Interest, Penalties, and Collection Cost Recovery Fee

1 Interest, Penalties, and Collection Cost Recovery FeePREFACEThis publication is intended to answer many of the questions asked about when and how interest charges, penalty charges, and the Collection cost Recovery fee (CRF) may apply. We provide examples of common situations where these charges apply and information about how these charges can be waived. This publication may not cover all scenarios related to all interest, penalties, and CRF that we administer. We administer California s sales and use, fuel, tobacco, alcohol, and cannabis taxes, as well as a variety of other tax and fee programs.

2 The taxes and fees we collect support local essential services such as transportation, public safety and health, libraries, schools, social services, and natural resource management programs through the distribution of tax dollars going directly to local you need additional information, please visit our website at , or call our Customer Service Center at 1-800-400-7115 (CRS:711). Customer service representatives are available Monday through Friday from 8:00 to 5:00 (Pacific time), except state welcome your suggestions for improving this or any California Department of Tax and Fee Administration (CDFTA) publication.

3 Please send your suggestions to:Audit and Information Section, MIC:44 California Department of Tax and Fee Administration PO Box 942879 Sacramento, CA 94279-0044 Please note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted on the cover. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this Section PageOverview 1 When Do Interest, Penalty, and the Collection Cost Recovery Fee Charges Apply?

4 2 How Do Interest, Penalty, and the Collection Cost Recovery Fee Charges Apply? 12 Relief from Interest, Penalties, and the Collection Cost Recovery Fee 13 Interest on Refunds and Credits 16 For More Information 17 DECEMBER 2021 | INTEREST, PENALTIES, AND Collection COST Recovery FEE 1 OVERVIEW Situations that can result in interest and penalty charges The reasons for interest and penalty charges vary. For example, you may be assessed interest and penalty charges if you: File a late return and/or make a late payment.

5 Do not include a payment or a sufficient payment with your balance-due return. Do not report tax on a taxable transaction. Calculate tax at the incorrect rate. Do not file a return. Operate a business without the required CDTFA-issued permits or licenses. Misuse a resale or exemption certificate . Make sales without a valid permit. Knowingly collect sales tax reimbursement or use tax (tax) and fail to remit the tax to and other examples are discussed in more detail on the following pages.

6 Collection Cost Recovery Fee We are required by law to impose a Collection Cost Recovery Fee (CRF) on past due liabilities. The CRF is intended to cover costs incurred while obtaining payment of past due amounts and it applies to most tax and fee programs administered by us. 2 INTEREST, PENALTIES, AND Collection COST Recovery FEE | DECEMBER 2021 WHEN DO INTEREST, PENALTY, AND Collection COST RECOVERYFEE CHARGES APPLY?ection Cost Recovery Fee on past due amountsLate filing or payment File a return. You must file your tax return and pay the tax by the due date.

7 If the due date falls on a Saturday, Sunday, or legal holiday, your return and payment will be considered timely if you file a return and pay the tax the next business information on filing is available in publication 439, Online returns or payments. To be timely, tax returns and payments mailed to us must be postmarked on or before the due date. If the due date falls on a Saturday, Sunday, or legal holiday, returns postmarked by the next business day are considered on note: If you use a commercial delivery service rather than the Postal Service, you will need to retain proof of when the return or payment was card payments.

8 Your credit card payment must be completed before midnight (Pacific time) on the due date for the reporting period to be considered timely. Please note: If your account requires payment by Electronic Funds Transfer (EFT), you will incur a penalty if you pay by credit or debit card. These are not considered acceptable methods of EFT funds transfer (EFT) payments. If you pay your taxes by EFT, your payment must settle into our bank account by the first banking day following the tax due date. Depending on what method you use, there is a cutoff for making a timely payment.

9 ACH Debit If you submit your payment online directly through CDTFA, you must complete your transaction by the due date. If you pay online on the due date, your transaction must be completed by 3:00 (Pacific time), to ensure your funds settle into the state s bank account by the next banking day. Third Party Vendor If you submit your payment through the state s third-party payment processor, First Data, and it is the due date, you must complete your transaction by 3:00 (Pacific time), and select the next banking day as your debit date.

10 ACH Credit You must contact your financial institution to determine when to initiate your payment so that your payment settles into the state s bank account no later than the first banking day following the due that will apply to late tax return filings and late paymentsPlease note: The following information does not apply to late You are subject to: A 10 percent penalty if you do not file your tax return by its due date. A 10 percent penalty if your tax payment is you file a late return and make a late payment, your penalty will not exceed 10 percent of the amount of tax due for the reporting period.