Taxation: tax liability: collections

The law separates underlying taxes from most related interest, penalties, costs, and fees while ensuring those added charges expire when the related tax debt expires.

What the law does ​

• Defines tax liability for the 20-year collection limit as tax due under California personal income, corporation, and franchise-tax administration laws.
• Excludes interest, penalties, costs, and fees from that definition, except the limited liability company fee.
• Requires interest, penalties, costs, and fees tied to a tax liability to lapse when the related tax liability lapses.
• Requires the Franchise Tax Board to end collection actions on liabilities that are no longer collectible and treat money collected in violation of the limit as an overpayment eligible for credit or refund.

Who it affects ​

• Individuals and businesses with delinquent California income or corporation tax liabilities.
• Limited liability companies subject to California’s LLC fee.
• The Franchise Tax Board.