Posted on 12/29/2008 10:05:00 AM PST by NormsRevenge
Reporting from Sacramento -- Over the last six months, California tax officials have quietly mailed thousands of official letters to doctors, beauty salons, insurance agents and other service providers looking for some badly needed state tax revenue.
The letters asked these service businesses to check records on their out-of-state purchases for the last three years and pay any back taxes they owe. Failure to do so could lead to an audit of the taxpayer's books going back eight years, the letter warned.
Californians know all too well about sales taxes they pay almost every day on purchases. But less known is the "use tax" ...
California consumers, both individuals and businesses, must pay a use tax if they buy something in another state and if the seller does not collect a sales tax on the purchase. The use tax -- the same amount as the sales tax -- ranges from 7.25% to 9.25% depending on where the buyer lives.
...
Compliance with the use-tax obligation is spotty at best, say officials at the California Board of Equalization, the agency charged with collecting sales and use taxes, among others.
To critics of the use tax, the state's new letters on official letterhead are heavy-handed. But supporters say it's a matter of tax fairness.
There's nothing "scary" about the letters, other than they come from a government tax agency, said Board of Equalization Chairwoman Betty Yee. "Much as it feels like a fishing expedition, it is the law. Honestly, a lot of these businesses may not be aware of what the law is" and that it's been on the books since 1935.
Maximizing revenue from existing taxes is crucial at a time when the state government faces a projected $41-billion budget gap over the next 18 months, officials say.
(Excerpt) Read more at latimes.com ...
Give it a couple of years and there won’t be any businesses in Calif to audit
Downright Orwellian.
Que?
Is there any wonder why this state is bankrupt?
Nothing scary about a friendly letter from the Government backed up by the threat of force and imprisonment. Nothing scary at all.
L
Maybe Kalifornia will do what Uncle Ted suggests here in OHio, use the Federal government to destroy business.
At least Uncle Ted understands ‘flight’!
California has undercut itself on so many levels...All they need to do is DRILL HERE, DRILL NOW and start collecting the revenues that the oil off their shores would bring them! Stupid, Stupid politicians...SOmeone needs to run in California who would step up and call out the liberals and tell the PAYING PUBLIC how they can save their state!
In other words, it seems Kalifornia wants to collect taxes for purchases made in other States and brought into Kali for use there. This would seem to be violating federal law.
I wonder how e-Bay is going to handle this?
Last recession, brought on once again by excessive government spending and taxes and someone who broke a certain promise about his lips, my company got a letter from the State of Connecticut congratulating us on surviving the "downturn" in the economy and advising us that our unemployment, business fee and workers' comp "contributions" were going up.
Moved the company at my first opportunity.
Many states have similar provisions.
California’s Use Tax is probably unConstitutional, violating Art I Sec 9. “No tax or Duty shall be laid on Articles exported from any State.”
But who has the resources to fight it?
I implemented a financial system for a publicly traded company in CA this year and yes, they set up a “use tax” feature called “self assessed tax” for vendors who fail to collect it. It’s then up to the Accounts Payable department to identify these invoices on a case by case. Forget anything paid with a company credit card. I doubt many small businesses are set up to do this. Yes they should fear the Board of Equalization. Love the name for that department.
C2K
You’d think there would be a lot more businesses moving to Oregon - no sales tax!
They have - and the paying public remains emphatically opposed to offshore drilling.
I suppose the constitutionality of these “use taxes” which many states impose has been upheld, but it is, IMHO, no more than a disguised effort to restrain trade and unconstitutional on the face of it.
Ohio does that too. You pay the use tax on your state income tax return. You declare how much you bought over the Internet during the year and pay tax on it. Or else you don’t ;-).
He had last been in California when he mustered out of the service about 40 years ago, but was terrified that the "ticket' would be given the same presumption of validity as if it had been written by a real live policeman.
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