Article 5. Jeopardy Assessments of California Revenue And Taxation Code >> Division 2. >> Part 10.2. >> Chapter 4. >> Article 5.

If the Franchise Tax Board finds that the assessment or the collection of a tax or a deficiency for any year, current or past, will be jeopardized in whole or in part by delay, it may mail or issue notice of its findings to the taxpayer, or its transferee or transferees, together with a demand for immediate payment of the tax or the deficiency declared to be in jeopardy, including interest and penalties and additions thereto. Any assessment issued under this article shall also be an assessment issued pursuant to Section 19033, if an assessment has not already been issued pursuant to Section 19033 with respect to that taxable year for that amount.

In the case of a tax for a current period, if the Franchise Tax Board finds that the assessment or collection of the tax will be jeopardized in whole or in part by delay, the Franchise Tax Board may declare the taxable period of the taxpayer immediately terminated. The Franchise Tax Board shall mail or issue notice of its finding and declaration to the taxpayer, together with a demand for a return and immediate payment of the tax based on the period declared terminated, including therein income accrued and deductions incurred up to the date of termination if not otherwise properly includible or deductible in respect of the period, and the tax shall be immediately due and payable whether or not the time otherwise allowed by law for filing the return and paying the tax has expired.

(a) A jeopardy assessment is immediately due and payable, and proceedings for collection may be commenced at once.
  (b) The collection of the whole or any amount of a jeopardy assessment may be stayed, at any time before the assessment becomes final, by filing with the Franchise Tax Board: (1) a bond in an amount equal to the amount (together with interest thereon to the date of payment) as to which the stay is desired, conditioned upon the payment of the amount, the collection of which is stayed by the bond, upon notice and demand by the Franchise Tax Board after the assessment becomes final; or (2) other security in the amount as the Franchise Tax Board may deem necessary, not exceeding double the amount (together with interest thereon to the date of payment) as to which the stay is desired.
  (c) Upon the filing of the bond or other security the collection of so much of the amount assessed as is covered by the bond or other security shall be stayed. The taxpayer shall have the right to waive the stay at any time in respect of the whole or any part of the amount covered by the bond or other security, and if as a result of the waiver any part of the amount covered by the bond or other security is paid, then the bond or other security shall, at the request of the taxpayer, be proportionately reduced. If any portion of the jeopardy assessment is abated, the bond or other security shall, at the request of the taxpayer, be proportionately reduced.
  (d) The Franchise Tax Board, prior to the time the assessment becomes final, may stay collection of the whole or any amount of a jeopardy assessment if it finds that jeopardy does not exist.
  (e) Where collection of the whole or any amount of a jeopardy assessment has been stayed under this section, the period of limitation on any action to collect shall be tolled during the time of the stay.

(a) (1) (A) Unless the Chief Counsel of the Franchise Tax Board (or the chief counsel's delegate) personally approves (in writing) the assessment or levy, no assessment shall be made under this article and no levy shall be issued less than 30 days after either of the following:
  (i) A notice and demand is mailed or issued for payment pursuant to Section 19081.
  (ii) Notice and demand for a return and payment is mailed or issued pursuant to Section 19082.
  (B) Within five days after the day on which either a notice and demand for payment is mailed or issued pursuant to Section 19081, or notice and demand for a return and payment is mailed or issued pursuant to Section 19082, the Franchise Tax Board shall mail or issue the taxpayer a written statement of the information upon which the Franchise Tax Board relies in issuing that notice and demand.
  (2) Within 30 days after the day on which the taxpayer is furnished the written statement described in paragraph (1), or within 30 days after the last day of the period within which the statement is required to be furnished, the taxpayer may petition the Franchise Tax Board to review whether its finding pursuant to Section 19081 or 19082 is reasonable under the circumstances, specifying the grounds on which the petition is based. The filing of a petition for review shall not operate to stay collection. Collection may be stayed only as provided in Section 19083. A petition filed pursuant to this paragraph shall also be considered a protest filed pursuant to Section 19041 against the proposed additional tax.
  (3) If a petition for review under paragraph (2) is not made within the 30-day period set forth in that paragraph, the finding of the Franchise Tax Board pursuant to Section 19081 or 19082 is final.
  (4) After a petition for review is filed under paragraph (2), the Franchise Tax Board shall determine whether or not the issuance of notice and demand under Section 19081 or 19082 is reasonable under the circumstances. In making this determination, the Franchise Tax Board shall grant the taxpayer or authorized representative an oral hearing if the taxpayer has so requested in the petition. Chapter 4.5 (commencing with Section 11400) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to a hearing under this paragraph. The burden of proof with respect to whether a jeopardy exists as to collection or an assessment is upon the Franchise Tax Board.
  (5) The Franchise Tax Board shall make the determination under paragraph (4) within 90 days of the filing of the petition for review unless the taxpayer requests, in writing, additional time.
  (6) In making the determination required by paragraph (4), the Franchise Tax Board shall consider all relevant factors, including, but not limited to, the likelihood that collection will be jeopardized, the assets of the taxpayer, and the amount of the assessment as it relates to whether jeopardy status exists. The burden of proof as to the amount of the assessment for purposes of determining jeopardy status is upon the taxpayer.
  (b) (1) Within 60 days after the earlier of the following days, the taxpayer may appeal the determination to the State Board of Equalization in the manner provided in Section 19085:
  (A) The day the Franchise Tax Board notifies the taxpayer of the determination described in paragraph (4) of subdivision (a).
  (B) One day after the time period prescribed by paragraph (5) of subdivision (a) for the Franchise Tax Board to make its determination.
  (2) If an appeal is not filed before the expiration of the time periods, the Franchise Tax Board's determination is final. Filing of an appeal shall not operate to stay collection. Collection may be stayed only as provided in Section 19083.
  (3) Within 60 days after an appeal is filed under paragraph (1), the board shall determine whether the issuance of notice and demand under Section 19081 or 19082 is reasonable under the circumstances. The burden of proof with respect to whether a jeopardy exists as to collection or an assessment is upon the Franchise Tax Board.
  (4) If the board determines that a jeopardy status does not apply to all or part of the assessment, the board may modify the amount of the assessment to which the jeopardy attaches. If the board does not act within the time period provided in paragraph (3) as modified by paragraph (6), the board will be deemed to have denied the taxpayer's appeal.
  (5) In making the determination required by paragraph (3), the board shall consider all relevant factors, including, but not limited to, the likelihood that collection will be jeopardized, the assets of the taxpayer, and the amount of the assessment as it relates to whether jeopardy status exists. The burden of proof as to the amount of the assessment for purposes of determining jeopardy status is upon the taxpayer.
  (6) If either party requests an extension of the 60-day period set forth in paragraph (3) and establishes reasonable grounds why the extension should be granted, the board may grant an extension of not more than 30 additional days.
  (c) (1) Within 60 days after the earlier of the following days, either party may bring a civil action against the other in superior court for a judicial determination as to whether or not the issuance of the notice and demand under Section 19081 or 19082 is reasonable under the circumstances:
  (A) The day the board notifies the taxpayer of its determination described in paragraph (3), as modified by paragraph (6), of subdivision (b).
  (B) If the board fails to make a timely determination, then one day after the time prescribed for the board to make its determination.
  (2) If a civil action under this subdivision is not commenced within the 60-day period set forth in paragraph (1), the board's determination is final. The filing of the civil action shall not operate to stay collection. Collection shall be stayed only as provided by Section 19083.
  (3) Within 60 days after proper service is made, the superior court shall determine whether the issuance of notice and demand under Section 19081 or 19082 is reasonable under the circumstances. The burden of proof with respect to whether a jeopardy exists as to collection or an assessment is upon the Franchise Tax Board.
  (4) If the court determines that a jeopardy status does not apply to all or part of the assessment, the court may modify the amount of the assessment to which the jeopardy attaches.
  (5) In making the determination required by paragraph (3), the superior court shall consider all relevant factors, including, but not limited to, the likelihood that collection will be jeopardized, the assets of the taxpayer, and the amount of the assessment as it relates to whether jeopardy status exists. The burden of proof as to the amount of the assessment for purposes of determining jeopardy status is upon the taxpayer.
  (6) If either party in the action requests an extension of the 60-day period set forth in paragraph (3) of subdivision (c) and establishes reasonable grounds why the extension should be granted, the superior court may grant an extension of not more than 30 additional days.
  (7) Actions filed pursuant to this section shall be filed in the Superior Court of the County of Los Angeles, the City and County of San Francisco, the County of San Diego, or the County of Sacramento. Sections 19387 and 19389 shall apply to those actions.
  (8) The determination made by a superior court under this section shall be final and conclusive and shall not be reviewed by any other court.
  (d) The amendments made by the act adding this subdivision are operative for taxes assessed and levies made after the effective date of the act adding this subdivision.

The taxpayer may appeal to the board from the Franchise Tax Board's action on the petition for review. The appeal shall be made in the manner prescribed by Section 19046. Article 3 (commencing with Section 19031) of Chapter 4 relating to an appeal from the action of the Franchise Tax Board on a protest against an additional tax proposed to be assessed applies to the appeal.

In any proceeding brought to enforce payment of taxes made due and payable by this article, the finding of the Franchise Tax Board under Section 19081, whether made after notice to the taxpayer or not, is for all purposes presumptive evidence that the assessment or collection of the tax or the deficiency was in jeopardy. A certificate of the Franchise Tax Board of the mailing or issuing of the notices specified in this article is presumptive evidence that the notices were mailed or issued.

(a) If any taxpayer fails to file a return, or files a false or fraudulent return with intent to evade the tax, for any taxable year, the Franchise Tax Board, at any time, may require a return or an amended return under penalties of perjury or may make an estimate of the net income, from any available information, and may propose to assess the amount of tax, interest, and penalties due. All the provisions of this part relative to delinquent taxes shall be applicable to the tax, interest, and penalties computed hereunder.
  (b) When any assessment is proposed under subdivision (a), the taxpayer shall have the right to protest the same and to have an oral hearing thereon if requested, and also to appeal to the board from the Franchise Tax Board's action on the protest; the taxpayer must proceed in the manner and within the time prescribed by Sections 19041 to 19048, inclusive.

(a) On the appointment of a receiver for any taxpayer in any receivership proceeding before any court of the United States or of any state or territory or of the District of Columbia, any deficiency (together with all interest, additional amounts, or additions to the tax provided for by law) determined by the Franchise Tax Board in respect of a tax upon the taxpayer may be immediately assessed.
  (b) Any deficiency (together with all interest, additional amounts, and additions to the tax provided by law) determined by the Franchise Tax Board in respect of a tax on either of the following:
  (1) The debtor's estate in a case under Title 11 of the United States Code.
  (2) The debtor, but only if liability for the tax has become res judicata pursuant to a determination in a case under Title 11 of the United States Code, may be immediately assessed if that deficiency has not previously been assessed in accordance with law.

(a) Every trustee in a case under Title 11 of the United States Code, receiver, assignee for the benefit of creditors or like fiduciary shall give notice of qualification as such to the Franchise Tax Board in the manner and at the time that may be required by regulations of the Franchise Tax Board. The Franchise Tax Board may by regulation provide for any exemptions from the requirements of this section that the Franchise Tax Board deems proper.
  (b) If the regulations issued pursuant to this section require the giving of any notice by any fiduciary in any case under Title 11 of the United States Code, or by a receiver in any other court proceeding to the Franchise Tax Board of qualification as such, the running of the period of limitations for mailing a notice of proposed deficiency assessment shall be suspended for the period from the date of the institution of the proceeding to a date 30 days after the date upon which the notice from the receiver or other fiduciary is received by the Franchise Tax Board; but the suspension under this section shall in no case be for a period in excess of two years.

(a) Claims for the deficiency and such interest, additional amounts and additions to the tax may be presented, for adjudication in accordance with law, to the court before which the receivership proceeding (or case under Title 11 of the United States Code) is pending, despite the pendency of an appeal to the board.
  (b) In the case of a receivership proceeding, no appeal shall be filed with the board after the appointment of the receiver.

Upon notice and demand from the Franchise Tax Board after termination of the receivership proceeding, the taxpayer shall pay any portion of the claim allowed in the proceeding which is unpaid. The unpaid amount may be collected in the manner provided in this part for the collection of delinquent taxes at any time within six years after termination of the proceeding.

The Franchise Tax Board may prescribe rules and regulations necessary to properly carry out this article.

(a) If the individual who is in physical possession of cash in excess of ten thousand dollars ($10,000) does not claim that cash in any of the capacities specified in paragraphs (1) and (2), then for purposes of Sections 19081 and 19082, it shall be presumed that the cash represents gross income of a single individual for the taxable year in which the possession occurs, and that the collection of tax will be jeopardized by delay:
  (1) The cash is not claimed as his or hers.
  (2) The cash is not claimed as belonging to another person whose identity the Franchise Tax Board can readily ascertain and who acknowledges ownership of that cash.
  (b) In the case of any assessment resulting from the application of subdivision (a), all of the following apply:
  (1) The entire amount of the cash shall be treated as taxable income for the taxable year in which the possession occurs.
  (2) That income shall be treated as taxable at the maximum rate under Section 17041.
  (3) Except as provided in subdivision (c), the possessor of the cash shall be treated (solely with respect to that cash) as the taxpayer for purposes of Chapter 4 (commencing with Section 19001) and Chapter 5 (commencing with Section 19201).
  (c) If, after an assessment resulting from the application of subdivision (a), that assessment is abated and replaced by an assessment against the owner of the cash, that later assessment shall be treated for purposes of all laws relating to lien, levy, and collection as relating back to the date of the original assessment.
  (d) For purposes of this section, the following definitions apply:
  (1) "Cash" includes any cash equivalent.
  (2) "Cash equivalent" means any of the following:
  (A) Foreign currency.
  (B) Any bearer obligation.
  (C) Any medium of exchange to which both of the following apply:
  (i) It is of a type which has been frequently used in illegal activities.
  (ii) It is specified as a cash equivalent for purposes of this part in regulations prescribed by the Franchise Tax Board.
  (3) Any cash equivalent shall be taken into account in the following manner:
  (A) In the case of a bearer obligation, at its face amount.
  (B) In the case of any other cash equivalent, at its fair market value.