Tax Violations

Revenue and Taxation Code Division 2, Part 1, Chapter 10 deals with violations of the California Sales and Use Tax Laws.

Section 7152 provides that any person required to make, render, sign, or verify any report who makes any false or fraudulent return, with intent to defeat or evade the determination of an amount due required by law to be made is guilty of a misdemeanor.

Any person who willfully aids or assists in, or procures, counsels, or advises in, the preparation or presentation, in connection with any matter arising under this part, of a return, affidavit, claim, or other document that is fraudulent or false as to any material matter, whether or not the falsity or fraud is with the knowledge or consent of the person authorized or required to present the return, affidavit, claim, or document, is guilty of a misdemeanor.

Section 7153 provides that any violation of this part by any person is a misdemeanor.

Section 7153.5 specifies that any person who violates this part with intent to defeat or evade the reporting, assessment, or payment of a tax or an amount due required by law to be made is guilty of a felony when the amount of unreported tax liability aggregates $25,000 or more in any 12-consecutive-month period.

Section 7153.6 states that any person who purchases, installs, or uses in this state any automated sales suppression device or zapper or phantom-ware with the intent to defeat or evade the determination of an amount due pursuant to this part is guilty of a misdemeanor.

Any person who, for commercial gain, sells, purchases, installs, transfers, or possesses in this state any automated sales suppression device or zapper or phantom-ware with the knowledge that the sole purpose of the device is to defeat or evade the determination of an amount due pursuant to this part is guilty of an offense punishable by a fine, by imprisonment in a county jail for not more than one year, or by both that fine and imprisonment.

In addition, any person who uses an automated sales suppression device or zapper or phantom-ware is liable for all taxes, interest, and penalties due as a result of the use of that device. This section defines the terms “automated sales suppression device,” “zapper,” “electronic cash register,” “phantom-ware,” and “transaction data.”

Section 7154 provides that any prosecution for violation of any of the penal provisions of this part must be instituted within five years after the commission of the offense, or within two years after the violation is discovered, whichever is later.

Section 7155 states any person who, for the purpose of evading the payment of taxes due under this part, knowingly fails to obtain a valid permit prior to the date on which the first tax return is due will be liable for a penalty of 50 percent of any tax determined to be due for the period during which the person engaged in business in this state as a seller without a valid permit.

This section does not apply to any person whose measure of tax liability over the period during which he or she was engaged in business in this state as a seller without a valid permit averaged $1,000 or less per month. This section does not apply to the amount of taxes due on the sale or use of a vehicle, vessel, or aircraft, if the amount is subject to the penalty.

Section 7156 explains that, in the case of any civil proceeding which is brought by or against the State of California in connection with the determination, collection, or refund of any tax, interest, or penalty under this part, and brought in a court of record of this state, the prevailing party may be awarded a judgment for reasonable litigation costs incurred in that proceeding.

However, a judgment for reasonable litigation costs is not to be awarded unless the court determines that the prevailing party has exhausted the administrative remedies available to that party under this part. An award is made only for reasonable litigation costs which are allocable to the State of California and not to any other party to the action or proceeding.

No award for reasonable litigation costs may be made with respect to any declaratory judgment proceeding. No award for reasonable litigation costs may be made with respect to any portion of the civil proceeding during which the prevailing party has unreasonably protracted that proceeding. The term “reasonable litigation costs” is defined. 

Section 7157 explains that restitution orders or any other amounts imposed by a court of competent jurisdiction for criminal offenses upon a person or any other entity that are due and payable to the board may be collected by the board in any manner provided by law for collection of a delinquent sales and use tax liability.