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The California State Board of Equalization has issued a publication to provide details on its in-state and out-of-state voluntary disclosure programs. The publication describes what the program is, the difference between the two programs, the eligibility requirements, how to apply and the benefits of the program. In addition, the publication discusses penalty waivers and how a taxpayer can request an opinion as to whether or not the BOE would approve their voluntary disclosure request without first revealing their identity. (BOE Publication 178, Voluntary Disclosure Program, California State Board of Equalization, December 2009)


Bill 27, which proposed to tax certain internet sales, died in the third session of the California Assembly. The bill would have amended the definition of a retailer to include any retailer who entered into an agreement with a California resident under which the resident, for a commission or other consideration, directly or indirectly refers potential customers of tangible personal property, whether by a link or an Internet Web site or otherwise, to the retailer. A similar bill, A.B. 178, was introduced on February 2, 2009 and is still pending. (A.B. 27, died at the desk, October 26, 2009; A.B. 178, introduced in the regular session by the California Assembly n February 2, 2009)


California has issued a news release and special notice informing taxpayers that the new use tax registration and reporting law requires all "qualified purchasers" to register with the BOE and report and pay use tax. A qualified purchaser is a business that meets all of the following tests: 1) is not required to hold a seller’s permit with the BOE; 2) is not required to be registered or otherwise register with the BOE; 3) is not a holder of a use tax direct payment permit; and 4) receives at least $100,000 in gross receipts per year from business operations. The BOE has identified nearly 200,000 businesses that meet the definition of a “qualified purchaser” and is notifying them of their registration requirement. However, even if a business is not contacted by the BOE, any business that meets the requirement is still responsible for registering with the BOE to report and pay use tax. Under existing law, those businesses who do not meet the $100,000 gross receipts threshold are still required to report and pay use tax; they just do not have the mandatory obligation to register with the BOE for that purpose.

The return for 2009, along with payment, is due by April 15, 2010. The BOE is also asking businesses to report purchases for 2007 and 2008. The new provisions of this bill do not change the due date for use tax liabilities from prior years. Therefore, returns for purchases made in 2007 and 2008 were due January 31, 2008 and January 31, 2009, respectively. Penalty and interest applies to payments received after the due date of each return period. (Special Notice L-232, California State Board of Equalization, September 2009 and News Release 84-09-G, California State Board of Equalization, September 8, 2009)


A California sales and use tax regulation discussing sales for resale has been amended to clarify the proper use of qualified resale certificate. The amendments provide that the acceptable resale designation on a purchase order is not limited to the phrase, “for resale” and may include other similar terminology. The amendments also provides that a purchase order where the applicable amount of tax is shown as $0 or is left blank will not be accepted as designating that the property is purchased for resale, unless the purchase order also includes the phrase “for resale” or other similar terminology (Reg. 1668, California State Board of Equalization, effective August 29, 2009).


Governor Schwarzenegger vetoed a majority vote tax increase passed by the California legislature after announced that it would pull its affiliate advertising from the State. California lawmakers had proposed a tax on affiliate advertising similar to New York’s “Amazon” laws. The new laws would have changed the definition of “retailer engaging in business in this state” to include any retailer entering into an agreement with a resident of California under which the resident, for a commission or other consideration, directly or indirectly refers potential customers of tangible personal property via a link on its website or otherwise to the retailer. Governor Schwarzenegger stressed his commitment to not raising taxes and his fight to keep and create jobs in California. will continue to do business with affiliates in California (Press Release, Governor Schwarzenegger Remains Committed to No New Taxes, Announces Will Continue to do Business in California (July 1, 2009).



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