New Business Tax Penalties on 90,000 Delinquent Filers – California State Board of Equalization


New Fee on Delinquent Taxpayers Effective January 1, 2011 
Legislation Imposed the Fee and Requires the BOE to Collect
The California State Board of Equalization (BOE) announced today that thousands of California businesses will potentially be assessed a fee on past due liabilities beginning in 2011, under recently enacted legislation.  More than 90,000 businesses will be notified of this potential fee beginning January 1, 2011.

Legislation imposed the new collection cost recovery fee and requires the BOE to collect a fee on any person failing to pay amounts due and owing.  The fee applies to most taxes and fees collected by the BOE and is intended to cover costs incurred in obtaining payment of past due amounts.  The fee may only be imposed after the BOE has notified a taxpayer of the potential fee by mailing a notice advising that the continued failure to pay the amount due may result in collection action and potential assessment of the collection cost recovery fee. The BOE could potentially assess a fee on each liability greater than $250 that remains unpaid for more than 90 days.  The fee amount, adjusted annually to reflect the cost of collecting unpaid liabilities, ranges from $185 to $925 for calendar year 2011, as follows: 

Fee Amounts Effective January 1, 2011

Liability Size

Liability Amount

Fee Amount


$250.01 – $2,000.00



$2,000.01 – $50,000.00



$50,000.01 and greater




The BOE has identified more than 90,000 tax and fee payers with outstanding sales and use tax liabilities or overdue payments in the many tax and fee programs administered by BOE. 

Taxpayers can avoid the fee by paying their liability in full prior to the fee being assessed, that is before 90 days from the date the notice expires. The notice they receive will state that the new collection cost recovery fee will be due if each liability of greater than $250 remains unpaid for more than 90 days. Taxpayers unable to pay in full now may still avoid the fee if they qualify for, enter into, and complete an installment payment agreement, which allows for payment of a tax, fee, or surcharge debt in smaller, more manageable amounts. Also, if the BOE finds that a taxpayer’s failure to pay the amount being collected is due to reasonable cause and circumstances beyond the taxpayer’s control, the BOE may relieve the taxpayer of the collection cost recovery fee.

The BOE estimates the fee will facilitate additional annual revenue of $5.2 million from additional collection of taxes, fees, and surcharges for the remainder of the 2010-11 Fiscal Year and $19.4 million to $22.6 million annually beginning in 2011-12.

This new collection cost recovery fee requirement was added to the Revenue and Taxation Codes by Senate Bill 858 (Chapter 721, Statutes of 2010).

The five-member California State Board of Equalization (BOE) is a publicly elected tax board.  The BOE collects more than $48 billion annually in taxes and fees supporting state and local government services. It hears business tax appeals, acts as the appellate body for franchise and personal income tax appeals, and serves a significant role in the assessment and administration of property taxes.  For more information on other taxes and fees in California, visit

The Special Notice is available on the BOE website at 








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