Do I owe Use taxes?
The State Board of Equalization wants to know if you owe Use taxes...and they want to collect it!
Use tax is basically the same as sales tax. Retailers in California collect sales taxes from customers and remit those taxes to the Board of Equalization. However, many individuals and businesses purchase products from out-of-state retailers (both foreign and domestic) where no sales taxes are collected and remitted. If these products are used, given away, stored or otherwise consumed in California, then the purchaser of these products is liable for Use taxes. The tax applies whether the products were purchased in person, by telephone, via the internet, or by mail.
The recently enacted 2009-2010 California State Budget includes Assembly Bill x4-18 which requires "qualified purchasers" to register with the Board of Equalization and to report and pay Use taxes. A "qualified purchaser" is defined as a person that meets all of the following conditions:
The person is not already required to be registered with the BOE
The person is not a holder of a Use tax direct payment permit
The person receives at least $100,000 in gross receipts from business operations per calendar year.
The person is not otherwise registered with the BOE to report Use tax
The Board of Equalization is currently sending notices to individuals and businesses that they have determined to be "qualified purchasers." The notice requests certain contact information and indicates that an account will be set up to "report and pay use tax." They are presently interested in the reporting and payment of taxes for years 2007, 2008 and 2009.
If you receive a notice BOE-404 from the Board of Equalization, or you have any questions regarding the reporting and payment of Use taxes, it is important you call us before you take any other action.
