California Law Increases Penalty for Withholding of Collected Tax.

Effective January 1, 2007, any person who collects California sales tax reimbursements or use tax, and fails to timely remit those amounts to the California State Board of Equalization is liable for a penalty of 40 percent of the amount withheld. Under certain circumstances, the penalty is not applicable and a taxpayer may be relieved from payment. For instance, the penalty does not apply to any person whose liability for unremitted sales tax reimbursement or use tax averages $1,000 or less per month or does not exceed 5% of the total amount of tax liability for which the tax reimbursement was collected, whichever is greater. Furthermore, penalty relief is provided to a person whose failure to timely remit sales tax reimbursement or use tax was due to a reasonable cause or circumstance beyond the person’s control. Additional regulations apply. (Ch. 252, S.B. 1449, Laws 2006)

Posted on February 8, 2007