What California CDTFA-65 (2023) Is For
The CDTFA-65, Notice of Close-Out, closes California Department of Tax and Fee Administration state accounts tied to a California Seller's Permit. The notice informs the CDTFA that retail sales ended or a transfer of ownership occurred, and it ends sales tax filing.
The notice helps prevent future business tax assessments, notices, penalties, and interest after the business closes. The CDTFA-65 also supports tax clearance for business sales under the Revenue and Taxation Code.
The form documents the closeout date, sale terms, record location, and information needed to confirm a final tax return. The filing addresses sales and use tax, and it does not address income tax or payroll filings.
When You’d Use California CDTFA-65 (2023)
A California taxpayer files CDTFA-65 when operations end, ownership changes, or the business entity dissolves. A filer submits it after ending taxable retail sales under a seller’s permit or a temporary seller’s permit.
A filer also uses it when closing related CDTFA accounts, including a use tax permit or Certificate of Registration. A filer should submit CDTFA-65 soon after the last sale date and match the closeout date to the final return.
A filer should contact CDTFA when facts change, including the cessation date, asset sales, or inventory disposition. Marketplace facilitators, out-of-state sellers, and drop shipper arrangements can affect sales tax nexus and the closeout date reported.
Key Rules or Details for 2023
A filer must submit every required tax return through the closeout date, including the final return for California sales tax. A filer must report fixtures and equipment sales and inventory withdrawals that trigger use tax under the sales tax permit.
A filer must keep resale certificates, related documentation, and books for at least four years. A buyer may request a clearance certificate, and CDTFA may review allocation details and escrow documents.
A seller should retain a resale certificate when inventory transfers for resale to another seller’s permit holder. A seller should follow the California Code of Regulations and Revenue and Taxation Code sections 6451, 6452, 6452.1, and 6455.
Step-by-Step (High Level)
Step 1: A filer reviews CDTFA guidance and confirms the last taxable sale date for sales and use tax.
Step 2: A filer gathers the seller’s permit or temporary seller’s permit number, business licenses, and the business location mailing address.
Step 3: A filer completes CDTFA-65 with the closeout date, transfer of ownership facts, and records custodian contact information.
Step 4: A filer files the final return, reports fixtures, equipment, inventory withdrawals, and use tax, and submits final tax payments.
Step 5: A filer submits sale documents and uses the CDTFA Online Services Portal to track closeout messages.
Common Mistakes and How to Avoid Them
Filers experience processing delays because CDTFA closeout submissions contain documentation errors and reporting omissions. Early correction supports accurate account closure, consistent sales tax filing, and cleaner clearance review. Accurate preparation supports compliance and reduces requests for additional information.
- Mismatched Account Identification: This mistake occurs when filings list an EIN, legal name, or California seller’s permit number that differs from CDTFA records. The taxpayer must match CDTFA registration records exactly and verify all identifiers before submission.
- Missing Final Return: This mistake occurs when CDTFA-65 is submitted without the final return covering the closeout period. The taxpayer must file the final return first and align the closeout date across all entries.
- Unreported Fixtures and Equipment Sales: This mistake occurs when taxable asset sales are omitted from the final return. The taxpayer must report fixtures and equipment sales and document the allocation in the sale records.
- Unsupported Resale Treatment: This mistake occurs when inventory transfers claim resale without a valid resale certificate. The taxpayer must obtain, review, and retain a properly completed resale certificate.
- Incomplete Contact and Records Details: This mistake occurs when filings omit a forwarding address or the records custodian’s location. The taxpayer must provide current contact information and a complete records location.
What Happens After You File
CDTFA reviews the CDTFA-65 and confirms that sales tax filing and tax return obligations are complete through the closeout date. CDTFA customer service may request details about inventory, fixtures, or the allocation shown in sale documents.
CDTFA also verifies that the seller’s permit and related state accounts match the closure request, including a temporary seller’s permit. CDTFA may select the account for audit and request records supporting California sales tax and use tax reporting.
CDTFA applies any security deposit to liabilities, then issues any remaining refund to the forwarding address on record. The filer keeps records available after closing a business because CDTFA can review compliance later.
FAQs
Is CDTFA-65 required for a temporary closure?
No, the filer keeps the seller’s permit active and files zero returns until taxable activity resumes.
Does CDTFA-65 replace the final return?
No, the filer submits CDTFA-65 and files the final return for sales and use tax.
When does a temporary seller’s permit affect closeout?
A filer closes the temporary seller’s permit when the event ends, and all sales tax filing is complete.
Do economic nexus or physical presence issues change closeout?
Economic nexus rules and physical presence rules can affect closeout timing and filing obligations. Out-of-state sellers, marketplace facilitators, and the Marketplace Facilitator Act rules can create filing duties before closure.
Must other California agencies receive notices?
Yes, the filer checks the California Secretary of State, Employment Development Department, and Franchise Tax Board requirements for the business entity.
