We Are Seeing the California BOE Stepping Up Collection Efforts

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In what seems to be a response to the current California state budget crisis, I have seen signs that the California Board of Equalization is stepping up efforts to try to generate tax revenue. We have certainly heard that this is coming so it should not be much of a surprise, but the first reports of it hitting our clients are rolling in.

In one instance, a client of ours has had a sales tax auditor show up at their office unannounced, doing door to door examinations. This client is in a service industry, and yet the BOE felt there may be some opportunity for collection.

In what seems to be a more wide spread effort, the BOE is sending out letters requesting voluntary compliance with use tax reporting, on purchases made from out of state vendors who do not collect sales tax. If an out of state vendor is not considered to be doing business in California, they are not required to collect sales ax, but the California taxpayer IS required to report and pay use tax on those purchases. Internet sales seem to be the most prevalent example.

This is a copy of a letter received by a client of ours requesting they self-report past purchases subject to use tax.

Additionally, the BOE is apparently sending out notices to CPA’s in the state requesting that they help their clients voluntarily comply with use tax reporting. Ths is a copy of a letter we received.

Use tax reporting is required and we certainly advise all of our clients to make sure they are in compliance with the sales and use tax reporting requirements. If you have any questions about this, please do not hesitate to contact us.

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