SB 1165 (2025) — Contractor licenses: outstanding liabilities assessed by the California Department of Tax and Fee Administration.

AMENDED IN SENATE APRIL 16, 2026

AMENDED IN SENATE MARCH 23, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

SENATE BILLNo. 1165

CHAPTER 111

Statutes of 2026

[ Approved by Governor August 17, 2026. Filed with Secretary of State August 17, 2026. ]

Introduced by Senator Caballero

February 18, 2026

An act to amend Section 7145.5 of the Business and Professions Code, relating to contractors.

Vote: majority Appropriation: no Fiscal committee: yes Local program: no

LEGISLATIVE COUNSEL’S DIGEST

Existing law, the Contractors State License Law, establishes the Contractors State License Board and sets forth its powers and duties relating to the licensure and regulation of contractors. Existing law requires the board to appoint a registrar of contractors, as specified, to serve as the executive officer and secretary of the board. Existing law permits the registrar to suspend or refuse to issue, reinstate, reactivate, or renew a license for a failure to resolve all outstanding final liabilities, including taxes and any fees that may be assessed by, among others, the State Board of Equalization and the Franchise Tax Board. Existing law exempts from that provision the outstanding final liabilities assessed by the State Board of Equalization of a licensee who has entered into an installment payment agreement with the State Board of Equalization, as provided.

Existing law, on July 1, 2017, transferred to the California Department of Tax and Fee Administration various duties, powers, and responsibilities of the State Board of Equalization.

This bill would update the above-described outstanding liability enforcement provisions of the Contractors State License Law to include references to the California Department of Tax and Fee Administration, as specified. The bill would require the installment payment agreements with the State Board of Equalization or the department to be in writing.

The Contractors State License Law requires the application for a contractor’s license to include an authorization by the applicant for the Franchise Tax Board to disclose the tax information that is required for the registrar to administer the outstanding liability enforcement provisions, as specified. Existing law authorizes the Franchise Tax Board to audit these authorizations.

This bill would revise the application requirements to include a similar tax information disclosure authorization for the department, as specified. The bill would also authorize the department to audit these authorizations.

The people of the State of California do enact as follows:

SECTION 1.

Section 7145.5 of the Business and Professions Code is amended to read:

7145.5.

(a) The registrar may refuse to issue, reinstate, reactivate, or renew a license or may suspend a license for the failure of a licensee to resolve all outstanding final liabilities, which include taxes, additions to tax, penalties, interest, and any fees that may be assessed by the board, the Department of Industrial Relations, the Employment Development Department, the Franchise Tax Board, the State Board of Equalization, or the California Department of Tax and Fee Administration.

(1) Until the debts covered by this section are satisfied, the qualifying person and any other personnel of record named on a license that has been suspended under this section shall be prohibited from serving in any capacity that is subject to licensure under this chapter, but shall be permitted to act in the capacity of a nonsupervising bona fide employee.

(2) The license of any other renewable licensed entity with any of the same personnel of record that have been assessed an outstanding liability covered by this section shall be suspended until the debt has been satisfied or until the same personnel of record disassociate themselves from the renewable licensed entity.

(b) The refusal to issue a license or the suspension of a license as provided by this section shall be applicable only if the registrar has mailed a notice preliminary to the refusal or suspension that indicates that the license will be refused or suspended by a date certain. This preliminary notice shall be mailed to the licensee at least 60 days before the date certain.

(c) In the case of outstanding final liabilities assessed by the Franchise Tax Board, this section shall be operative within 60 days after the board has provided the Franchise Tax Board with the information required under Section 30, relating to licensing information that includes the federal employer identification number, individual taxpayer identification number, or social security number.

(d) All versions of the application for a contractor’s license shall include, as part of the application, an authorization by the applicant, in the form and manner mutually agreeable to the Franchise Tax Board, the California Department of Tax and Fee Administration, and the board, for the Franchise Tax Board and the California Department of Tax and Fee Administration to disclose the tax information that is required for the registrar to administer this section. The Franchise Tax Board and the California Department of Tax and Fee Administration may from time to time audit these authorizations.

(e) In the case of outstanding final liabilities assessed by the State Board of Equalization or the California Department of Tax and Fee Administration, this section shall not apply to any outstanding final liability if the licensee has entered into a written installment payment agreement for that liability with the State Board of Equalization or the California Department of Tax and Fee Administration, as applicable, and is in compliance with the terms of that agreement.