California Sales Tax License Revocation / Business Shutdown Checklist

California Sales Tax License Revocation / Business

Shutdown Checklist

Understanding Sales Tax Permit Revocation

The California Department of Tax and Fee Administration may revoke a sales tax permit when a business fails to meet its sales tax obligations over an extended period. Revocation ends the business’s legal authority to collect sales tax from customers in California.

This action typically follows multiple notices, missed filing deadlines, unpaid assessments, or failure to respond to prior enforcement attempts. Revoked permits do not eliminate the underlying tax debt, penalties, or interest owed to the state.

Businesses remain liable for all amounts due, and the state retains full authority to pursue collection through liens, levies, or other enforcement methods. Revocation represents a serious enforcement action that requires immediate attention and response.

California’s Revenue and Taxation Code authorizes revocation whenever a person fails to comply with any provision relating to sales and use taxes. Each revocation notice specifies the permit number, effective date, stated reason for the action, and instructions for resolving the issue.

Consequences of Operating With a Revoked Permit

Operating as a seller after permit revocation violates the Revenue and Taxation Code. Every offense is punishable by a fine of not less than one thousand dollars and not more than five thousand dollars, or imprisonment not exceeding one year in county jail, or both.

Any sale made without a valid permit constitutes a separate criminal violation. The California

Department of Tax and Fee Administration may refer cases to the Investigations Division for criminal citation and prosecution when businesses continue operating after revocation.

Criminal prosecution becomes more likely when businesses continue collecting sales tax without a valid permit or fail to address revocation notices. These penalties apply in addition to any civil tax liabilities, interest charges, and collection costs already assessed.

Collection efforts intensify when revocation is ignored. State authorities may file liens against business assets or personal property, assign the account to collections, issue wage garnishment orders, or seize and sell property.

Immediate Steps After Receiving a Revocation Notice

Contact the California Department of Tax and Fee Administration immediately after receiving a revocation notice. Call the Customer Service Center at 1-800-400-7115 or use the contact information provided on the notice. Representatives are available Monday through Friday from

7:30 a.m. to 5:00 p.m. Pacific time, except state holidays. Confirm the current status of your permit, the total amount owed, including penalties and interest, and any deadlines for response or payment.

Request written confirmation of this information and document the date, time, and name of the representative you speak with. Save all correspondence, notices, and account statements in a secure location for future reference.

Gather all sales tax records, including filed returns from the past three years, payment receipts, and documentation of sales activity. If returns were not filed for certain periods, collect invoices, sales records, and accounting documents showing business activity during those quarters.

Review the revocation notice carefully to understand the stated reason and verify whether the amount owed matches your records. Note any discrepancies or errors that may form the basis for an appeal if you believe the assessment contains mistakes.

Resolution Options and Required Actions

You may pay the full amount owed, establish a payment arrangement, or file an appeal if you dispute the revocation or the amount assessed. To reinstate a revoked permit, contact the agency office for assistance in clearing the cause of revocation.

Payment of a reinstatement fee of one hundred dollars per business location is required after resolving all outstanding compliance issues. State authorities will not issue a new permit after revocation unless satisfied that you will comply with sales and use tax laws going forward.

If you cannot pay the full amount immediately, request a payment plan through the online services portal or by contacting the office that sent the billing. Payment plans may be arranged on a weekly, biweekly, or monthly schedule based on your financial situation and compliance history.

Interest continues to accrue on unpaid balances during the payment plan period, making full payment the most cost-effective option when possible. State authorities may still file a lien even if your payment plan is accepted, though liens may be withheld under certain conditions.

Filing Requirements During and After Revocation

File all required sales tax returns for every reporting period, even after permit revocation.

Continued operation without filing returns increases penalties, demonstrates ongoing non-compliance, and weakens any appeal or settlement effort.

Filing shows a good faith effort to comply with tax laws and may improve the outcome of negotiations or appeals. The state expects returns to be filed on time for all periods of activity, regardless of permit status.

If you believe the revocation was issued in error or if you dispute the amount owed, ask about the formal appeal process and applicable deadlines. Missing the deadline may forfeit your right to challenge the revocation, even if errors occurred in the assessment or revocation process.

Documentation and Follow-Up Requirements

Keep detailed records of all communications with the California Department of Tax and Fee

Administration. Document every phone call, email, letter sent, and notice received.

Note the date, time, representative name, and content of each conversation. Save copies of all correspondence, payment receipts, and account statements to support any appeal or prove that payments were properly made.

After making a payment, setting up a payment arrangement, or submitting an appeal, follow up within ten to fourteen business days. Confirm that your payment was received and properly applied to your account.

Request written confirmation of your current account status and any required next steps.

Contact the office again to verify that your action was processed and recorded correctly if you receive no response.

Facing State Enforcement or Payroll Tax Issues?

If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.