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California warns companies they may owe use tax
LA Times ^ | 12/29/08 | Marc Lifsher

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 ...


TOPICS: Business/Economy; Politics/Elections; US: California
KEYWORDS: california; companies; warns
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1 posted on 12/29/2008 10:05:00 AM PST by NormsRevenge
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To: NormsRevenge

Give it a couple of years and there won’t be any businesses in Calif to audit


2 posted on 12/29/2008 10:06:39 AM PST by clamper1797 (I pledge to give the Obambanation the same level of support that the liberals gave GWB)
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To: NormsRevenge
California Board of Equalization

Downright Orwellian.

3 posted on 12/29/2008 10:06:49 AM PST by facedown (Armed in the Heartland)
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To: NormsRevenge
Board of Equalization

Que?

Is there any wonder why this state is bankrupt?

4 posted on 12/29/2008 10:07:41 AM PST by rjsimmon (1-20-13)
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To: NormsRevenge
There's nothing "scary" about the letters, other than they come from a government tax agency, said Board of Equalization Chairwoman Betty Yee.

Nothing scary about a friendly letter from the Government backed up by the threat of force and imprisonment. Nothing scary at all.

L

5 posted on 12/29/2008 10:08:19 AM PST by Lurker ("America is at that awkward stage. " Claire Wolfe, call your office.)
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To: clamper1797

Maybe Kalifornia will do what Uncle Ted suggests here in OHio, use the Federal government to destroy business.
At least Uncle Ted understands ‘flight’!


6 posted on 12/29/2008 10:08:53 AM PST by griswold3
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To: facedown

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!


7 posted on 12/29/2008 10:09:12 AM PST by princess leah
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To: NormsRevenge

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.


8 posted on 12/29/2008 10:09:55 AM PST by CodeToad
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To: NormsRevenge

I wonder how e-Bay is going to handle this?


9 posted on 12/29/2008 10:10:12 AM PST by jim_trent
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To: clamper1797
Give it a couple of years and there won’t be any businesses in Calif to audit

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.

10 posted on 12/29/2008 10:12:24 AM PST by N. Theknow (Kennedys: Can't fly, can't ski, can't drive, can't skipper a boat. But they know what's best.)
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To: CodeToad
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.

Many states have similar provisions.

11 posted on 12/29/2008 10:12:52 AM PST by Travis T. OJustice (Change is not a destination, just as hope is not a strategy.)
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To: NormsRevenge

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?


12 posted on 12/29/2008 10:13:04 AM PST by savedbygrace (SECURE THE BORDERS FIRST (I'M YELLING ON PURPOSE))
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To: NormsRevenge

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


13 posted on 12/29/2008 10:13:20 AM PST by cicero2k
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To: jim_trent

You’d think there would be a lot more businesses moving to Oregon - no sales tax!


14 posted on 12/29/2008 10:13:41 AM PST by Aria ("An America that could elect Sarah Palin might still save itself." Vin Suprynowicz)
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To: princess leah
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!

They have - and the paying public remains emphatically opposed to offshore drilling.

15 posted on 12/29/2008 10:13:57 AM PST by Mr. Jeeves ("One man's 'magic' is another man's engineering. 'Supernatural' is a null word." -- Robert Heinlein)
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To: NormsRevenge

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.


16 posted on 12/29/2008 10:14:22 AM PST by mathurine
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To: jim_trent
Just wait until they go after Amazon sales to residents of California. Amazon doesn't collect sales tax. Borders and Barnes & Noble have a "bricks and mortar" presence, so they are required to collect the tax.
17 posted on 12/29/2008 10:14:23 AM PST by Myrddin
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To: CodeToad

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 ;-).


18 posted on 12/29/2008 10:15:04 AM PST by tvdog12345
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To: mathurine
Some states in the northeast have attempted to collect use taxes from shoppers who travel to an adjacent state, purchase clothing (paying sales tax in the state where the goods were sold) and returned to their home state. The bozos don't care that such commerce goes both ways.
19 posted on 12/29/2008 10:18:15 AM PST by Myrddin
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To: Lurker
A friend of mine received a ticket from one of those automated traffic light camera thingies for running a traffic light in Long Beach. The notice essentially stated that he had failed to respond to prior summonses, that he had waived his right to appeal and he was obligated to fork over about $260, or else.

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.

20 posted on 12/29/2008 10:18:31 AM PST by Mr. Lucky
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