California Sales Tax Payment Plan and Resolution
Checklist
Sales tax is a tax California collects on most purchases of goods and some services. If you operate a business or have a California seller’s permit, the state expects you to collect this tax from customers and send it to California.
The California Department of Tax and Fee Administration monitors sales tax accounts through regular filings and payments. Ignoring a sales tax issue can result in penalties, interest charges, collection action, and potential liens on your property.
What This Issue Means
A sales tax issue can arise from numerous circumstances, including unfiled returns, unpaid liabilities, audit assessments, discrepancies in account monitoring, estimated assessments for missing returns, successor liability determinations, responsible person liability, failure to meet security requirements, and various other compliance failures. CDTFA assigns one of five filing frequencies based on reported sales tax or anticipated taxable sales: quarterly prepay, quarterly, monthly, fiscal yearly, or yearly.
Missing returns or unpaid amounts trigger notices from CDTFA requesting payment or asking you to file the missing returns. Audits conducted by the state can also generate additional tax assessments based on a review of your business records.
Why the State Issued This or Requires This
California requires sales tax collection and payment to fund state and local services. Businesses with a seller’s permit are legally required to file returns on schedule and remit collected taxes.
Common triggers include missing payments from your bank, returns that were not submitted by the deadline, or discrepancies discovered during routine account monitoring. CDTFA initiates contact to resolve the gap when it has no record of receiving your return or payment.
What Happens If This Is Ignored
Failure to respond to a sales tax notice or pay an outstanding balance results in California taking escalating collection steps. Additional notices will be issued with increasing urgency, and the state may assess penalties and interest on unpaid amounts.
CDTFA may file a lien against your property or initiate wage garnishment or bank levies in some cases. The state also has the authority to revoke or suspend your seller’s permit, which prevents you from legally conducting business.
What This Does NOT Mean
Receiving a sales tax notice does not mean criminal charges have been filed against you. A notice is not a final determination of liability; it is a request for action or information.
Procedural options remain available to address the issue even if you disagree with the amount owed. Your business will not be shut down immediately, and not all your assets will be seized.
Checklist: What to Do After Receiving This or Identifying
This Issue
- Keep the original copy of any notice or letter you received from the California CDTFA.
- Check your records and account number to locate copies of sales tax returns you filed.
- Gather bank statements that show when you made payments, if you submitted any
- Collect records of sales and taxable transactions for the period in question.
- Obtain proof of payment if you sent a check or made an electronic payment.
- Include any correspondence you have exchanged with CDTFA in your organized
Step 1: Gather all related documents
Collect the following items and keep them organized: payments. documents.
Step 2: Review the notice or document carefully
Read the entire notice and identify the specific tax period (month and year) the notice
addresses. Write down the amount the state says is owed and the deadline for response.
Step 3: Verify your account status
Go to cdtfa.ca.gov and select “Online Services” or “File & Make a Payment” to access the secure online services portal. Use your seller’s permit number and account credentials to log in, then review your filing history and payment records to check whether returns for the period in question show as filed or outstanding.
- You may have failed to file a return for one or more required periods.
- Your situation may involve filing a return but not paying the full amount owed.
- The payment was not received or posted correctly, even though you submitted it.
- You may disagree with the amount the state calculated on your account.
- Your account may have a penalty or interest charge that you want to address.
Step 4: Determine the type of issue
Based on the notice and your account review, identify which situation applies:
Step 5: Prepare your response
If you have unfiled returns, locate or reconstruct your sales records for the missing period and calculate the gross sales and taxable transactions for that period. Complete the appropriate
California sales tax return form CDTFA-401-A (State, Local, and District Sales and Use Tax
Return).
When dealing with unpaid amounts, determine whether you can pay in full or need a payment arrangement. Gather documentation showing the payment was made (cancelled check, bank statement, credit card receipt, or electronic transfer confirmation) if you have payment disputes.
Step 6: Contact CDTFA if you need clarification
Call CDTFA at 1-800-400-7115 (TTY:711) or the number listed on your notice if the notice is unclear or you have questions before responding. Customer service representatives are available Monday through Friday from 7:30 a.m. to 5:00 p.m. (Pacific time), except on state holidays.
Step 7: File any missing returns
File using the California CDTFA online services portal at cdtfa.ca.gov if you owe unfiled returns.
Select “File a Return” and enter the applicable period, then complete the return based on your sales records and submit the return before or by the deadline noted in the notice.
Step 8: Request a payment plan (if unable to pay in full)
Contact CDTFA before the deadline if you cannot pay the full amount by the deadline (do not wait until after). Request information about a payment plan or installment payment agreement, then provide information about your business income and current financial situation.
Approved payment plans include terms showing the amount of each payment and due dates.
Make all payments on time to avoid further penalties or collection action.
Step 9: Submit before the deadline
Never miss the deadline listed on the notice. Consider whether mail delivery time affects when payment will arrive if paying by mail, and submit with enough time for processing if paying electronically or online.
- State enforcement actions and notices
- Payroll tax debt review and resolution
- Penalty and interest reduction options
- Payment plans and compliance solutions
- Representation before state tax agencies
Step 10: Monitor your account
Log back into your online account within one to two weeks after you have submitted returns or payment. Verify that returns appear as filed and check that payments have posted to your account number.
What Happens After This Is Completed
CDTFA processes your submission once you have filed missing returns and paid or arranged a payment plan, and your account status should update in the online portal. Electronic returns and payments process within approximately five to six business days.
Payment plan requests that receive approval result in a written confirmation of the terms. The state will stop issuing collection notices once your account is in compliance.
Common Mistakes to Avoid
Missing the response deadline can result in additional penalties and escalated collection action.
Filing incomplete or inaccurate returns without proper documentation may result in the state reassessing the amount owed.
Failure to keep proof of payment makes disputes over whether payment was received difficult to resolve. Not updating contact information with CDTFA may cause you to miss deadlines unknowingly.
Frequently Asked Questions
How long does it take for a payment to appear in my account?
CDTFA guidance indicates that electronic returns and payments are processed within approximately five to six business days. Log in to your account to monitor the status.
What if I disagree with the amount owed?
Contact CDTFA to discuss your position if you believe the state calculated the amount incorrectly. File a Petition for Redetermination (Form CDTFA-416) within 30 days from the date of the notice if you disagree with a Notice of Determination.
Can I get a penalty removed?
CDTFA has a process for requesting penalty relief through its online services or by submitting
Form CDTFA-735 (Request for Relief from Penalty, Collection Cost Recovery Fee, and Interest).
Eligibility depends on specific circumstances, and there is no guarantee that a penalty will be removed.
Will my seller’s permit be revoked?
The state can revoke or suspend a seller’s permit if sales tax obligations are not met.
Addressing the issue promptly reduces this risk since revoking a permit is typically a later step after other collection efforts have not succeeded.
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.
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