FAQ: Dual Determinations (Personal Liability) under California RTC §6829

A dual determination is a second tax assessment that holds an individual personally liable for a business’s unpaid sales and use taxes. In California, if a corporation, LLC, partnership, or similar entity terminates owing sales or use tax, the California Department of Tax and Fee Administration (CDTFA) can issue an assessment against responsible individuals, not just the business. In effect, the state pierces the corporate veil – making you pay the company’s tax debt (including interest and penalties) out of your own pocket. This power exists to prevent business owners or officers from walking away from tax obligations by simply dissolving or abandoning the business.

Because it can ruin you financially. If you ignore your company’s sales tax obligations, the CDTFA can come after your personal assets with relentless force. A dual determination makes you personally responsible for the full amount of the unpaid taxes, plus accumulating interest and penalties. In other words, your bank accounts, wages, home, and other assets become targets for state collection if the business can’t or won’t pay. The law is unforgiving – inaction or hoping the debt will disappear is extremely dangerous, as the liability will only grow and follow you individually until paid in full.

Any individual who had control over or responsibility for the company’s tax matters can be held liable – this includes owners, corporate officers, LLC members or managers, partners, financial controllers, and even employees in charge of tax compliance. Section 6829 applies to any business entity (corporation, LLC, partnership, etc.), so no entity type is immune. The key is whether you were a “responsible person” for collecting or paying the taxes. If you had the duty or power to file returns or pay taxes on behalf of the company, the CDTFA can reach you personally when those taxes go unpaid. In short, anyone in the company with authority over tax compliance is at risk – titles like CEO or CFO are typical targets, but even bookkeepers or employees can be on the hook if they effectively controlled tax payments.

“Responsible person” is defined broadly: it means any officer, manager, director, partner, member, shareholder, employee, or other person who had control or supervision over tax reporting and payment, or a duty to act for the business in complying with sales and use tax laws. In other words, if you had the power to ensure the sales tax got paid – such as signing tax returns, managing finances, or directing payments – you are a responsible person. Importantly, simply holding a title doesn’t automatically make you responsible; the CDTFA must show you had actual authority or duty in tax matters. However, in practice, officers and managing members are usually considered responsible persons unless they can prove they had no real involvement in tax compliance. If you had any say in what bills got paid or had the ability to pay the taxes, you meet the definition of a responsible person.

Yes – a dual determination is only issued after the business has terminated, dissolved, or effectively ceased operations with an unpaid tax balance. Personal liability under RTC §6829 requires that the company’s business has ended (formally or just by stopping operations) and the tax debt remains unpaid. In practical terms, the CDTFA doesn’t hit individuals while the company is still active; they wait until the business is closed, defunct, or abandoned. But don’t breathe easy if your company is still operating – if it later shuts down owing taxes, that’s the moment when the trap springs. Once the business is closed (even if you simply walked away without formally dissolving), the CDTFA can impose the tax debt on you personally as long as the other conditions are met.

It applies to California sales and use taxes – essentially, the taxes your business collected from customers or owed on its own purchases. The law covers three scenarios: (a) sales tax that was collected from customers but not remitted to the state, (b) use tax owed on tangible property the business consumed without paying tax, and (c) use tax collected (or billed to customers) but not reported and paid. In short, if your business sold tangible goods and took sales tax reimbursement from buyers and didn’t send it in, or if it bought items and never paid use tax, those unpaid taxes fall under section 6829. These are exactly the kinds of liabilities the CDTFA will pursue – especially the first kind, which is essentially customer tax money the business failed to turn over. Note that other taxes (like income tax or employment taxes) are not covered by this specific code section, but sales and use tax delinquencies are squarely within its scope.

“Willful” in this context means an intentional, conscious, and voluntary decision not to pay the tax – it does not require evil intent or fraud, just the deliberate choice not to fulfill the tax obligation. According to regulation, a failure is willful if the responsible person had actual knowledge the taxes were due and unpaid, had the authority to pay them, and had the ability to pay – yet chose not to. In plainer terms, the CDTFA must prove that you knew the sales taxes weren’t being paid and still didn’t take action, despite having power and funds to do so. Even if you didn’t intend to steal the money or harbor ill will, consciously paying other bills or expenses instead of the taxes qualifies as “willful” failure. The frightening part is that willfulness can be found even if you were not malicious – simply prioritizing other payments while aware of the tax debt is enough to be deemed willful in the eyes of the law.

Potentially, yes – obedience is not a shield if you had a duty to ensure taxes were paid. The CDTFA will look at your actual authority: if you merely carried out someone else’s directions and truly had no independent control over tax payments, you might escape liability, but you’ll have to prove it. The law even acknowledges that someone who needed approval from a superior for every payment might not be considered to have “authority” to pay taxes. However, this can be a trap – many employees claim “I was just following the boss’s orders,” but if you signed checks, managed finances, or knew taxes weren’t paid, the state can still tag you. Keep in mind, if you were a lower-level employee with no ownership or officer role, you’re presumed not liable unless the CDTFA can show with clear evidence that you actually controlled the finances. But don’t rely on that presumption too much – if the CDTFA uncovers that you effectively ran the show or had knowledge of the non-payment, they will treat you as a responsible person despite any orders from above.

Not automatically – being an officer or director puts you squarely in the CDTFA’s sights, but they still must prove you were a responsible person under the law. Simply holding a title like President, CEO, CFO, or Director by itself is not sufficient to make you personally liable. However, in reality, officers and high-level managers almost always have at least some oversight of finances or tax reporting, so it’s usually easy for the CDTFA to show responsibility. The critical point is that an officer who had no involvement in tax matters could theoretically avoid liability, but that’s rare. If your name was on the corporation’s bank accounts, if you signed tax returns, or if you decided which bills to pay, then you are personally on the hook when the taxes don’t get paid – your official title just makes it easier for the state to identify you as a target.

No – not when it comes to sales and use taxes. Under section 6829, the corporate structure will not save you if you were responsible for unpaid taxes. Many business owners mistakenly believe that an LLC or corporation shields their personal assets from business debts, but California specifically carved out an exception for sales tax obligations that meet the criteria. If your company doesn’t pay its sales taxes, the CDTFA can reach through the entity and grab the responsible individuals personally. In effect, the law treats unremitted sales taxes as trust funds that were never really the company’s to keep. So the normal corporate limited liability doesn’t apply – you can be made personally liable despite the corporate veil. In short, using an LLC or corporation as a shell to evade sales tax will backfire disastrously.

It applies to partnerships as well – in fact, the statute covers corporations, LLCs, limited partnerships, limited liability partnerships, and other business entities except sole proprietorships. Any formal business entity that can register for a seller’s permit is included. So if you’re a general partner or managing partner in a partnership that goes under with unpaid sales tax, you could face a dual determination just like a corporate officer would (partners in general partnerships already have personal liability for debts, but section 6829 can add liability specifically for unpaid taxes to responsible non-partner individuals too). Essentially, the CDTFA can hold any person from any type of entity personally liable, as long as the business was an entity separate from you and all the conditions of 6829 are met. No entity type offers a free pass from this law.

Yes. The CDTFA can – and often does – issue dual determinations to multiple individuals for the same corporate tax liability. For example, a president and a controller could both be deemed responsible persons and each served with a Notice of Determination for the full amount. This doesn’t mean the state gets to collect twice; instead, all named parties are jointly and severally liable for the debt, and the state will go after whoever can pay. In practice, if multiple people are on the hook, the state will pursue all of them aggressively until the debt is paid in full (including by seizing personal assets from any of them). You cannot assume that someone else (like a co-owner) being targeted means you’re off the hook – everyone who is found responsible remains liable until the debt is completely satisfied. It’s a terrifying scenario: the state can pick apart personal finances of several people at once to recover one business’s tax debt.

It typically starts when the business closes with an unpaid tax balance – at that point, a CDTFA collector is assigned to the account and immediately begins work to collect from the business or decide if personal bills are warranted. The collector will review the case file and notes, then reach out to the company’s officers, owners, or other responsible persons on record. They will usually call or send inquiries to inform you that the business owes money and request that the entity pay the debt or at least enter a payment plan. Behind the scenes, the collector is also determining the date the CDTFA first learned the business closed (this is important for legal time limits) and gathering evidence about who was in charge of finances. From the moment your business shuts down, if there’s a tax liability, the CDTFA springs into action – you may get a phone call or letter very soon after closure, signaling the start of the dual determination investigation when payment isn’t forthcoming.

Yes, generally the CDTFA will warn you about the potential for personal liability before they actually issue a dual determination. Early in the collection process, the assigned collector is instructed to explicitly discuss RTC section 6829 and its implications with all the business’s officers, partners, or potential responsible persons. This means you might receive a call or letter saying, in effect, “If the company doesn’t pay, we can hold you personally liable.” Additionally, after internal approval, the CDTFA sends out a Notice of Proposed Determination as a formal warning (more on that below) giving you one last chance to dispute or pay before the personal assessment is finalized. Don’t mistake these warnings as empty threats – they are a red alert that the agency is about to make you personally pay the business’s tax debt if immediate action isn’t taken.

It’s essentially a final warning letter that the CDTFA sends to a person it intends to hold liable, before issuing the actual personal tax bill. The Notice of Proposed Determination (CDTFA-1515 letter) lays out the basis for holding you personally responsible – it will cite the unpaid taxes and explain the evidence for the four elements (termination of business, tax collected/owed, your responsible person status, and willfulness). Crucially, this letter gives you a short window (typically 15 days) to respond with any evidence or arguments to disprove your liability. It’s effectively the CDTFA saying, “We’re about to assess you personally for $X unless you convince us otherwise very quickly.” If you receive a Notice of Proposed Determination, it means the CDTFA has already built a case against you and gotten management approval – you are inches away from a personal tax assessment. It’s your last chance to submit proof or explanation to stop it.

If you do nothing, the CDTFA will proceed to issue the Notice of Determination (NOD) against you personally as soon as the 15-day response period expires. In other words, silence is taken as acquiescence – after about two weeks with no challenge, the warning letter turns into an official bill in your name. Once that Notice of Determination is issued, you’re formally on the hook for the debt and the clock starts ticking on your appeal rights (only 30 days to act – see appeals section). Ignoring the proposed determination practically guarantees that the assessment will be finalized against you, at which point the CDTFA will aggressively pursue collection from your personal assets. Inaction is the worst thing you can do; by not responding, you essentially give the state a green light to treat the company’s tax debt as your debt. The CDTFA will not show mercy if you ignore their outreach – they interpret silence as either inability to dispute or an attempt to dodge, and they will swiftly move to lock in your liability.

Yes – they will pursue every avenue to get the money. Even if they decide to assess you personally, the CDTFA doesn’t stop trying to collect from the defunct business’s remaining assets (if any). The policy is clear that before and even after a dual determination is issued, collection efforts against the closed business should continue. They might file liens or levy any business bank accounts, seize leftover inventory or equipment, or go after a successor who took over the business, all while also coming after you. The state wants its money and will try to get it wherever it can – from the dissolved company’s carcass or from your pockets. This means you could be dealing with personal collection actions concurrently with whatever is happening to the business’s remnants. Don’t think that because they’re hitting you personally that the company liability is forgotten – they will keep squeezing both you and the failed business until the debt is paid or all assets are exhausted.

Often, yes – the CDTFA does allow payment plans and, in some cases, may consider an Offer in Compromise (OIC) if you qualify (usually when you have no means to pay in full). If you cannot pay the entire amount at once, it’s critical to engage with the collectors and propose a reasonable installment plan. They prefer getting something rather than nothing, and a plan can prevent immediate harsh enforcement actions as long as you make the payments on time. Likewise, for persons who are truly financially insolvent, the CDTFA has an OIC program where they might accept a lesser amount to settle the debt. However, be warned: the CDTFA will only agree to a reduction if you provide extensive proof that you’ll never be able to fully pay – it’s not easy to qualify. Any negotiation must be proactive and in good faith. If you simply hide or delay, they will assume you’re avoiding them and will move to levy assets rather than negotiate. The sooner you communicate and arrange something, the better your chances of avoiding a financial catastrophe (but expect to divulge your financial information and stick to strict terms).

There is a statute of limitations that limits how long the CDTFA has to personally assess you under section 6829. By law, the Notice of Determination must be mailed within three years from the end of the month following the quarter in which the CDTFA obtained actual knowledge that the business terminated – or within eight years of the business’s actual closure – whichever comes first. For example, if the CDTFA found out your business closed in March 2022, they generally have until July 31, 2025 to issue a dual determination (three years from the quarter after knowledge). There’s also an absolute cutoff at eight years from the business’s shutdown date. Keep in mind, “actual knowledge” usually means when a CDTFA rep learned of the closure through an account update, audit, or written communication. If they miss these deadlines, they lose the legal right to assess you, and any Notice of Determination would be invalid. However, you should never count on the clock saving you – the CDTFA is very diligent about tracking closure dates, and they will rush to assess within the allowed period. In practice, they often act well before the deadline, but it’s good to know that after a certain point (three years of them knowing, or eight years total), you may have a statute of limitations defense to get the case dismissed.

No – a business’s bankruptcy or insolvency does not protect responsible individuals from a dual determination. In fact, bankruptcy of the company is one scenario that frequently leads the CDTFA to target officers personally. The reasoning is simple: if the company can’t pay because it’s bankrupt, the tax debt still exists, and section 6829 allows the state to collect it from you. Not even a discharge of the business’s debts in bankruptcy will wipe out your personal liability if the dual determination is issued – often the CDTFA waits until a corporate bankruptcy is done, then hits the officers with the tax bill. Courts have ruled that the personal liability under 6829 arises only after the business’s termination or dissolution, so if the company goes through bankruptcy and is then closed, the CDTFA can assess you afterward and that debt is considered new to you. In short, the company’s bankruptcy might erase the entity’s obligation, but the state can essentially resurrect the debt in your name. Don’t think that hiding behind a bankrupt corporation will shield you – you could emerge from the corporate bankruptcy only to be personally ambushed by the CDTFA’s claim.

Absolutely. If you’re deemed a responsible person who willfully failed to pay, you are on the hook for any and all unpaid taxes, and that includes all the interest and penalties that have accumulated. The law makes you personally liable for the “unpaid taxes and interest and penalties on those taxes” – effectively the same balance the company owed. There’s no reduction or sharing; the CDTFA will pursue you for the entire remaining debt. It’s a frightening reality: you could personally owe tens or hundreds of thousands of dollars because of business taxes, including late fees, a 10% late penalty, a 25% finality penalty if the company didn’t timely petition, and interest running at a high rate until paid. All those charges stick to you just as they did to the business. And if there were any fraud or negligence penalties assessed to the business, those would carry over to you as well. In essence, the state wants to collect the full amount due, no matter who pays it – and once the company can’t, they will try to collect every penny from you personally.

Yes. The tax debt continues to grow with interest (and possibly new penalties) even after the dual determination is issued. Interest accrues on unpaid sales tax liabilities by law, typically compounded monthly, until the balance is fully paid. When the CDTFA issues a Notice of Determination to you, they will add on all interest up to that point, and interest will continue to accrue thereafter on your personal account. This means the longer you delay paying, the larger the debt becomes – every day costs you more. As for penalties, the major penalties (like the late payment penalty, finality penalty, etc.) are generally assessed on the underlying liability and included in what you owe. They don’t keep adding new penalties beyond what’s provided by law, but if you miss deadlines (for example, if you don’t petition the NOD in time, a finality penalty could be part of the balance). Also, be aware the CDTFA charges a Collection Cost Recovery Fee on delinquent accounts; however, by policy they do not impose that extra fee in the dual determination against you (they charge it to the business’s account). Still, the interest alone can be substantial and relentless. The bottom line: the debt will snowball until you pay in full or make arrangements – ignoring it is financially devastating as the interest meter never stops.

To avoid liability, you must knock out one of the four required elements: termination, unpaid taxable transactions, responsible person, or willfulness. If even one of those elements is not proven, the CDTFA cannot legally issue a dual determination against you. In practice, your defense might be to show that the business hasn’t terminated (perhaps it’s still active or was sold, so 6829 shouldn’t apply), or that no sales tax was actually collected/owed for the period in question, or – most commonly – that you were not a responsible person or did not willfully fail to pay. Successfully disputing these cases is hard, but not impossible. You would need solid evidence: for example, documents showing you weren’t an owner/officer during the time, or correspondence proving you had no control over finances, or proof that you were completely unaware of the unpaid taxes (negating willfulness). The CDTFA gives you that brief 15-day window with the Notice of Proposed Determination to present such evidence. If you miss that, you can still contest the liability by filing a formal petition within 30 days of the NOD (see Appeals below). The key to any defense is evidence – unsubstantiated excuses won’t work. You must demonstrate that an element of the personal liability criteria is not met. If you succeed, the personal assessment cannot stand. If you cannot, you’ll be stuck with the debt.

You’ll need to show that you lacked the control or duty over tax matters. Useful evidence might include corporate records or job descriptions that delineate someone else as responsible for sales tax, bank signature cards showing you were not an authorized signer on accounts, or emails and correspondence demonstrating you weren’t involved in financial decisions. Essentially, anything that indicates you did not have authority to direct or make tax payments can help. For instance, if you were an employee, you could present an org chart or testimony that you had no role in accounting or check signing. If you were an officer in title only, you’d want to prove that you were out of the loop (maybe you lived out of state, etc.). The defense strategy often highlights examining who actually signed tax returns, who controlled the checkbook, and what your actual duties were – if you didn’t sign returns or checks and had no access to funds, you can argue you were not truly a responsible person. Also, consider the presumption in the regulation: if you were not an officer, director, or owner, the law presumes you’re not liable unless the CDTFA has clear and convincing evidence to the contrary. In a defense scenario, you want to bolster that presumption by showing you were a minor player with no control. Documents like resignation letters (if you left before the liability period) or board minutes delegating tax duties to someone else could also be persuasive. The more concrete proof, the better – your goal is to convince the CDTFA (or later, an appeals judge) that you did not have the responsibility or ability to pay the taxes, and therefore shouldn’t be on the hook.

You must demonstrate that you did not intentionally or consciously choose to let the taxes go unpaid. The strongest way is to negate one of the willfulness criteria: perhaps you genuinely didn’t know the taxes were unpaid, or you lacked the authority to pay them, or there truly were no funds available. For example, if a rogue partner was hiding the tax delinquencies from you, you’d gather evidence of that deception or your lack of awareness – emails, testimony from employees, etc., showing you thought taxes were being handled. Or, if you discovered the problem and then took steps to fix it (like consulting a tax professional or making partial payments), show that timeline; it can prove you didn’t willfully sit on your hands. If you can illustrate that when you learned of the unpaid taxes, you either were powerless to pay (no money left and you couldn’t get any) or you promptly tried to address it, you can argue the failure wasn’t willful. Also, if you were relying on a CPA or another officer to handle taxes, gather evidence of that delegation and perhaps their assurances – it supports that you didn’t intentionally shirk the duty. Keep in mind, willfulness is about your state of mind and actions (or inaction). It’s tough to prove a negative (that you didn’t willfully fail), but by assembling communications, meeting notes, or other records showing you were either unaware, had no power, or made good-faith efforts, you can build a case that the failure was not a deliberate decision on your part. Be warned though: simply claiming “I didn’t mean not to pay” isn’t enough – you need convincing evidence of your lack of knowledge or lack of ability to pay during the critical times.

Not by itself. The CDTFA will scrutinize the company’s finances to see if funds were available when the taxes were due. If they find that the business had money but spent it on other expenses (payroll, rent, etc.), they’ll say you willfully chose not to use those funds for taxes – and you’ll be liable. Only if you can show that no funds at all were available to pay the tax (and that you didn’t divert money improperly) might lack of funds help your defense. For instance, if the company was truly insolvent and every penny went to critical expenses with nothing left, you could argue you didn’t have the ability to pay (which is a component of willfulness). However, the burden is on you to prove that. The CDTFA often examines bank statements around the due dates – if your bank statements show there was cash on hand that got used for something other than the tax, they will argue you had the ability but willfully chose not to pay. In short, “we had no money” is a common refrain, and the state’s response is usually “you should have paid us before anything else.” Only in extreme cases, where it’s evident the business was underwater with no way to pay, can this be a partial defense. Even then, if earlier in the period the company did have money (like collecting sales tax from customers), spending it elsewhere is considered willful misallocation. So while lack of funds due to genuine business losses might win some sympathy, it’s not a guaranteed escape – the CDTFA’s position is that sales tax is not optional and must be paid even if other bills suffer, so claiming poverty after the fact often falls on deaf ears unless you have clear proof of complete inability to pay at the time.

Delegating tax duties doesn’t automatically absolve you. The CDTFA will say that a responsible person has a duty to ensure taxes are paid, even if they hire or assign someone for day-to-day tasks. However, if you truly had no knowledge of the nonpayment because you reasonably trusted a finance person or CPA, it can be a factor against willfulness. Your defense would be stronger if you can show that you were misled or kept in the dark. For example, maybe you were an absentee owner who assumed your on-site manager paid the taxes, or you’re a CFO who relied on a bookkeeper’s assurances. Present any evidence of instructions you gave to pay taxes, or reports you received that turned out false. The law recognizes that not everyone is a tax expert and people delegate – indeed, many business owners delegate tax filings to professionals. If you delegated and that person dropped the ball or deceived you, you must document this scenario. It could involve correspondence with your accountant, internal emails, or testimony from colleagues that you believed things were handled. That said, the CDTFA might counter that ultimate responsibility still lies with the person in charge (you). They often argue that relying on others is not a defense if you had the ability to verify or intervene. To overcome that, you want to show that you had no reason to suspect a problem – e.g. the person handling taxes had a good track record until then, or they actively hid the notices from you. In summary, reliance on others can mitigate the perception of willfulness if convincingly demonstrated, but it’s not a free pass. You’ll need to overcome CDTFA’s skepticism with solid proof that you did not willfully ignore the taxes – you were betrayed or uninformed, essentially.

Generally, no. Claiming that you “didn’t know” the law required payment or “didn’t realize” the seriousness is not a winning defense – responsible persons are expected to know that sales taxes collected must be remitted and that tax law compliance is mandatory. Ignorance of the law is never an excuse in tax cases. However, there’s a subtle distinction: ignorance of the nonpayment can factor into willfulness (as discussed above). If you truly were unaware that the taxes weren’t being paid (as opposed to being unaware they were due at all), that could help negate willfulness. For example, if your business partner was hiding the delinquency from you, you might not have had actual knowledge of the unpaid taxes, and thus you didn’t willfully fail to pay. But simply saying “I didn’t know I was supposed to file sales tax” or “I’m not a tax person, so I didn’t understand the requirements” will fall flat – as a person in a position of responsibility, you’re expected to familiarize yourself with basic obligations or hire someone competent. The CDTFA and courts have little sympathy for an executive who pleads ignorance of something as fundamental as sales tax. If you try that route, they’ll view you as negligent and still willful in your failure (since choosing to remain ignorant or not inquire is effectively a conscious choice). In short, you can’t defend yourself by saying you didn’t know taxes needed to be paid – your only hope is demonstrating you didn’t know that they weren’t paid due to someone else’s concealment. Even then, once you receive notices or warnings from the CDTFA, you can no longer claim ignorance – failing to act after being notified would be willful. The moment you’re aware of a tax delinquency, you must act decisively, or you’ll be held liable.

No – you can only be held personally liable for the tax liabilities that arose during the periods you were a responsible person at the business. If the company had unpaid taxes from before you joined or after you left, those should not be pinned on you. The law explicitly limits your liability to the quarters in which you had control or duty to act. For instance, if you became an officer in 2021 and the company owes taxes from 2020, section 6829 shouldn’t apply to you for that 2020 debt. Similarly, if you resigned and gave up all authority in mid-2022, any new tax delinquencies after that should not be your responsibility. In practice, the CDTFA will carefully match the liability periods to the timeline of your involvement. They often check corporate records, employment dates, etc., to confirm when each person was in charge. You should do the same: if you’re facing a dual determination, verify the periods they’re assessing. If they included a period when you had no role or had already stepped down, you have strong grounds to contest that portion. It’s important to raise this issue in your appeal or response to the Proposed Determination, providing evidence of your tenure dates (e.g. resignation letters, corporate filings, pay stubs showing employment period). The CDTFA sometimes errs or has incomplete info, and you could get wrongly tagged for a timeframe outside your responsibility. They cannot make you liable for taxes that became due when you weren’t there – that’s a clear line in the law. However, be aware: if you were involved when the taxes came due but simply left before the business closed, you’re still liable for those earlier periods. Quitting or selling your shares doesn’t erase liability for the time you were at the helm.

Not really – the CDTFA isn’t going to split the bill between responsible parties or let you off for less just because others are also liable. In fact, the agency will issue the determination against each responsible person for the full amount and treat you all as jointly liable. There is no provision for an official “pro rata” division of the debt among multiple people in the 6829 process. If two or three of you are deemed responsible, each of you gets a notice for the entire debt (though the CDTFA will only collect the total amount once). You might think, “Well, I was only one of four owners, I should only pay 25%,” but that’s not how it works – the state can pursue any or all of you for 100% until the debt is paid in full. The idea of a “proportionate liability” defense is generally not accepted except in very limited circumstances. The CDTFA’s internal guidelines mention a potential “pro rata” defense only in rare cases (perhaps if someone can prove they were only responsible for a segregable portion of the business), but in practice, it’s almost never successfully applied. From the CDTFA’s perspective, each responsible person is as guilty as the next, and they won’t waste time adjudicating who should pay what share – they just want the money. Now, once you pay, you might have the option to sue or seek contribution from the other responsible parties in civil court, but that’s on you, not the CDTFA. The CDTFA will consider the debt resolved when someone (or a combination of people) pays the full amount. In summary, don’t expect the state to cut your liability down because others are also at fault – your personal risk remains the entire tax debt. The only slight relief is that if one of the other parties pays off the tax, it will extinguish the liability for all, including you.

You appeal it by filing a petition for redetermination with the CDTFA, in writing, within 30 days of the date the Notice of Determination was served on you. This petition is basically a formal letter or form where you state that you disagree with the assessment and want a review. It must be submitted timely – if you miss the 30-day window, you lose your right to an appeal and the liability becomes final. In your petition, you’ll want to specify why you’re not personally liable (e.g. challenge one of the four elements, dispute the amount, etc.), and you can request an appeals conference. After you file, the case goes to the CDTFA’s appeals division for evaluation. Typically, an appeals conference (an informal hearing with a hearing officer) will be scheduled, where you or your representative can present evidence and arguments. Eventually, if not resolved, your case could go before the Office of Tax Appeals (OTA), an independent tax tribunal, for a hearing similar to a court trial but less formal. The key is: act fast – get that petition in writing within 30 days. You do not have to pay the tax to file the petition (unlike some taxes, California sales tax appeals are pre-payment appeals), so there’s no financial prerequisite to get your appeal heard. Once your petition is filed, collection action on the dual determination is generally put on hold until the appeal is resolved. This process can be complex and may take many months (or even years if it goes through OTA), but it is your opportunity to fight the assessment. Make sure your petition is comprehensive – include all reasons you believe you’re not liable and any supporting documentation. If you only argue part of it and later try to add new arguments, you might face difficulties. Engaging a tax attorney or professional at this stage is wise, because the stakes are high and procedural missteps can cost you dearly.

Then the determination becomes final, and you are stuck with the liability. By law, if you do not file a timely petition within 30 days of the notice, the CDTFA’s assessment is final, meaning you no longer have the right to an administrative appeal. After that, the CDTFA can immediately proceed with collection actions against you personally. Missing the deadline is essentially forfeiting your chance to challenge the dual determination through the normal appeals process. In some cases, people who miss the deadline will try to file an administrative claim for refund after paying, or a late protest, but those are uphill battles – the CDTFA is not obligated to consider an untimely petition at all. They may simply refuse it and continue collections. There are very limited exceptions (for instance, if you never received the notice because it was sent to a wrong address and you genuinely didn’t know about it, you might argue for some relief), but barring extraordinary circumstances, a late appeal means game over. The fear here is real: you could lose your house or bank accounts because you missed a mail deadline. The CDTFA includes clear instructions on the Notice of Determination about your appeal rights and the 30-day window – they consider that your warning. If you slip up, they will enforce the debt as final. So, treat that deadline as sacrosanct. If you’re even considering an appeal, get it filed within 30 days, even if it’s just a protective letter saying you’ll provide more info later. Once final, your options narrow to paying up or perhaps filing bankruptcy or a very difficult court action, none of which are good. In short, missing the deadline hands the CDTFA victory by default.

Yes, if you file a timely petition, you are entitled to an appeals process that usually includes an informal hearing (conference) and potentially a more formal hearing. Initially, the CDTFA’s Appeals Bureau will often hold an appeals conference, which is a meeting (nowadays often by phone or video) with an Appeals Officer where you can explain your side, present evidence, and respond to the CDTFA’s arguments. It’s somewhat informal – not a court of law, but you should still be prepared with facts, documents, and maybe witness statements. If the case isn’t resolved at that stage, you can further appeal to the Office of Tax Appeals (OTA) for a formal hearing before a panel of administrative law judges. At an OTA hearing, which is like a mini-trial, you can testify under oath, have witnesses, and submit evidence. This is your day in “court” to argue why you shouldn’t be held liable. The proceedings focus on those four elements (termination, tax owed, responsible person, willfulness) and any factual or legal disputes about them. The CDTFA will be represented by someone from their side (often a specialist or attorney) who will argue against you. It’s high stakes, because the OTA’s decision will be the final word on the administrative appeal. Many dual determination cases do get to the appeals conference stage and some to the OTA, because often the facts are contentious (who did what, who knew what, etc.). During the process, you have the right to see the evidence against you – you can request the CDTFA’s supporting documentation (they’ll redact others’ personal info but you get the substance). So yes, you will have your chance to be heard, but you must actively pursue it by filing the petition and engaging in the process. Go into any hearing fully prepared – this is your opportunity to avoid personal financial disaster by convincing an impartial judge or officer that the state got it wrong.

No – California’s system allows you to appeal first, pay later (if at all). When you receive a dual determination Notice of Determination, you are not required to pay the assessed amount upfront in order to file a petition for redetermination. As long as you file the petition within the 30 days, the CDTFA will generally not take collection action during the appeal. This is unlike federal tax or some other state taxes where sometimes you have to pay and sue for refund; here, you get to contest it without payment. That said, interest will continue to accrue on the unpaid balance during the dispute, so if you ultimately lose, you’ll owe even more interest for the time the appeal took. In some cases, a taxpayer might choose to make a deposit or payment to stop interest, but that’s optional. Most people facing dual determinations cannot afford to pay it upfront anyway. Also, keep in mind: if you miss the 30-day window and the tax becomes final, at that point the CDTFA can demand payment and start collections – you could still try to dispute by paying and filing a claim for refund, but that’s a much weaker position. So, the system is: timely appeal = you don’t have to pay while your case is being heard. Use that to your advantage by fighting the assessment if you have grounds, without the immediate financial strain of paying the huge bill. Just remember to either prevail or find a solution by the end – because if you lose the appeal, you’ll have to pay, and by then the amount will likely be larger due to interest.

Possibly, yes. There are a couple of avenues to resolve the case for less than the full amount, but none are guaranteed. First, the CDTFA has a settlement program for certain tax disputes (though usually larger cases and ones already at the OTA stage) where you can negotiate a compromise before the hearing. This would involve their Settlement Bureau and typically requires a solid justification (litigation hazards, evidentiary weaknesses, etc.) for them to accept less. It’s not publicized for dual determinations, but it is an option in principle. Second, there’s the Offer in Compromise (OIC) program, which is more about inability to pay: if you truly cannot ever pay the full amount, you might submit an offer to pay a smaller lump sum as full satisfaction. The CDTFA will scrutinize your finances thoroughly for an OIC – they only accept if they’re convinced that what you offer is the most they could ever collect from you. An OIC can be pursued at any point once the liability is final (and sometimes during appeal if you concede liability but not ability to pay). Third, as part of the appeals conference negotiations, you might get some relief like a penalty abatement if you have reasonable cause, or a reduction if you provide new records that lower the tax (for example, proving some sales were nontaxable might reduce the underlying tax). The CDTFA appeals may agree to adjustments if evidence supports it. What they won’t do is simply say “okay, pay half and we’ll call it even” without a valid reason. They are generally very tough because they know this is essentially a collection from trust taxes. But if the evidence of your non-liability is mixed, they might settle to avoid risk at OTA. Also, if multiple responsible persons are involved, sometimes the CDTFA might accept partial payments from each that together cover the tax (effectively a split, though not officially a settled reduction of the total). The takeaway: you can attempt to negotiate – it helps to have a tax attorney for this – and in some cases people do resolve these for less, especially if fighting further would be costly for the CDTFA or if you truly can’t pay and qualify for OIC. Just never assume they will cut you a deal; you must pursue it and present a compelling case. Fear is a motivator here: the CDTFA knows you’re desperate to reduce it, and they’ll only budge if they believe it’s the most pragmatic way to secure payment.

It’s highly advisable. Facing a dual determination is serious and the CDTFA plays hardball – having an experienced tax attorney or representative can significantly improve your odds of a better outcome. The process is complex, the stakes are high, and the CDTFA’s collectors and lawyers are experts in this area (they do it every day). A professional can help formulate effective defenses, gather and present evidence, and negotiate on your behalf without the emotion or fear you might have. In fact, many tax attorneys warn individuals not to speak directly to CDTFA investigators without counsel, because you might inadvertently admit things or provide information that strengthens the state’s case. The CDTFA can and will use anything you say against you – their goal is to make you pay. A savvy representative knows the law (Regulation 1702.5, the nuances of “willfulness,” etc.) and can spot weaknesses in the CDTFA’s evidence or procedure. They might also be familiar with CDTFA personnel and how to work within the system. Moreover, a professional can manage the appeals process, which involves tight deadlines and procedural rules that can trip up a layperson. Yes, hiring representation costs money, but compare that to the massive personal liability and potential asset seizure at stake. This is the kind of life-altering tax problem where going it alone is extremely risky. The fear factor is justified – you could lose your savings, your property, and more – so getting an expert to defend you is almost always worth it. As one firm bluntly advises, do not deal with a dual determination without legal counsel if you can help it. Even the act of negotiating a payment plan or OIC is better handled by someone who knows how the CDTFA operates. In summary: a dual determination isn’t a simple billing error; it’s the state accusing you of diverting tax funds. Treat it like the serious legal matter it is and get professional help to protect yourself.

Yes. Once you are personally assessed and the liability becomes final, the CDTFA can record a state tax lien against you, which attaches to your real estate and other property. In fact, filing liens is one of their standard collection tools. They will usually send you a notice (often a Demand for Payment) and, if you don’t pay, at least 30 days later they are authorized to file a lien in your county and with the Secretary of State. That lien publicly announces that you owe a state tax debt; it encumbers any property you own in California. For example, if you own a home, a lien means you generally can’t refinance or sell it without paying off the tax debt – the lien gives the state a secured interest, like a mortgage, on your property. It also hits your credit report, severely hurting your credit score and credibility (tax liens are a big red flag on credit). A lien can attach to personal property too – equipment, vehicles – though the practical effect is mostly on real estate and financial assets. The scary part is that a lien is not just a passive claim; it’s the legal precursor to seizure. If you still don’t pay, the lien positions the CDTFA to levy or even foreclose on assets. State tax liens do not automatically expire for 10 years and can be renewed, so they have a long life. In short, a lien ensures the debt sticks to you like glue – you can’t easily sell assets or have clear title until you resolve it. The CDTFA will use liens to pressure you and secure their interest, often early in the collection process once you’re personally liable. If you get a Notice of State Tax Lien, know that your personal assets are officially under threat.

Yes. The CDTFA has broad powers to levy your bank accounts, garnish your wages, and even seize and sell your personal property to satisfy the debt. These are some of their most forceful enforcement actions. They can serve a Notice of Levy on your bank – this freezes the funds in your account and forwards them to the state after a short hold. One day you wake up and find your checking and savings accounts emptied by the tax man – a very real possibility if you ignore payment demands. They can also issue an Earnings Withholding Order to your employer, grabbing a significant portion of each paycheck until the debt (plus ongoing interest) is paid. Wage garnishments for taxes don’t require a court judgment; the CDTFA can do it administratively. Beyond that, for larger debts, the CDTFA can seize physical assets: using a warrant, they can instruct county sheriffs or their agents to take your property – like vehicles, equipment, or inventory – and auction it off to pay the tax. In extreme cases, even your house could be seized and sold, though usually they rely on liens and let the sale happen on your end, but the law permits seizure and sale of real estate as well. Community property laws in California mean they can sometimes reach assets you co-own with a spouse too (for instance, levying a joint bank account). No asset is truly safe once you personally owe the tax: the state can intercept state tax refunds, garnish rents from tenants, put a hold on your vendor payments if you do business with the state, and more. The CDTFA’s collection toolbox is filled with pain: bank levies, wage garnishments, liens, asset seizures – all can and will be used to force payment. They don’t need a court order for these (except in seizure of real property, where a court proceeding is needed, but that’s a step they can take given the lien). So if you fail to voluntarily resolve the debt, be prepared for aggressive involuntary extraction of the money from your personal assets.

For an operating business, the CDTFA can revoke the seller’s permit for unpaid taxes, effectively shutting down the business. However, in a dual determination scenario, usually the business is already closed. If you’re involved in another business or start a new one, a tax delinquency can indeed interfere with getting or keeping a seller’s permit – California law allows the CDTFA to refuse to issue a new permit if you owe an old sales tax debt, or to revoke permits of any business where you have an ownership interest until the debt is paid. So, in that sense, your ability to legally operate a business in California could be jeopardized by the unresolved liability. As for other licenses, while the CDTFA directly controls seller’s permits, they can also put pressure through agencies (for example, they can place a hold on renewing a liquor license by filing a notice with Alcoholic Beverage Control if taxes are owed). Concerning law enforcement or criminal charges: a dual determination itself is a civil matter (a debt). But if the circumstances involve obvious fraud – say you collected huge amounts of tax and willfully evaded payment – the CDTFA could refer the case to its Investigations Bureau and the California Attorney General or local prosecutors for criminal tax evasion charges. That’s not common for routine cases, but it is possible in extreme cases of apparent tax theft. Sales tax evasion (willfully failing to remit trust fund taxes) can be prosecuted as a felony if the amounts are large and the conduct egregious. So while the CDTFA’s collection agents won’t arrest you, they can spark a criminal investigation if they suspect intentional tax evasion or fraud. The mere fact you owe under 6829 doesn’t mean you’ll be criminally charged – most cases are handled civilly (they just take your money and assets). But you should be aware that the state views failing to turn over collected sales tax as essentially stealing from the public, and in severe cases they do pursue criminal penalties. At the very least, expect intense civil enforcement: your financial life will be policed until you pay. And in the worst case, yes, legal authorities could become involved beyond the CDTFA’s civil division.

They can be. California is a community property state, which generally means a tax debt incurred by one spouse during marriage can attach to community assets (assets acquired during the marriage). The CDTFA can levy bank accounts even if they’re joint accounts in both spouses’ names, because half or all of the funds might be considered the liable spouse’s share. In practice, there have been cases where the CDTFA hit a spouse’s separate bank account because it contained community property funds commingled, and they were authorized to do so. If you are personally assessed, the state can file a lien that attaches to any real estate you own jointly with your spouse. That doesn’t mean they can take your spouse’s separate property that was acquired before marriage or by gift/inheritance (those are separate property under CA law), but distinguishing what’s separate versus community can be complicated and may require your spouse to fight it. The state will typically assume that assets (including bank accounts, cars, etc.) are community property unless proven otherwise. This is scary because your personal tax nightmare can quickly become your family’s nightmare. Your spouse – who might have nothing to do with the business – could find their paycheck or bank account levied if it’s a joint account or if their earnings are considered community income. The CDTFA will usually send a Notice of Levy and if the account or asset is jointly titled, they’ll take the funds and leave it to you and your spouse to prove any portion should be returned. The onus is effectively on you to carve out the innocent spouse’s share. California does have an “Innocent Spouse” type relief for certain taxes, but that’s typically for income tax; for sales tax, there’s no formal innocent spouse relief if the spouse wasn’t an actual responsible person – because the liability is only assessed to the person deemed responsible. But that nuance doesn’t stop them from levying a joint account. So, yes, your spouse’s assets can get caught in the crossfire. To protect your spouse, you’d have to proactively segregate their separate property and perhaps have them prove what’s separate. Even then, community funds are fair game. This adds urgency – by not resolving the debt, you risk dragging your loved ones’ finances into the fray.

No – ignoring it will only make things worse, and bankruptcy is not a guaranteed solution for this kind of debt. If you ignore the debt, the CDTFA will escalate collection actions as described: liens, levies, garnishments, and possibly seizure of assets. The debt will not vanish; in fact, with interest and penalties, it will keep growing. The CDTFA has up to 10 years (from the liability’s final date) to enforce collection – and they can renew that judgment-like power to extend it further. They are incredibly persistent. Hoping that the statute will run out is futile; they will file liens and keep the debt alive. Now, regarding bankruptcy: many people think they can discharge their debts in bankruptcy court. But sales tax collected from customers is generally considered a trust fund tax and is usually nondischargeable in bankruptcy. Courts have held that California sales tax (especially the portion collected as reimbursement) is essentially held in trust for the state, so a personal Chapter 7 bankruptcy often won’t wipe out a section 6829 liability. In one notable case (Ilko v. CDTFA), a taxpayer tried to discharge a 6829 liability, but the court ruled that because the liability arises upon business termination and is like a trust fund obligation, it was not discharged. Also, the CDTFA typically is not idle – if you file bankruptcy, they will be there to assert that your sales tax debt can’t be discharged (at least the portion equal to collected taxes). They may allow discharge of certain older use tax obligations or penalties in some cases, but the core tax likely survives. So do not view bankruptcy as an easy escape hatch – you might go through the ordeal of bankruptcy only to still owe the CDTFA afterward. Plus, if you attempt bankruptcy during the 30-day appeal window instead of filing a petition, you might lose your chance to dispute the liability. The far better course is to fight the liability or negotiate it, rather than trying to duck it. In summary: ignoring it is the worst thing (the state could lien your home, snag your funds, and wreck your credit while the balance grows), and bankruptcy is an uncertain and often ineffective remedy for this species of tax debt. Your best bet is to confront the issue head-on with professional help, not stick your head in the sand.

The classic trigger is a business that shuts down owing sales tax, especially when the company collected sales tax from customers and failed to remit it. If your business terminates (whether through formal dissolution, abandonment, or even a temporary suspension) and there’s an outstanding sales or use tax liability, the CDTFA will immediately evaluate whether they can hold one or more individuals personally liable. Certain scenarios practically guarantee scrutiny: for example, if the company went bankrupt or insolvent without paying sales taxes, or if it was closed and the owners walked away from a tax debt. Additionally, if the CDTFA suspects that the business was a “fly-by-night” or was closed intentionally to dodge taxes, they will pursue a dual determination relentlessly. Any case where the corporation or LLC has no assets left to satisfy the tax is a prime candidate – the state knows the only way to get paid is to go after individuals. In short, termination + unpaid tax is the formula. Within that, certain patterns ring loud alarm bells: multiple quarters of unpaid taxes, repeated late filings, prior collection actions, or a situation where the business continued operating while accruing tax debt and then suddenly closed. Those all suggest willfulness and responsibility. Also, if the business officers are uncooperative or disappear, the CDTFA will lean on the dual determination tool to pin someone down. It’s worth noting that the CDTFA operates as a “dual determination jurisdiction,” meaning they are structurally inclined to issue that second assessment to individuals whenever the primary business assessment is uncollectible. So the moment your business fails or ceases and has a tax liability, you should fear a dual determination – that’s exactly when the CDTFA is most likely to strike.

Yes. This is the number one scenario that leads to personal liability under section 6829 – when a business collected sales tax from customers (sales tax reimbursement) and did not send it to the state. From the CDTFA’s perspective, that money belonged to the state the moment it was collected, so not remitting it is viewed as a form of theft or trust fund misappropriation. If your business charged customers sales tax (or issued receipts for use tax) and kept it, you have essentially provided the CDTFA with a slam-dunk case for a dual determination. The law explicitly requires that as an element for personal liability: the state must show that during the period you were responsible, the business sold tangible property and collected tax but failed to remit it, or similarly, consumed property without paying use tax, etc. When they can prove that, the case for willfulness is often easy – because you had customer tax money in hand and chose to use it for something else. It’s hard to defend such a scenario. So, failing to remit collected sales tax doesn’t just trigger liability, it virtually guarantees it, since all the CDTFA has to do is show the tax was collected (through audits or your sales records) and not paid over. In contrast, a business that didn’t collect tax but owes use tax might trigger 6829 as well, but it doesn’t carry the same moral weight in the eyes of the state as collected-unremitted tax. The CDTFA is most aggressive where they see trust fund taxes were withheld from customers and diverted. That’s when you can expect zero leniency. Any responsible person in that situation should be extremely concerned – this is exactly the conduct section 6829 was designed to punish. In summary, failing to remit sales tax you collected is like painting a target on your back for a dual determination. The state will come after you personally with full force if they see that pattern.

No, financial hardship of the business is not a shield against 6829 liability. The law does not provide an exception saying “if the business couldn’t afford to pay, then the individuals aren’t liable.” The CDTFA’s position is that sales tax must be paid first, hardship or not. If your business was struggling and you paid rent, suppliers, or payroll instead of the sales tax, the state views that as a willful choice – you essentially chose other creditors over the State of California. They expect you to prioritize the tax, even in tough times (because that tax money was collected for the state). In fact, one of the key things they investigate is whether funds were available at tax time and how you allocated them. If they find you had money to pay but spent it on other expenses (like payroll, rent, etc.), they’ll say you willfully chose not to pay those funds for taxes – and you’ll be liable. Now, if truly no funds were available (say, all sales revenue went to paying vendors to keep the doors barely open and nothing was left), you might attempt to argue that you lacked the ability to pay, which goes to willfulness. But realistically, by the time a business is that broke, it probably shouldn’t have been operating or collecting tax in the first place. The CDTFA tends to view “we couldn’t afford to pay” as an admission of willfulness rather than a defense, cynically speaking – because you knowingly operated without fulfilling tax obligations. The fact the business struggled might explain why taxes weren’t paid, but it doesn’t excuse it legally. The state expects responsible persons to either inject personal funds, cut other expenses, or shut down before letting tax debts accumulate. Harsh as it is, a dying business is expected to still pay its taxes above all else, or cease taxable sales. So, while you might garner some sympathy with the story of hardship, it won’t legally protect you. The dual determination will still be issued if the elements are present. It’s cold comfort, but maybe if you lacked any funds and truly couldn’t pay, you might have a point about not being willful – yet you’d have to prove that scenario. In all likelihood, financial hardship is part of almost every case (businesses don’t withhold taxes when flush with cash; they do it when desperate), and the CDTFA still routinely holds owners liable. So, don’t count on “the business was in trouble” as a defense – it’s exactly those trouble cases that end up with personal liability.

No – simply transferring assets or continuing the business under a new name will not let you escape personal liability. The CDTFA is wise to that tactic. In fact, before the CDTFA issues a “successor liability” billing to a new entity, they are instructed to explore a dual determination against the responsible persons of the old entity. What this means is if you think you can close “OldCo” with tax debts and shift operations to “NewCo,” leaving the tax behind, the CDTFA will first see if they can nail you personally under 6829. Only after they either issue the dual determination or conclude they can’t, will they consider going after the new entity as a successor. They will not simply forget the debt. If anything, trying to play a shell game with corporate entities strengthens their resolve – it shows an intent to evade, which feeds into willfulness. The CDTFA can pursue both avenues: they might hit you with personal liability and also hold the new entity liable as a successor if it’s essentially a continuation of the old business. Transferring assets for little or no value to avoid paying taxes is a classic badge of fraud in their eyes. So, no, forming a new LLC or corporation and dumping the old one won’t protect you; it practically guarantees you’ll face a dual determination (since the original entity will have terminated with unpaid tax – trigger condition met). Plus, the CDTFA could unwind asset transfers or hold the recipient liable via successor liability laws. Bottom line: you can run, but you can’t hide by moving the business around. The safest path is to pay the taxes or work out an arrangement. Trying to outsmart the CDTFA with clever restructuring often results in both you and your new venture being pursued. The agency has a long memory and a broad mandate to prevent tax evasion schemes – and transferring assets without paying taxes is one of the first things they look for in these cases.

Not fully. Resigning your position might limit the periods for which you’re liable, but it doesn’t automatically absolve you for the time you were involved. If you quit or were removed as an officer before the business terminated and before the taxes became due, you won’t be liable for anything that happened after your departure. However, any unpaid taxes that came due while you were still a responsible person remain your problem. For example, say you stepped down as CFO on June 30 and the company closed on July 31 with unpaid second-quarter taxes (due July 31) – you could argue you weren’t responsible in Q3 or at closure, but you were there during Q2 when that tax obligation accrued, so you’d likely still get hit for Q2. The law is clear that a responsible person is only liable for the periods they had control, so leaving can cut off future periods. But if the company later dissolves with those earlier periods unpaid, they’ll still come after you for those earlier periods. If you foresee a financial trainwreck, simply resigning might reduce your exposure a bit, but it won’t erase what’s already happened. Also, the CDTFA might view a last-minute resignation or corporate shell game skeptically – if you remained an owner or had influence, or if the “resignation” was on paper but you still pulled strings, they’ll argue you were effectively responsible. That said, if you genuinely left and had nothing to do with the company’s final months of operation, ensure the CDTFA knows your exact end date and role. It could get you off the hook for liabilities that arose after you left. We have seen cases where someone left a year before the business folded, and they successfully avoided liability for post-departure tax periods by proving their resignation date. But any taxes due during your tenure will stick. In summary, resigning is not a magic bullet – it’s more like damage control to cap your liability period. The taxes that fell due on your watch will follow you even if you left before the ship sank.

There are warning signs. If the CDTFA has contacted you (or other principals) after the business closed to discuss the unpaid taxes, that’s a strong indicator – especially if they mention section 6829 or terms like “dual determination” or “responsible person.” Often, a collector will call or send a letter to the company’s officers asking about the closure and ability to pay, and they may explicitly warn about personal liability. Another red flag is if you receive questionnaires such as CDTFA-1508 (Responsible Person Questionnaire) or CDTFA-1509 (Business Operations Questionnaire). These forms ask detailed questions about who was in charge, who signed checks, how the business ended, etc. – which is exactly the evidence needed for a dual determination case. If you’re asked to fill out such forms, the CDTFA is absolutely gathering ammunition to potentially hold you liable. Also, if the collector asks you for a meeting or interview to discuss the business closure and taxes, you should assume you are under personal scrutiny. Keep an eye on any notes or documentation you get: sometimes notices of tax due will have language like “possible dual determination” in internal notes or letters. Internally, the CDTFA will log a “date of knowledge” of the business termination – once you see them concerned with when the business closed, it means they’ve started the 6829 evaluation clock. If you have online access to your account, you might even see that the account was closed and a “dual” case created. Also, pay attention if they continue to pursue you after the business is defunct – phone calls to your personal number, letters to your home, etc. All of that signals that you are now the target since the business is gone. In short, the moment the business closes owing money, assume you’re being investigated. But concrete signs include direct communications referencing personal liability, formal questionnaires being sent out, or any Notice of Proposed Determination addressed to you. If you see any of these, you should act as if the CDTFA is building a case against you – because they are.

They can, and often will, if the conditions for personal liability are met. There’s no minimum dollar threshold written in the law – any amount of unpaid sales or use tax can trigger a dual determination, in principle. In practice, the CDTFA might use some discretion; they may not go through the effort for a truly trivial amount (say a few hundred dollars) if the cost of collection outweighs it. But “small amount” is relative – remember that penalties and interest can inflate even a modest tax balance, and the CDTFA will factor in the full amount due. If your business closed owing, for example, $5,000 of tax, that might seem small to you, but with interest and penalties it could become $8,000+ and the CDTFA will definitely pursue that. They routinely issue dual determinations for liabilities in the low thousands. The CDTFA’s internal guidelines encourage focusing on cases where evidence shows personal liability, not necessarily only high-dollar cases. So long as it’s clear that taxes were collected or owed and not paid, and a responsible person is identifiable, they will proceed. Also, from their perspective, going after “smaller” cases deters business owners from thinking they can get away with any amount. If you owe a small amount, it’s actually easier for them to justify coming after you because it should be easier for you to pay – they’ll wonder why you didn’t just pay such a small tax in the first place (implying willfulness). Furthermore, any amount of unremitted sales tax is taken personally by the state – it’s money that was supposed to be held in trust. They are quite principled on that. So yes, don’t be lulled into a false sense of security if the unpaid tax is minor. The law makes you liable for “any unpaid taxes and interest and penalties”, no matter how much. We’ve seen mom-and-pop businesses closed with a few thousand due get their owners hit with dual determinations. The safest assumption is that if the business doesn’t pay, you will be pursued, period. It’s not worth gambling that “maybe they won’t bother because it’s small.” That gamble could lead to liens and levies over a debt that might have been manageable if addressed promptly. The CDTFA is very efficient at turning even small debts into big problems if ignored.

There are several common mistakes that virtually guarantee personal liability for taxes. One big mistake is using sales tax money to float your business – i.e. collecting tax from customers and thinking, “I’ll use this cash for expenses now and pay the taxes later.” Later never comes, the business falters, and now that trust fund money is gone – leading straight to a dual determination. Another mistake is ignoring tax filings and notices. Some owners fall behind on sales tax returns and then ignore the CDTFA’s delinquency notices or bills. This nonchalance or avoidance will be seen as willful neglect, and by the time the business is closed, the record clearly shows the owner’s failure to act, making personal liability likely. A common error is believing the corporate/LLC shield is absolute – many think they can just walk away from the company’s debts. That false sense of security leads them not to prioritize the tax, only to learn too late that California law pierced the veil for taxes and now they owe personally. Also, poor record-keeping or delegation without oversight is a frequent culprit: owners who leave all tax matters to an employee or outsider and never verify if taxes are paid can end up blindsided. “My bookkeeper handled it, I assumed it was fine” is a classic scenario – the bookkeeper didn’t pay, the owner wasn’t paying attention, and now the CDTFA says the owner willfully failed by not ensuring payment. Another mistake is dissolving or abandoning a business with outstanding taxes without consulting a tax professional or arranging payment. Some think if they close the doors and dissolve the entity, debts vanish – a grave mistake, as it triggers personal liability pursuit immediately. Additionally, asset shifting or starting a new business while leaving old taxes behind is a blunder – it’s effectively a red flag of willful tax evasion and the CDTFA will come after you harder (and possibly the new business as well). In essence, the mistakes boil down to mismanagement or miscalculation: not treating sales tax funds as sacrosanct, failing to communicate or respond to the tax agency, misunderstanding the law, and failing to plan for tax obligations when winding down. Each of these errors is like stepping on a landmine; eventually, it will blow up in the owner’s face in the form of a dual determination. The overarching mistake is inaction – by not actively addressing the tax problem (through payment, financing, or timely protest), owners seal their fate. The CDTFA loves nothing more than a delinquent, defunct business with silent owners – it makes their case for personal liability much easier.

The best protection is prevention: run your business in a way that a dual determination never becomes an issue. This means always pay your sales and use taxes on time and in full, even if it hurts. Treat the sales tax you collect as untouchable trust funds – set them aside in a separate account if you must, to avoid the temptation of using them for operating expenses. If your business is struggling, resist the urge to “borrow” from tax funds; it’s better to miss a vendor payment than to miss a tax payment, because the state can and will come after you personally. Another key step is to maintain good records and oversight. Know who is handling your taxes and double-check that filings and payments are being made. As a CFO, controller, or owner, you should personally verify at least quarterly that the sales tax returns were filed and the payment cleared. If you delegate to a bookkeeper or CPA, implement internal controls – require dual signatures on checks (so you see the payments), or review the CDTFA online account regularly. Respond to all CDTFA correspondence promptly. If you receive a late notice or billing, address it immediately – call the department, find out what’s wrong, get on a payment plan if needed. Demonstrating proactivity can sometimes stop a dual determination in its tracks, because the CDTFA often uses it as a last resort when they think you’re uncooperative or the business is dead. If you decide to close or sell the business, make paying off the sales tax one of your top closure tasks. File final returns, communicate the closing to CDTFA, and try to clear the tax balance from any remaining funds or sale proceeds. It’s far better to pay the tax out of the business’s assets than to face personal collection later. Also, don’t ignore the warning signs of a possible dual determination – if a collector is talking about personal liability, take it seriously and perhaps negotiate then and there while you still have leverage (like offering some payment from the business). Finally, consider insurance or bonding – some owners in risky industries carry a bond or trust fund for taxes, or pre-pay taxes, though that’s not common. Ultimately, protecting yourself means staying compliant and never letting sales tax become an afterthought. The second you start treating tax funds as optional or the CDTFA as a low-priority creditor, you set the stage for personal disaster. Pay on time, keep documentation of who is responsible for taxes, and if things go south, engage with the CDTFA early to resolve the debt through a plan or settlement before they feel the need to invoke section 6829. The stakes (your house, your bank account, your peace of mind) are too high to do otherwise.