What Form CDTFA-65 (2013) Is For
Form CDTFA-65 (2013) is California’s official notice to formally close a business account with the California Department of Tax and Fee Administration. It is used when a business shuts down, changes ownership, or undergoes a restructuring that affects its tax registration. The form ensures that the CDTFA no longer holds the owner responsible for taxes under the original seller’s permit, Business License, or special tax account, and helps initiate the release of any security deposits.
When You’d Use Form CDTFA-65 (2013)
You should file Form CDTFA-65 (2013) in the following business closure or transition scenarios:
- Permanent Business Closure: This form is required when a business ceases all operations and has no successor to continue the activity under its existing tax registration.
- Sale or transfer of business: It must be filed when ownership of the company, inventory, or tangible assets is transferred to another individual, entity, or successor.
- Business structure change: Businesses must file this form when converting from a sole proprietorship to a different legal entity, such as a limited liability company (LLC) or S corporation.
- Change in ownership requiring dissolution: Partnerships, including domestic partnerships and Limited Liability Partnerships, must file if the change in partners results in a legal dissolution.
- Cessation of seller’s permit activity: A business that discontinues taxable activities, such as retail sales, must file to cancel the associated Business Registration and tax obligations.
Key Rules or Details for 2013
Several critical requirements and conditions apply when filing Form CDTFA-65 (2013):
- Sale of Fixtures and Equipment: Any sale of business property, including shelving, displays, or machinery, is subject to California sales tax and must be reported as part of the final tax return.
- Use tax on retained inventory: If resale inventory is not sold and is instead retained for personal use, the business must report and pay use tax based on its original purchase cost.
- Successor liability: A buyer may be held personally liable for the seller’s unpaid taxes unless a Certificate of Payment is obtained from the California Department of Tax and Fee Administration.
- Tax clearance timing: Processing a tax clearance or refund of a security deposit can take between 30 and 60 days, primarily if the CDTFA conducts an audit during the close-out process.
- Record-keeping requirements: Business owners must retain all business records, including sales and purchase documentation, for a minimum of four years after closing the account.
- Final tax return requirement: A complete and accurate tax return must be filed to report the final day’s transactions, including any use tax or asset sales, before the account can be closed.
Step-by-Step (High Level)
The close-out process for Form CDTFA-65 (2013) requires detailed documentation and proper filing steps:
- Gather all supporting documentation: Collect your final tax return, business inventory records, escrow statements, HUD-1 Settlement Statement (if used), and Business Identification details for submission.
- Complete Section I of the form: Provide your business name, account number, business location, phone number, and mailing address exactly as recorded with the CDTFA.
- Complete Section II for business closure details: Enter your actual closing date, how you disposed of inventory, whether fixtures were sold, and the full buyer details if the business was sold.
- Provide forwarding information: Include a current mailing address for refund checks or future notices, and indicate the Custodian of the Will or other individual maintaining records.
- Sign Section III and prepare final tax payments: Sign and date the form, print your name and title, and submit your final payments using an accepted method such as ACH debit.
- Submit the full packet: Send the completed form, tax return, and supporting documents to the CDTFA’s designated office or your local field office, depending on your situation.
Common Mistakes and How to Avoid Them
Many business owners make costly errors when filing Form CDTFA-65 (2013); these can be avoided with proper attention:
- Failing to report fixture and equipment sales: Always report the fair market value of sold equipment on your final return to avoid unexpected tax bills or compliance assessments.
- Late submission of the form: Waiting too long to file keeps your account active and could result in collection actions or a collection fee assessed by the Tax Collector’s Office.
- No forwarding address provided: Missing or outdated mailing addresses may cause you to miss important correspondence, such as refund checks or delinquent notices.
- Not requesting a tax clearance: Buyers should never release the full purchase price without obtaining a Certificate of Payment, as they may become liable for unpaid taxes.
- Missing use tax on retained inventory: When you keep unsold inventory for personal use, use tax is due based on the purchase price, as required by the Internal Revenue Code.
- Neglecting city fees and renewal obligations: Even after state-level closure, cities like San Francisco may continue to bill for license renewal or renewal fees unless formally notified.
What Happens After You File
After you submit Form CDTFA-65 (2013), the California Department of Tax and Fee Administration will review your documents and mark your account as closed if all requirements are met. If taxes are paid and the final return is accepted, any refundable security deposit will be processed. Delays may occur if the CDTFA initiates a close-out audit or identifies missing data, particularly for businesses with a history of underreporting.
Agencies like the Franchise Tax Board or the California Secretary of State may also issue follow-up notices related to separate reporting requirements or dissolution filings.
FAQs
Can I file Form CDTFA-65 (2013) online, or do I need the paper version?
Yes, you can file online through the CDTFA’s Online Services portal; however, complex closures involving asset sales or escrow typically require the paper version for proper documentation.
Do I need to notify other agencies when I file Form CDTFA-65 (2013)?
Yes, you may still need to file a Certificate of Dissolution, Certificate of Election to Wind Up and Dissolve, or a Dissolution Waiver with the California Secretary of State.
What if my business were a pass-through entity or a disregarded entity?
Pass-through entities and disregarded entities must still file final tax returns such as Form 1065, Form 1120, or Form 199, depending on their classification and tax filing obligations.
Do short-term rentals or local ordinances affect the close-out process?
Yes, businesses subject to a short-term rental ordinance or Transient Occupancy Tax must also update or cancel local permits with the city or county to avoid future property tax bills.
What happens if I owed excise tax on alcohol or tobacco products at the time of closure?
If your business was liable for excise tax rates under programs like the CBMA tax benefit assignments or Tobacco Floor Stocks Tax Regulations, you must report and pay before finalizing closure.
