Letter from CDTFA: 30-Day Window, Penalties, and How to Respond

A letter from the CDTFA almost always means the California Department of Tax and Fee Administration needs you to do something specific within a specific window: pay a balance, file a missing return, explain a deduction, or respond to an audit finding. The deadline that matters most is 30 days. If your letter is a Notice of Determination, you have 30 days from the date it was mailed to file a petition for redetermination. Miss that window and the amount becomes final, and the agency can move to liens, bank levies, and wage garnishment without further discussion.¹

Before anything else, figure out which letter you received. The required response is different for each one.

Which Notice Did You Get

The CDTFA sends more than a dozen letter types. The form number is usually printed on the notice itself. These are the ones most taxpayers see:

Notice of Determination (CDTFA-1210). A formal bill for tax the agency has calculated you owe. This is the one that starts the 30-day petition clock.
Notice of Delinquency (CDTFA-431). The CDTFA hasn’t received a return for one or more periods. File the missing return quickly to head off an estimated assessment.
Notice of Proposed Liability (CDTFA-846). The next step after a delinquency notice. The agency has estimated what you owe because you still haven’t filed.
Questionable Deductions Letter (CDTFA-1641). The deductions on your return don’t match your registered business type or don’t look like valid nontaxable sales.
Demand for Immediate Payment (CDTFA-1210-DEM). A past-due balance. Interest keeps running until it’s paid.
Excess Tax Reimbursement Letter (CDTFA-5033). Your return shows you collected more tax from customers than you reported and remitted.
Notice of Levy (CDTFA-425-LA). The CDTFA has already sent a levy to your bank or another third party. By the time this letter reaches you, your account may already be frozen.
Notice to Appear (CDTFA-431). Issued after repeated failures to file or pay. Ignoring it can lead to permit revocation.

The agency also sends pre-notification letters to people who imported goods into California (based on U.S. Customs data) and closure notices on accounts that show no activity for a year.²

What to Read Off the Letter First

Find these four items before you make a phone call or start drafting a response:

CDTFA account number. Usually near the top. You’ll need it for every call, login, and letter.
Tax period. The specific months or quarter at issue. Check it against your records; responding about the wrong period solves nothing.
Notice date. On the first page. For a Notice of Determination, this date starts the 30-day countdown. The clock runs from the mailing date, not the day the letter landed in your mailbox.³
Express Login Code. Some notices include one. It gets you into the CDTFA’s online services for that specific issue without a full account profile.

The 30-Day Window to Dispute

If you received a Notice of Determination and you disagree with it (whether on the amount, the period, or the underlying facts), file a petition for redetermination within 30 days of the mailing date. This is not a soft deadline. Once it passes, the assessment is final, your administrative options to contest the amount close, and collection activity can begin.¹

Filing on time has a second benefit: the regulation says collection activity will not start on a disputed amount while a timely petition is pending. That protection only exists if you meet the deadline.³

On the petition form (CDTFA-416) you can also ask that the case be considered for settlement by checking the appropriate box. That request doesn’t pause the appeals process, so continue meeting every other deadline as normal.⁴

If the CDTFA rules against you on the petition, you can escalate to the California Office of Tax Appeals, an independent body outside the CDTFA. Appeals go in through the OTA’s online portal or by mail or fax, and must be in English. The Tax Appeals Assistance Program, run by the Taxpayers’ Rights Advocate office, offers free legal help for OTA appeals if you can’t afford representation.⁵

How to Respond

The CDTFA’s online portal is the fastest route. Through it you can file a return, make a payment, submit an appeal, request relief, and track correspondence. If your notice carries an Express Login Code, use it to go straight to the account in question without creating a full profile.⁶

If you’d rather respond by mail, send everything to the address on your notice using certified mail with a return receipt. In any dispute about whether you met the deadline, that receipt is the only evidence that counts. Keep copies of everything you send.

Records to Pull Before You Respond

Gather the records that back up the figures on your return for the period in question: sales receipts, purchase invoices, bank statements. If the notice is about a return you still need to file, the CDTFA-401-A return form and the CDTFA-401-INST line-by-line instructions are on the agency’s website.⁷

If the dispute involves exempt sales, check your resale certificates for six required elements: the purchaser’s business name and address, their seller’s permit number (or an explanation of why they don’t hold one), a description of the property, a statement that the purchase is “for resale” (not merely “nontaxable” or “exempt”), the date, and the purchaser’s signature. A certificate missing any of these won’t protect you.⁸

Penalties and Interest Keep Growing

The CDTFA charges a 10 percent penalty for filing late and a separate 10 percent penalty for paying late. If you both file late and pay late on the same return, the combined penalty is capped at 10 percent of the tax for that period, not 20 percent.⁹

Interest accrues on unpaid tax for every month, or fraction of a month, that payment is late. For all of 2026 the deficiency interest rate is 10 percent annually, which comes out to a monthly factor of 0.00833 applied to the outstanding balance. On a $10,000 balance that’s roughly $83 a month. Interest keeps compounding even while a petition is pending, so the amount at stake grows while you contest it.¹⁰

Once the balance reaches collections and the CDTFA mails a demand notice, the agency can add a collection cost recovery fee. That fee can be waived if you show the failure to pay was due to reasonable cause beyond your control.¹¹

Asking for Penalty Relief

You can request relief from late-filing and late-payment penalties if the failure was due to reasonable cause and circumstances beyond your control. The CDTFA reviews each request individually. Even if penalties are waived, you still owe the underlying tax and all accrued interest.¹²

Some penalties can never be waived this way: fraud, negligence, misuse of resale or exemption certificates, and failure to obtain a permit. Interest relief is harder still. It’s only available when the late payment was caused by an error or unreasonable delay by a CDTFA employee or another state agency acting for the CDTFA.¹²

If you’ve already paid any part of the liability you’re seeking relief on, file a Claim for Refund (CDTFA-101) within six months of each payment. Miss that window and the money stays with the state regardless of how the relief request turns out.¹²

If You Can’t Pay in Full

Owing more than you can write a check for doesn’t mean you have no path forward. The CDTFA runs several programs, each with its own fit.

Payment Plan

If all required returns are filed and you have a past-due balance, you can set up a payment plan through online services using your account information and a checking or savings account number. The plan generally must pay off the full balance within one year. Interest keeps accruing on the unpaid portion.¹³

Offer in Compromise

An offer in compromise lets you propose paying less than the full amount. To qualify, you generally must have a final liability on a closed account, no longer be associated with the business that incurred the debt, not dispute the amount, and be unable to pay in full within a reasonable time. Through January 1, 2028, the program is also open to active businesses that didn’t collect reimbursement for the taxes owed, successors who inherited a predecessor’s liability, and consumers with use tax obligations.¹⁴

The CDTFA evaluates your assets, income, expenses, and future earning potential. If a fraud penalty was assessed, the minimum acceptable offer is the outstanding tax plus the fraud penalty. A conviction for felony tax evasion disqualifies you entirely.¹⁴

Settlement

If your case involves a pending petition for redetermination or a claim for refund, the settlement program is a different track. It’s built for cases with genuine factual or legal disputes where both sides face some risk, rather than inability to pay. Submit form CDTFA-393 or check the settlement box on the petition. If an Office of Tax Appeals hearing is already scheduled, a settlement proposal has to be submitted at least five days before the hearing. Any settlement that reduces the tax or fee by more than $500 triggers a public record statement in the CDTFA Director’s office disclosing the parties, the disputed amount, and the terms.⁴

What Happens If You Ignore the Letter

Once a liability becomes final, the CDTFA has a wide collection toolkit:

State tax lien. Attaches to all your real property, including property acquired after the lien is recorded. Valid for 10 years and renewable twice, so it can encumber your property for up to 30 years.
Bank account levy. The agency can seize funds up to the amount owed. The bank must hold the captured funds for 10 days before releasing them to the state.
Wage garnishment. An Earnings Withholding Order can take 25 percent of your after-tax income from each paycheck.
Asset seizure. The CDTFA can seize and sell personal property like vehicles and boats, and can seize and sell an alcoholic beverage license.
Till-tap and keeper warrants. For active businesses with a final sales tax liability, a law enforcement officer can collect directly from the cash registers. A keeper warrant can station an officer at the business for up to 10 days.
Permit suspension. The seller’s permit can be suspended for failing to file returns or pay on time, which effectively shuts down taxable sales.

Collection won’t begin on an amount actively disputed through a timely petition. Once the assessment is final, all of these tools are on the table.¹⁵

How Far Back Can the CDTFA Reach

The agency doesn’t have unlimited time. For most businesses, the CDTFA must issue a deficiency determination within three years after the end of the calendar month following the quarterly period at issue, or within three years after the return was filed, whichever is later.¹⁶

Two exceptions matter. If you failed to file a return at all, the window stretches to eight years. If fraud or intent to evade tax is involved, there’s no time limit. So a letter about returns you skipped years ago isn’t necessarily out of reach.¹⁶

Letters About a Business You Closed or Sold

If notices keep coming for a business you’ve already shut down or sold, the account probably wasn’t formally closed. Until the CDTFA closes it, the agency will keep expecting returns and generating delinquency notices. Close the account through online services or by submitting Form CDTFA-345-WEB by mail to the Customer Service Center, and keep proof of mailing.¹⁷

If you bought a business, successor liability can pass the previous owner’s unpaid sales tax, interest, and penalties to you. Request a tax clearance certificate from the CDTFA before closing. If the agency doesn’t issue the certificate or mail you a notice of amounts due within 60 days of receiving your written request (or the date of sale, or the date records are made available for audit, whichever is latest), you’re released from the obligation to withhold purchase funds.¹⁸

Letters to Out-of-State Sellers

If you’re an out-of-state business and this is your first contact from the CDTFA, the letter likely relates to California’s economic nexus rule. Any retailer with more than $500,000 in combined sales of tangible goods delivered into California during the current or preceding calendar year is “engaged in business” in California and must register to collect and remit sales tax.¹⁹

A narrow exception covers businesses that attend California conventions or trade shows for no more than 15 days in any 12-month period and derive no more than $100,000 in net income from those events during the prior calendar year. Even then, use tax has to be collected and remitted on event sales through a temporary permit.¹⁹

When Normal Channels Aren’t Working

If you’ve tried the Customer Service Center and the auditor or representative assigned to your case and still can’t get a resolution, the Taxpayers’ Rights Advocate operates independently within the CDTFA. The advocate can intervene, conduct independent reviews, and in some cases suspend collection while a case is examined. Reach the office at 1-888-324-2798. For general CDTFA questions, the Customer Service Center is 1-800-400-7115, Monday through Friday, 7:30 a.m. to 5:00 p.m. Pacific time.²⁰

1
California Department of Tax and Fee Administration. California Revenue and Taxation Code 6561 – Petition for Redetermination
2
California Department of Tax and Fee Administration. Letters or Notices Received
3
Cornell Law Institute. Cal. Code Regs. Tit. 18, 35007 – Limitation Period for Filing a Petition; Collection Activities
4
California Department of Tax and Fee Administration. Settlement Program – Sales and Use Tax – Special Tax and Fee Cases
5
Office of Tax Appeals. How to Appeal
6
California Department of Tax and Fee Administration. Online Services
7
California Department of Tax and Fee Administration. CDTFA-401-INST – Instructions for Completing CDTFA-401-A, State, Local, and District Sales and Use Tax Return
8
California Department of Tax and Fee Administration. Sales for Resale – Valid Resale Certificates
9
California Department of Tax and Fee Administration. Interest, Penalties, and Collection Cost Recovery Fee
10
California Department of Tax and Fee Administration. Interest Rates
11
California Department of Tax and Fee Administration. Fee Collection Procedures Law – Sec. 55211 – Collection Cost Recovery Fee
12
California Department of Tax and Fee Administration. Relief Request Help
13
California Department of Tax and Fee Administration. Trouble Paying Taxes
14
California Department of Tax and Fee Administration. Offer in Compromise
15
California Department of Tax and Fee Administration. Collection Procedures
16
California Department of Tax and Fee Administration. California Revenue and Taxation Code 6487 – Limitations; Deficiency Determinations
17
California Department of Tax and Fee Administration. CDTFA-345-WEB – Notice of Business Change
18
California Department of Tax and Fee Administration. Regulation 1702 – Successor’s Liability
19
California Department of Tax and Fee Administration. Tax Guide for Out-of-State Retailers
20
California Department of Tax and Fee Administration. California Taxpayer Advocates