Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Notwithstanding any other provision in
this chapter, the provisions of this regulation are applicable to a request for
innocent spouse relief.
(b) Who May
Request Relief. A divorced or separated spouse or registered domestic partner
may request innocent spouse relief regarding taxes imposed under the Sales and
Use Tax Law, Motor Vehicle Fuel Tax Law, Use Fuel Tax Law, Diesel Fuel Tax Law,
Cigarette and Tobacco Products Tax Law, Timber Yield Tax Law, Energy Resources
Surcharge Law, Emergency Telephone Users Surcharge Law, Hazardous Substances
Tax Law, Integrated Waste Management Fee Law, Oil Spill Response, Prevention
and Administration Fees Law, Underground Storage Tank Maintenance Fee Law, and
Fee Collection Procedures Law.
(c)
Request Requirements. An individual seeking relief under subdivision (b) must
file a written request for innocent spouse relief that is signed and dated by
the individual seeking relief and specifically requests innocent spouse relief.
The request must identify the tax from which that relief is sought, include the
applicable tax account number, and provide a specific explanation as to why the
individual requesting relief believes he or she should not be held responsible
for the liability at issue. A completed form provided by CDTFA for use as a
request for innocent spouse relief will satisfy these requirements.
(d) Filing Requests.
(1) A request for innocent spouse relief may
be filed if, at the time relief is requested, the individual requesting relief
is no longer married to or is legally separated from the non-requesting spouse
or registered domestic partner, or the requesting individual is no longer a
member of the same household as the non-requesting spouse or registered
domestic partner.
(2) A request for
innocent spouse relief and related documents may be filed as set forth in this
subdivision, or as otherwise expressly provided on CDTFA's website at
www.cdtfa.ca.gov.
(A) By hand delivery to: Offer in Compromise
Section, MIC 52, California Department of Tax and Fee Administration, 450 N
Street, Sacramento, CA 95814.
(B)
By mail to: Offer in Compromise Section, MIC 52, California Department of Tax
and Fee Administration, P.O. Box 942879, Sacramento, CA 94279-0052.
(C) By facsimile to: (916)
322-7940.
(e)
Res Judicata. A liability is not eligible for relief under this regulation if
that liability was incurred in a calendar month, quarter, or year that has been
closed by res judicata.
(f)
Limitation Period. A liability is not eligible for relief under this regulation
unless a timely request for innocent spouse relief is filed with regard to that
liability.
(1) A request for innocent spouse
relief that is filed with CDTFA no later than one year after CDTFA's first
contact with the individual making the request is timely as to all
liabilities.
(2) A request for
innocent spouse relief that is filed with CDTFA more than one year after
CDTFA's first contact with the individual making the request is timely only as
to liabilities:
(A) Reported on a return due
no more than five years before the filing of the request for innocent spouse
relief; and
(B) Assessed by a
CDTFA-issued determination or similar billing document for collection of a tax
which became final no more than five years before the filing of the request for
innocent spouse relief.
(g) Acknowledgment. When the Offer in
Compromise Section receives a request for innocent spouse relief, it will:
(1) Mail the individual requesting relief an
acknowledgement letter containing the contact information for the Offer in
Compromise Section, and include a questionnaire and financial statement for the
individual requesting relief to complete and return.
(2) Inform the non-requesting spouse or
registered domestic partner that the request has been filed and the basis for
the request, and permit the non-requesting spouse or registered domestic
partner to submit information to support or counter the
request.
(h) Review. The
Offer in Compromise Section will review a request for innocent spouse relief to
determine whether the individual requesting relief is eligible for innocent
spouse relief or other equitable relief from all the liabilities included in
his or her request. The Offer in Compromise Section may request additional
information from the individual requesting relief if necessary to complete such
review.
(i) Bases for Relief. An
individual requesting innocent spouse relief from liability for any tax,
interest, penalties, or other amounts shall be relieved from such liability
where all the following requirements are met:
(1) The liability is incurred under the Sales
and Use Tax Law, Motor Vehicle Fuel Tax Law, Use Fuel Tax Law, Diesel Fuel Tax
Law, Cigarette and Tobacco Products Tax Law, Timber Yield Tax Law, Energy
Resources Surcharge Law, Emergency Telephone Users Surcharge Law, Hazardous
Substances Tax Law, Integrated Waste Management Fee Law, Oil Spill Response,
Prevention and Administration Fees Law, Underground Storage Tank Maintenance
Fee Law, or Fee Collection Procedures Law;
(2) The liability is attributable to the
non-requesting spouse or registered domestic partner;
(3) The individual requesting relief
establishes that he or she did not know of the liability, and that a reasonably
prudent person in the requesting individual's circumstances would not have had
reason to know of the liability; and
(4) It would be inequitable to hold the
requesting individual responsible for the liability, taking into account
whether the requesting individual significantly benefited directly or
indirectly from the liability, and taking into account all other facts and
circumstances.
(j)
Attribution.
(1) The determination of the
spouse or registered domestic partner to whom items of liability are
attributable shall be made without regard to community property laws.
(2) With respect to a liability incurred as a
result of a failure to file a return or an omission of an item from the return,
attribution to one spouse or registered domestic partner may be determined by
whether a spouse or registered domestic partner rendered substantial services
as a taxpayer engaged in an activity or transaction that is subject to a tax
administered under the laws specified in subdivision (i)(1) and related to the
liability. If neither spouse, or if neither registered domestic partner,
rendered substantial services as a taxpayer, then the attribution of the
liability shall be treated as community property. A liability incurred as a
result of an erroneous deduction or credit shall be attributable to the spouse
or registered domestic partner who caused the deduction or credit to be entered
on the return.
(k)
Benefited.
(1) Whether a requesting
individual has benefited directly or indirectly from the liability will be
determined by a review of all of the available evidence. Normal support is not
a significant benefit for purposes of this determination. Normal support is
measured relative to each family's standard of living. The requesting
individual will not be deemed to have benefited directly or indirectly from the
liability solely as a result of normal support unless his or her lifestyle
significantly improved during the periods of liability.
(2) Gifts received by the requesting
individual, or lavish or luxury purchases made by either spouse or registered
domestic partner may be evidence that the requesting individual benefited
directly or indirectly from the liability. Evidence of direct or indirect
benefit may consist of transfers of property, including transfers which may be
received several years after the calendar quarter in which the liability
occurred. For example, if a requesting individual receives from the other
spouse or registered domestic partner an inheritance of property or life
insurance proceeds which are traceable to the liability, the requesting
individual will be considered to have benefited from that liability. Other
factors considered may include desertion of the requesting individual by the
other spouse or registered domestic partner or that the spouses or registered
domestic partners have become divorced or separated subsequent to the periods
of liability.
(l) Other
Equitable Relief. A requesting individual may also be relieved of liability for
any unpaid tax or deficiency under the laws specified in subdivision (i)(1) for
which relief is not available under subdivision (i) if, taking into account all
the facts and circumstances, it is inequitable to hold the requesting
individual liable for such amount. An individual requesting relief shall only
be considered for other equitable relief after the individual files a written
request for innocent spouse relief.
(1)
Factors that may be considered for the purpose of granting other equitable
relief include, but are not limited to:
(A)
The requesting individual is separated (whether legally or not) or divorced
from the non-requesting spouse or registered domestic partner.
(B) The requesting individual would suffer
economic hardship if relief is not granted.
(C) The requesting individual, under duress
from the non-requesting spouse or registered domestic partner, did not pay the
liability. To substantiate "duress," the requesting individual must provide
objective evidence. "Objective evidence" can include, but is not limited to,
such documents as police reports, restraining orders, or counseling
reports.
(D) The requesting
individual did not know and had no reason to know about the items causing the
understatement or that the tax would not be paid.
(E) The non-requesting spouse or registered
domestic partner has a legal obligation under a divorce decree or agreement to
pay the tax. (This obligation will not be considered a positive factor if the
requesting individual knew or had reason to know, at the time the divorce
decree or agreement was entered into, that the non-requesting spouse or
registered domestic partner would not pay the tax.)
(F) The tax for which the requesting
individual is requesting relief is attributable to the non-requesting spouse or
registered domestic partner.
(2) Factors that may be considered for
purposes of denying other equitable relief include, but are not limited to:
(A) The requesting individual will not suffer
economic hardship if relief is not granted.
(B) The requesting individual knew or had
reason to know about the items causing the understatement or that the tax would
be unpaid at the time the requesting individual signed the return.
(C) The requesting individual received a
significant benefit from the unpaid tax or items causing the
understatement.
(D) The requesting
individual has not made a good faith effort to comply with the laws specified
in subdivision (i)(1) for the periods for which the individual is requesting
relief or for subsequent periods of liability.
(E) The requesting individual has a legal
obligation under a divorce decree or agreement to pay the tax.
(F) The tax for which relief is being
requested is attributable to the requesting
individual.
(m)
Written Findings. Once its review is completed, the Offer in Compromise Section
will mail the individual requesting relief a letter granting or denying
innocent spouse relief and other equitable relief, and will explain in that
letter why such relief was granted or denied. If the Offer in Compromise
Section denies both innocent spouse relief and other equitable relief as to any
liability included in a request for innocent spouse relief, the letter will
include instructions about how to request review by the Appeals Bureau of that
denial of relief.
(n) Failure to
Timely Request Appeals Conference. If the individual requesting relief does not
submit a timely request for appeals conference as provided in subdivision (o),
the individual has waived the right to appeal the findings of the Offer in
Compromise Section, and those findings become final.
(o) Appeals Conference, Decision, and
Finality.
(1) Where the Offer in Compromise
Section denies both innocent spouse relief and other equitable relief as to any
liability included in a request for innocent spouse relief, the individual
requesting relief may appeal that denial by submitting a written request for
appeals conference to the Offer in Compromise Section. A request for appeals
conference must state the specific grounds upon which the taxpayer contests the
findings of the Offer in Compromise Section, must be signed by the taxpayer and
include his or her telephone number, and must be submitted in the same manner
as provided in subdivision (d)(2) for the filing of the request for innocent
spouse relief.
(2) The provisions
of article 8 of this chapter are applicable to the appeals conference and
issuance of the decision of the Appeals Bureau. For purposes of article 8, the
individual requesting relief is the "taxpayer." If the Appeals Bureau decision
denies the request for innocent spouse relief, in whole or in part, and the
individual requesting relief does not file an appeal to the Office of Tax
Appeals within 30 days of the mailing of the Appeals Bureau letter, the
individual has waived the right to appeal the decision of the Appeals Bureau,
and the decision of the Appeals Bureau becomes final.
(3) When the appeal of the requesting
individual is final, whether after the Offer in Compromise Section issues its
findings or, if a timely request for appeals conference is submitted, after the
Appeals Bureau issues its decision, or if a timely appeal to the Office of Tax
Appeals is submitted, after the Office of Tax Appeals issues its decision, the
Offer in Compromise Section will mail a letter to the non-requesting spouse or
domestic partner stating the results of the requesting individual's
appeal.
(p) Refund. Where
a request for relief of innocent spouse is granted as to amounts that have
already been paid by the individual requesting relief, the amount can be
refunded only as provided in the refund provisions of the applicable tax, as
set forth in article 3 of this chapter.
1. New
article 4C (section 35055) and section filed 3-19-2018 as an emergency;
operative 3-19-2018 (Register 2018, No. 12). Pursuant to Government Code
section
15570.40,
this action is a deemed emergency and exempt from OAL review. A Certificate of
Compliance must be transmitted to OAL by 9-17-2018 or emergency language will
be repealed by operation of law on the following day.
2. New article
4C (section 35055) and section refiled 9-17-2018 as an emergency; operative
9-17-2018 (Register 2018, No. 38). Pursuant to Government Code section
15570.40,
this action is a deemed emergency and exempt from OAL review. A Certificate of
Compliance must be transmitted to OAL by 12-17-2018 or emergency language will
be repealed by operation of law on the following day.
3. New article
4C (section 35055) and section refiled 12-17-2018 as an emergency; operative
12-17-2018 (Register 2018, No. 51). Pursuant to Government Code section
15570.40,
this action is a deemed emergency and exempt from OAL review. A Certificate of
Compliance must be transmitted to OAL by 3-18-2019 or emergency language will
be repealed by operation of law on the following day.
4. Repealed by
operation of Government Code section
11346.1(g)
(Register 2019, No. 12).
5. New article 4C (section 35055) and
section filed 3-19-2019; operative 3-19-2019. Submitted to OAL for filing and
printing only. Exempt from the APA pursuant to Government Code section
15570.40(b)
(Register 2019, No. 12).
Note: Authority cited: Sections
15570.40
and
15606,
Government Code; Section
25215.74,
Health and Safety Code; and Sections
7051,
8251,
9251,
30451,
34013,
38701,
40171,
41128,
42020,
42103,
43501,
45851,
46601,
50152,
55301
and
60601,
Revenue and Taxation Code. Reference: Sections
297,
297.5 and
308, Family
Code; Section
15570.54,
Government Code; and Sections
6456,
7202,
7203,
7261,
7262,
7657.5,
8880,
30285,
38454.5,
40105,
41099,
43159.1,
43159.2,
45158,
46159,
50112.6,
55045.1
and
60210.5,
Revenue and Taxation Code.
