What Form CDTFA-65 (2014) Is For
Form CDTFA-65 (2014) is used by California businesses to formally notify the California Department of Tax and Fee Administration that they are closing a seller’s permit, prepaid mobile telephony services account, or other tax and fee accounts. Filing this form officially ends your tax obligations related to the closed business, protecting you from future liabilities. This process is essential for California businesses that are dissolving, selling, or undergoing a significant change in their business structure, as required by California law.
When You’d Use Form CDTFA-65 (2014)
Use Form CDTFA-65 (2014) when specific business changes occur that require formal closure of a seller’s permit or related tax account:
- Business permanently closed with no successor: File the form to inform the California Department of Tax and Fee Administration that you are ending business operations and do not intend to transfer the permit to another party.
- Business sold or transferred: Sellers must file the form to end their liability and initiate any necessary clearance certificates, even if the company remains at the exact location.
- Ownership structure changed: Businesses converting from sole proprietorships to corporations, or from corporations to Limited Liability Companies, must close the original account and register the new entity.
- Dissolution of a Partnership or Legal Entity: If the operating agreement or California law requires dissolution, the business must file Form CDTFA-65 (2014) and notify the California Secretary of State.
- Business no longer selling taxable goods or services: If you cease activities that required a seller’s permit, such as selling tangible goods or prepaid services, you must submit the form to close the account.
Key Rules or Details for 2014
Understanding these requirements is essential to properly complete Form CDTFA-65 (2014) and avoid penalties or delays:
- Final tax return must be filed: You are required to file a complete tax return through the close-out date, reporting all sales and use tax obligations, including sales of business equipment.
- Inventory kept for personal use is taxable: Inventory originally purchased for resale becomes subject to use tax if it is retained for non-business or personal use upon closure.
- Security deposits are applied before refund: CDTFA uses any posted security (such as a cash deposit or surety bond) to cover unpaid business taxes before issuing a refund.
- Successor’s liability rules may apply: Buyers of a business may become liable for the seller’s outstanding taxes unless a Certificate of Payment is requested and obtained from CDTFA.
- Sales made after close-out may still be taxed: Asset sales occurring within 60 days of closure are presumed taxable unless proven otherwise and must be reported as part of final compliance.
Step-by-Step (High Level)
Follow these high-level steps to complete and submit Form CDTFA-65 (2014) properly:
- Read Publication 74: Begin by reviewing CDTFA’s official guidance on account closure to understand successor liability, use tax, and asset reporting.
- Gather key documents: Collect your seller’s permit, account numbers, final sales data, equipment sale details, and business record location information.
- Complete Section I – Account Information: Fill in your business name, all related account numbers, current address, and contact details as registered with CDTFA.
- Complete Section II – Close-Out Information: Provide the closure date, inventory disposition, buyer information (if sold), and details about fixtures and equipment sales.
- Sign and certify Section III: An authorized person must sign, print their name and title, and date the form to certify that all information is accurate.
- File your final return: Submit your final tax return covering sales and taxable transactions through the date of closure, including any retained inventory.
- Make required payments: Pay any amounts due using certified funds or electronic methods to avoid delays in processing and refund of any security deposits.
- Attach supporting documents: Include bills of sale, escrow instructions, and proof of payments or tax clearance requests where applicable.
- Submit everything together: Mail the complete packet to CDTFA or use the Online Services portal to submit electronically and track your request.
- Track your account and follow up: Check your account status online, respond promptly to CDTFA requests, and keep all relevant records accessible for a minimum of four years.
Common Mistakes and How to Avoid Them
Avoid these mistakes to ensure your Form CDTFA-65 (2014) is processed without delays or future tax issues:
- Not filing the form at all: Always include Form CDTFA-65 (2014) as part of your business closure process to terminate tax obligations and prevent continued liability officially.
- Failing to report sales of equipment: Identify and report all sales of fixtures and equipment on your final tax return to avoid unreported taxable transactions.
- Retaining inventory without reporting use tax: Conduct a final inventory and report use tax on any items kept for personal use that were initially purchased tax-free.
- Inaccurate or incomplete buyer information: Collect and submit the purchaser's full legal name, contact details, and business entity information to avoid delays in account closure.
- Entering an incorrect close-out date: Use the actual date business operations ceased to ensure accurate reporting periods and prevent delinquent tax filings.
- Expecting immediate refunds for security deposits: Prepare for a 30–90 day processing period and use certified payment methods to avoid delays in receiving your security refund.
What Happens After You File
After Form CDTFA-65 (2014) is submitted, CDTFA begins reviewing the form, your final return, and any supporting documents. If no returns or payments are outstanding, your account is officially closed within two to four weeks. If a security deposit was posted, the CDTFA applies it to any unpaid liabilities and then issues a refund within 30 to 90 days. If you sold your business through escrow, the CDTFA may take 60 days or more to issue a Certificate of Payment. Some cases may be selected for a close-out audit within four years of filing.
FAQs
Do I need to file Form CDTFA-65 (2014) if I already dissolved my LLC with the California Secretary of State?
Yes, even if you filed a Certificate of Dissolution or Form LLC-4 with the California Secretary of State, you must also submit Form CDTFA-65 (2014) to close your tax account with CDTFA.
If I filed Form CDTFA-65 (2014), do I still need to file Form 568?
Yes, Limited Liability Companies must still file Form 568 (Limited Liability Company Return of Income) for the taxable year in which they closed the business.
Is a California S Corporation required to file a final return after submitting Form CDTFA-65 (2014)?
Yes, an S corporation must file a final California S Corporation Franchise or Income Tax Return (Form 100S) covering all business activity through the final tax year.
Can a disregarded entity still claim California tax credits if it is being dissolved or liquidated?
No, once a disregarded entity files its final return. It closes the account; it cannot claim remaining credits, such as the California Competes Tax Credit or the Homeless Hiring Tax Credit.
Is Form CDTFA-65 (2014) required for tax-exempt organizations filing Form 199 or Form 109?
No, tax-exempt organizations that only file California Exempt Organization Annual Information Returns (Form 199 or Form 109) do not need to file Form CDTFA-65 (2014) unless they also hold a seller’s permit or similar account.
