim. The board may extend
the period for filing a claim under this section.
   (c) Charges and fees that may be reimbursed under the authority of
this section are limited to the usual and customary charges and fees
imposed by a business entity in the ordinary course of business.



21019.  (a) At least 30 days prior to the filing or recording of
liens under Chapter 14 (commencing with Section 7150) or Chapter 14.5
(commencing with Section 7220) of Division 7 of Title 1 of the
Government Code, the board shall mail to the taxpayer a preliminary
notice.  The notice shall specify the statutory authority of the
board for filing or recording the lien, indicate the earliest date on
which the lien may be filed or recorded, and state the remedies
available to the taxpayer to prevent the filing or recording of the
lien.  In the event tax liens are filed for the same liability in
multiple counties, only one preliminary notice shall be sent.
   (b) The lien shall not be filed or recorded if the taxpayer
demonstrates to the board by substantial evidence, within 30 days
after receiving the notice, that a filing or recording of a lien
would be in error.  The preliminary notice required by this section
shall not apply to jeopardy assessments authorized by Article 5
(commencing with Section 19081) of Chapter 4 of Part 10.2.
   (c) If after filing or recording the lien, the board determines
that its action was in error, it shall mail a release to the taxpayer
and the entity recording the lien as soon as possible, but not later
than seven working days, after this determination or the receipt of
the lien recording information, whichever is later.  The release
shall contain a statement that the lien was filed in error.  If the
erroneous lien is obstructing a lawful transaction, the board shall
immediately issue a release of lien to the appropriate party.  Upon
the request of the taxpayer, a copy of the release shall be mailed to
the major credit reporting companies in the county where the lien
was filed.
   (d) The procedures described in subdivision (c) shall apply to
liens that are filed or recorded in either of the following ways:
   (1) Not in accordance with administrative procedures.
   (2) After the taxpayer has entered into an installment payment
agreement under Section 19008 to satisfy the tax liability for which
the lien was filed or recorded, unless the agreement provides for the
filing or recording of the lien.
   (e) If after filing or recording the lien, the board determines
that a release of the lien will facilitate the collection of the tax
liability or will be in the best interest of the taxpayer and the
state, it shall mail a release of that lien to the taxpayer and the
entity recording the lien.  If the lien is obstructing a lawful
transaction and its release will facilitate the collection of the tax
liability, or will be in the best interest of the taxpayer and the
state, the board shall immediately do both of the following:
   (1) Issue a release of lien to the appropriate party.
   (2) Upon the request of the taxpayer, mail a copy of the release
to the credit reporting companies, financial institutions, or any
creditor whose name and address is provided by the taxpayer.
   (f) This section shall not limit the circumstances in which the
Franchise Tax Board may release a lien.  The Franchise Tax Board may
release a lien under any circumstances to facilitate the collection
of the tax liability or, if that release is in the best interest of
the taxpayer and state, and take any action associated with the
release of that lien it deems appropriate.
   (g) The amendments made by the act adding this subdivision are
operative on or after January 1, 1998.



21020.  For the purposes of Part 11 (commencing with Section 23001)
of Division 2 only, a taxpayer shall not be suspended pursuant to
Section 23301, 23301.5, or 23775 unless the board has mailed a notice
preliminary to suspension which indicates  that the taxpayer will be
suspended by a date certain pursuant to Section 23301, 23301.5, or
23775, as the case may be.  The notice preliminary to suspension
shall be  mailed to the taxpayer at least 60 days before the date
certain.



21021.  (a) If any officer or employee of the board recklessly
disregards board published procedures, a taxpayer aggrieved by that
action or omission may bring an action for damages against the State
of California in superior court.
   (b) In any action brought under subdivision (a), upon a finding of
liability on the part of the State of California, the state shall be
liable to the plaintiff in an amount equal to the sum of all of the
following:
   (1) Actual and direct monetary damages sustained by the plaintiff
as a result of the actions or omissions.
   (2) Reasonable litigation costs, as defined for purposes of
Sections 19420 and 26491.
   (c) In the awarding of damages under subdivision (b), the court
shall take into consideration the negligence or omissions, if any, on
the part of the plaintiff which contributed to the damages.
   (d) Whenever it appears to the court that the taxpayer's position
in the proceedings brought under subdivision (a) is frivolous, the
court may impose a penalty against the plaintiff in an amount not to
exceed ten thousand dollars (,000).  A penalty so imposed shall be
paid upon notice and demand from the board and shall be collected as
a tax imposed under Part 10 (commencing with Section 17001) or Part
11 (commencing with Section 23001).



21022.  (a) Except as provided in subdivision (f), if any officer or
employee of the board intentionally settles the determination or
compromises the collection of any tax due from an attorney, certified
public accountant, or tax preparer (as defined in subdivision (b) of
Section 19169) representing a taxpayer, in exchange for information
conveyed by the taxpayer to the attorney, certified public
accountant, or tax preparer for purposes of obtaining advice
concerning the taxpayer's tax liability, the taxpayer may bring a
civil action for damages against the State of California in superior
court.  The civil action shall be the exclusive remedy for recovering
damages resulting from the acts described in this subdivision.
   (b) In any action brought under subdivision (a), upon the finding
of liability on the part of the defendant, the defendant shall be
liable to the plaintiff in an amount equal to the lesser of five
hundred thousand dollars (0,000) or the sum of all the following:

   (1) Actual, direct economic damages sustained by the plaintiff as
a proximate result of the information disclosure.
   (2) The costs of the action.
   (c) Damages shall not include the taxpayer's liability for any
civil or criminal penalties or other losses attributable to
incarceration or the imposition of other criminal sanctions.
   (d) Notwithstanding any other provision of law, an action to
enforce liability created under this section may be brought without
regard to the amount in controversy, and may be brought only within
two years after the date the actions creating the liability would
have been discovered by the exercise of reasonable care.
   (e) Upon certification of the executive officer of the board, or
the executive officer's delegate, that criminal charges have been
filed against the taxpayer, the court before which an action under
this section is pending shall stay all proceedings with respect to
the action, pending the resolution of those criminal charges.
Certification authorized by this subdivision shall comply with the
requirements of Section 19542.
   (f) Subdivision (a) shall not apply to information conveyed to an
attorney, certified public accountant, or tax preparer for the
purpose of perpetrating a fraud or crime.
   (g) This section is operative for actions filed on or after
January 1, 1998.



21023.  (a) Notwithstanding Article 2 (commencing with Section
19542) of Chapter 7 of Part 10.2, if any amount with respect to a
joint return is due and payable and the individuals filing the return
are no longer married or no longer reside in the same household, the
board shall, upon request in writing by either of these individuals,
disclose in writing to the requesting individual whether the board
has attempted to collect the amount due from the other individual,
the general nature of the collection activities, and the amount
collected.
   (b) This section is operative for requests made on or after
January 1, 1998.


21024.  For appeals filed under Section 19045 or 19324, on or after
January 1, 1998, the board shall have the burden of producing
reasonable and probative information, in addition to the information
described in subdivision (a), concerning the amount assessed if a
taxpayer does both of the following:
   (a) Asserts a reasonable dispute with respect to either of the
following:
   (1) An item of income reported on an information return filed with
the board pursuant to Section 18637, 18638, 18639, 18640, 18641,
18642, 18643, 18644, 18645, 18646, or 18647 by a third party.
   (2) Wage information reported or furnished to the Employment
Development Department and accessible to the board under subdivision
(g) of Section 1088 of, or subdivision (e) of Section 13050 of, the
Unemployment Insurance Code or an exchange of information agreement.

   (b) Fully cooperates with the board, including, but not limited
to, providing, within a reasonable period of time, access to and
inspection of all witnesses, information, and documents within the
control of the taxpayer as reasonably requested by the board.



21025. 20125.  If any payment is received on or after January 1,
1998, by the board from any taxpayer and the board cannot associate
the payment with the taxpayer, the board shall make reasonable
efforts to notify the taxpayer of the inability within 60 days after
the receipt of the payment.



21026.  (a) Except as otherwise provided in subdivision (b), for
taxable years beginning on or after January 1, 1998, the board shall,
not less than annually, mail a written notice to each taxpayer who
has a tax delinquent account of the amount of the tax delinquency as
of the date of the notice.
   (b) Subdivision (a) shall not apply to accounts where a previously
mailed notice to the address of record was returned to the board as
undeliverable, or to accounts that are discharged from accountability
pursuant to Chapter 3 (commencing with Section 13940) of Part 4 of
Division 3 of Title 2 of the Government Code.



21027.  (a) (1) For purposes of Part 10 (commencing with Section
17001), Part 10.2 (commencing with Section 18401), Part 11
(commencing with Section 23001), or this part or any other law that
is applicable to the mailing of any returns, payments, or any other
items required to be filed under Part 10 (commencing with Section
17001), Part 10.2 (commencing with Section 18401), Part 11
(commencing with Section 23001), or this part, any reference in
Section 11003 of the Government Code to the United States mail shall
be treated as including a reference to any designated delivery
service, and any reference in that section to a post office
cancellation mark shall be treated as including a reference to any
date recorded electronically by a designated delivery service, kept
in the regular course of the designated delivery service's business,
or marks on the cover in which any item is to be delivered to the
board that indicate the date on which the item was given to the
designated delivery service for delivery.
   (2) For purposes of this section, "designated delivery service"
means any delivery service provided by a trade or business if that
service is designated by the Secretary of the Treasury under the
authority of Section 7502(f) of the Internal Revenue Code, as amended
by Public Law 104-168.
   (b) As revised by Treasury Decision 8932, January 10, 2001,
regulations of the Secretary of the Treasury under the authority of
Section 7502(c)(2) of the Internal Revenue Code (relating to prima
facie evidence of delivery and postmark date for electronic filing)
shall be applicable for prima facie evidence of delivery and the
postmark date for purposes of Part 10 (commencing with Section
17001), Part 10.2 (commencing with Section 18401), Part 11
(commencing with Section 23001), this part, or Section 11003 of the
Government Code.



21028.  (a) (1) With respect to tax advice, the protections of
confidentiality that apply to a communication between a client and an
attorney, as set forth in Article 3 (commencing with Section 950) of
Chapter 4 of Division 8 of the Evidence Code, shall also apply to a
communication between a taxpayer and any federally authorized tax
practitioner to the extent the communication would be considered a
privileged communication if it were between a client and an attorney.

   (2) Paragraph (1) may only be asserted in any noncriminal tax
matter before the Franchise Tax Board.
   (3) For purposes of this section:
   (A) "Federally authorized tax practitioner" means any individual
who is authorized under federal law to practice before the Internal
Revenue Service if the practice is subject to federal regulation
under Section 330 of Title 31 of the United States Code, as provided
by federal law as of January 1, 2000.
   (B) "Tax advice" means advice given by an individual with respect
to a state tax matter, which may include federal tax advice if it
relates to the state tax matter.  For purposes of this subparagraph,
"federal tax advice" means advice given by an individual within the
scope of his or her authority to practice before the federal Internal
Revenue Service on noncriminal tax matters.
   (C) "Tax shelter" means a partnership or other entity, any
investment plan or arrangement, or any other plan or arrangement if a
significant purpose of that partnership, entity, plan, or
arrangement is the avoidance or evasion of federal income tax or the
avoidance or evasion of the tax imposed under Part 10 (commencing
with Section 17001) or Part 11 (commencing with Section 23001).
   (b) The privilege under subdivision (a) does not apply to any
written communication between a federally authorized tax practitioner
and any person, or any director, officer, employee, agent, or
representative of the person, or any other person holding a capital
or profits interest in the person in connection with the promotion of
the direct or indirect participation of the person in any tax
shelter (as defined in Section 1274(b)(3)(B) of the Internal Revenue
Code, as modified by subdivision (g) of Section 19164), or in any
proceeding to revoke or otherwise discipline any license or right to
practice by any governmental agency.
   (c) This section shall be operative for communications made on or
after the effective date of the act adding this section.
   (d) This section shall remain in effect only until January 1,
2009, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2009, deletes or extends
that date.