Senate Bill 816, effective January 1, 2010, could result in the imposition of significant penalties on unwary taxpayers for failing to report changes in control or ownership of legal entities in California. It imposes a new, automatic 10% penalty for failure to file a change-in-ownership statement to the State Board of Equalization (SBE) within 45 days. The penalty will be 10% of the taxes applicable to the new base year reflecting the change in ownership. Previously, the acquiring entity was required to file a change-in-ownership statement with the SBE. However, no penalty was imposed for not filing, unless the SBE specifically requested such a statement. SB816 changes all that. Now taxpayers will incur the penalty if they do not file within 45 days, regardless if the SBE requests the statement or not. If the SBE requests the statement, taxpayers must respond within 45 days, even if no change took place, to avoid incurring the penalty.