For the chile sugar: Combine the sugar, chile powder and paprika in a stand mixer fitted with the paddle attachment. Mix on low speed until well combined, 1 to 2 minutes. Store in an airtight container.
For the doughnuts: In a saucepan, heat the milk until about body temperature. Add the yeast and stir until dissolved.
In the bowl of a stand mixer, combine the flour, sugar, salt and lemon zest. Add the butter to the flour mixture along with the egg yolks and milk/yeast mixture. Use the hook attachment to mix the dough together. Start on low speed for 3 to 4 minutes, then on medium speed for 10 to 15 minutes. Add up to 2 extra tablespoons milk if the dough does not come together.
Line a baking sheet with parchment paper and spray the paper lightly with nonstick cooking spray. Scale the dough into about thirty 1 1/2-ounce pieces. Roll the dough pieces into small balls and set them on the prepared baking sheet. Make sure there is enough space between the dough balls, as they will double in size when proofing. Cover with plastic wrap. The dough can be proofed and finished at this point, or frozen for later processing.
If proofing right away, let the dough balls sit in a warm area such as on top of the oven or close to it, covered with the plastic wrap so they don't dry out, until doubled in size, about 1 hour.
Heat 3 to 4 inches of vegetable oil in a heavy-bottomed pot until a deep-fry thermometer inserted in the oil registers 350 degrees F. Set a wire rack over a baking sheet.
In batches and using a bench scraper or flat spatula, carefully lift the doughnuts off the parchment and drop them into the oil top first. After about 2 minutes, use a rubber spatula or wooden spoon to flip the doughnuts, then cook for another 2 minutes on the bottom side. Flip them again and cook until golden brown all over, about 1 more minute. Use a spider or slotted spoon to pull the doughnuts out of the oil and set onto the prepared wire rack to drain.
Roll in the chile sugar and serve.
Recipe courtesy of Geoffrey Zakarian