California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 2.6 - Administration of Franchise and Income Tax › Subchapter 4 - Payments and Assessments › Article 7 - Penalties and Additions to Tax › Section 19141.6 - Duty to Maintain and Make Available Records

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) General.
(1) Duty to maintain and make available
					 records; examination and copying. Each taxpayer which determines its income
					 subject to tax pursuant to sections
					 25101
					 or
					 25110
					 of the Revenue and Taxation Code for income years beginning on or after January
					 1, 1994, is required to maintain and make available, upon request, records
					 regarding the determination of the components of any unitary business of which
					 it might be a part, the apportionment factors of such business, the
					 classification of an item of income or loss as business or nonbusiness, and the
					 attribution of income to either foreign jurisdictions of the United States for
					 the taxpayer and related parties under section
					 882, or Subpart F, or other
					 similar sections of the Internal Revenue Code. Records which are made available
					 are subject to examination and copying pursuant to section
					 19504
					 of the Revenue and Taxation Code.
(2) Penalty for failure to maintain records.
					 Failure to maintain such records shall subject the taxpayer to a monetary
					 penalty of ten thousand dollars ($10,000) for each income year for which the
					 failure occurs unless reasonable cause existed for the failure. If the failure
					 continues for a period of more than 90 days after notice of the failure has
					 been mailed, an additional penalty of ten thousand dollars $10,000) shall
					 accrue for each month for each income year in which the failure continues or
					 until the taxpayer demonstrates compliance with the record maintenance
					 requirements for the income year in which the examination occurs and subsequent
					 years to the satisfaction of the Franchise Tax Board. (See subsection (j) (4)
					 (B), infra.) For income years beginning on or after January 1, 1994 and prior
					 to December 31, 1995, such additional penalty shall not exceed fifty thousand
					 dollars ($50,000) per income year if the failure is not willful.
(3) Additional powers of the Franchise Tax
					 Board if a taxpayer does not make records available or is not authorized to act
					 as the limited agent of its related parties. In addition to the monetary
					 penalty described above, if a taxpayer fails to comply with a subpoena or
					 subpoena duces tecum for the records which the taxpayer is required to maintain
					 pursuant to section
					 19141.6
					 of the Revenue and Taxation Code, or if a taxpayer is not authorized to act as
					 the limited agent of its related parties solely for purposes of applying
					 section
					 19504
					 of the Revenue and Taxation Code, the Franchise Tax Board, in its sole
					 discretion, and based upon its own knowledge or from other information which it
					 obtains, may determine the components of the unitary business or businesses of
					 which the taxpayer is a part, the apportionment factors of such business or
					 businesses, the classification of any item of income or loss received by a
					 component of such business or businesses as business or nonbusiness, and the
					 correct amount of income attributable to the United States or foreign
					 jurisdictions under section
					 882, Subpart F, or other similar
					 sections of the Internal Revenue Code. The powers of the Franchise Tax Board
					 under this authority do not allow it to disregard a properly made election to
					 file under section
					 25110
					 of the Revenue and Taxation Code. (See subsection (1)(2)
					 infra.)