Could California grant interest relief after January 1, 2002 for section 6482 interest that accrued on a 1999 tax liability?

Plain-English summary

Effective January 1, 2002, section 6593.5(a) was broadened from a list of specified interest provisions to interest imposed under the Sales and Use Tax Law generally. The memorandum concluded that, from that date forward, the Board could use its discretion to relieve section 6482 interest on tax liabilities arising in reporting periods beginning July 1, 1999 or later, if every other requirement was met.

That did not make the amendment retroactive. Instead, unchanged subdivision (d) tied eligibility to when the tax liability arose, not when the interest accrued. Thus the request's hypothetical taxpayer could seek relief after January 1, 2002 for interest accruing from November 1, 1999 through June 30, 2001 on a third-quarter 1999 liability. The source does not identify an actual taxpayer, request, or relief decision.

A request denied before 2002 was not automatically barred from reconsideration. If the Board's administrative process otherwise allowed another request, filing again after January 1, 2002 did not itself make the request ineligible. No applied eligibility finding, discretionary Board decision, rehearing, claim, appeal, or later outcome is supplied.

The live annotation publishes the amendment and July 1, 1999 period rule but omits subdivision (d), the prospective-effect authorities and bills, reconsideration analysis, correspondence, hypothetical status, and administrative-process limit.

Common questions

Was relief automatic?

No. The Board retained discretion, and the taxpayer still had to meet all other requirements.

Could an earlier denial be reconsidered?

Potentially. The memorandum said another post-2001 request could be considered unless the administrative process otherwise prohibited it.

Citations and references

• California Revenue and Taxation Code section 6593.5(a) and (d) — described for the 2002 amendment and July 1, 1999 liability-period rule; complete text, conditions, procedures, amendment text, later history, and current law not supplied
• California Revenue and Taxation Code sections 6481, 6482, 6480.4, 6480.8, 6513, 6591, and 6592.5 — discussed for determination interest and the amendment's former limits; complete texts, computations, relationships, amendments, later history, and current law not supplied
• California Sales and Use Tax Regulation 5082 — cited for rehearing petitions; complete text, conditions, procedures, amendments, later history, and current law not supplied
• 58 California Jurisprudence Third, Statutes section 23, and Balen v. Peralta Junior College District (1974) 11 Cal.3d 821 — treatise text, edition, opinion, facts, exact holding, quotations, and later history not supplied
• Martin v. California Mutual Building & Loan Association (1941) 18 Cal.2d 478, 484 — opinion, facts, complete holding, other analysis, and later history not supplied
• Assembly Bills 821 and 1123 — bills, enacted chapters, legislative materials, omitted references, effective-date record, and later history not supplied
• August and September 2004 memoranda and February 16, 2005 response — no attachments, complete request, applied taxpayer or claim, eligibility finding, discretionary decision, rehearing, appeal, or later outcome supplied
• Official Annotation 320.0215's amendment and qualifying-period conclusion and date — omits the other authorities, bills, reconsideration analysis, provenance, hypothetical status, named staff, missing records, limits, later outcome, and reliance status and supplies no additional claim record

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/320-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/320-0215.pdf

Original ruling text

State of California

Board of Equalization
Legal Department-MIC: 82

Memorandum
320.0215
February 16, 2005

To :

Mr. Philip Spielman
Supervisor, Petitions Section (MIC: 38)

Date:

From:

Trecia M. Nienow
Senior Tax Counsel

Telephone: (916) 445-3723
CalNet
8 – 485-3723

Subject:

Request for Interpretation of Revenue and Taxation Code (RTC) section
6593.5 – Relief of Interest
This is in response to your memorandum dated September 21, 2004, requesting
clarification of my memorandum to Mr. J. W. Cornelius dated August 10, 2004 (copy attached). You state: “Does the law now permit us to relieve interest that accrued prior to January 1, 2002, for periods commencing on or after July 1, 1999, even though we could not do so prior to January 1, 2002? “For example: In November 2001, a taxpayer files for relief of interest that accrued from November 1, 1999, to June 30, 2001, for a determination covering the third quarter 1999. Although the taxpayer otherwise would have qualified for relief, the request was denied because there was no statutory basis for relief. Is this taxpayer now permitted to file a new request for relief, after January 1, 2002, and obtain relief of the interest that accrued from November 1, 1999, to June 30, 2001?” We understand you to ask two questions: 1) whether interest accrued from November 1, 1999 to June 30, 2001 that is imposed by section 64821 on tax liabilities arising in the third quarter 1999 can be relieved under section 6593.5 when the taxpayer requests relief after January 1, 2002; and 2) whether relief denied prior to January 1, 2002, can be reconsidered. DISCUSSION As you know, effective January 1, 2002, subdivision (a) of section 6593.5 was amended to substitute “this part” for “Sections 6480.4, 6480.8, 6513, 6591, and 6592.5.” I concluded previously, that this amendment permits the board, in its discretion, on or after January 1, 2002, to relieve interest imposed by section 6482 for tax liabilities arising during taxable reporting periods commencing on or after July 1, 1999, provided all other requirements for relief are met. That is, the board could not grant this relief prior to January 1, 2002, because the provisions of section 6593.5 applied only to interest imposed by sections 6480.4, 6480.8, 6513, 6591 and 6592.5. I based this conclusion on the general rule that statutes are to be given prospective effect in the

1

We assume your reference to determination means a determination computed in accordance with section 6481 that bears interest as specified in section 6482.

Mr. Philip Spielman

-2-

February 16, 2005
320.0215

absence of a legislative statement or history to the contrary.2 (See 58 Cal. Jr. 3, Statutes § 23; Balen v. Peralta Junior College District (1974) 11 Cal.3d 821.) However, no change was made to subdivision (d) of section 6593.5 which provides that the “board may grant relief only for interest imposed on tax liabilities that arise during taxable periods commencing on or after July 1, 1999.” Interest imposed on a third quarter 1999 tax liability includes interest that accrues on and after November 1, 1999. The legislature did not change or limit this subdivision to interest that accrues on and after January 1, 2002. This means that the amendment to section 6593.5 does not preclude a taxpayer from obtaining relief of interest accrued from November 1, 1999 to June 30, 2001 on a tax liability arising in the third quarter 1999 when such relief is requested on or after January 1, 2002, provided all other requirements for relief are met. With respect to your second question, our administrative process provides taxpayers with various opportunities for review of their liabilities such as during audit, appeal, or before the board. Moreover, Regulation 5082 authorizes a petition for rehearing under certain circumstances. To the extent our administrative process does not otherwise prohibit a taxpayer from requesting relief, another request made on or after January 1, 2002, should not render that request ineligible for consideration. I hope this answers your question. If you have any further questions, please write again.

TMN:bb
Attachment:
cc:

2

Trecia Nienow Memorandum Dated August 10, 2004

Mr. Vic Anderson, Supervisor, Audit Support Unit (MIC: 44)

An exception to the general rule that statutes are not construed to apply retroactively arises when the legislation merely clarifies existing law. (Martin v. California Mut. B. & L. Assn. (1941) 18 Cal.2d 478, 484.) Although the board inadvertently omitted some section references when it sponsored the original bill (AB 821) and sponsored AB 1123 to clean up this oversight, the amendment to section 6593.5(a) expands the original language by removing the limitation that relief may only be granted for interest imposed by sections 6480.4, 6480.8, 6513, 6591, and 6592.5. Thus, since the amendment does not merely clarify prior law (i.e., declare existing law), it is not retroactive.