Tax Law Offices of David W Klasing, PC Releases New Article on California Sales and Use Tax Enforcement
IRVINE, Calif., March 20, 2018 /PRNewswire/ -- Recently, Tax Law Offices of David W Klasing, PC has been servicing out of state retailers that ship into California that have received inquiries from the California Department of Tax and Fee Administration ("CDTFA"), formerly known as the Board of Equalization ("BOE"), concerning sales tax audits. Out of state retailers may be liable for collecting and remitting California sales tax where goods are shipped to California residents and businesses. After evaluating an out of state retailer's exposure for this issue, the firm has been putting most of them in a special California Voluntary Disclosure Program for out of state Businesses and Taxpayers, as a way to avoid criminal prosecution, limit the number of past tax years at issue and limit penalties and interest where warranted by each client's specific facts and circumstances.
A recent use tax audit of a client resulted in a revelation concerning how California is identifying targets for sales and use tax enforcement audits against California residents, businesses, against out of state retailers or those involved with California's underground economy. Emboldened by Amazon vs. The State of California and the upcoming Supreme Court case South Dakota v. Wayfair, trucks are now stopped at the California border at Agricultural check stations run by the California Department of Agriculture ("CDoA"). The "Bill of Lading" is provided to the CDTFA which contains information on the items being shipped, their value and shipping terms. Information on an $800 drafting table the firm's client purchased was forwarded to a special unit of the CDTFA that has 12 agents that each opens 200 inquiries a month, and sparked a use tax audit.
Where a tangible good is purchased outside California or offshore for use within California, residents are required to self-assess California use tax which is equal to the sales tax they would have paid had the good been purchased from a California retailer.
Use tax is owed where both of the following conditions apply:
- The out of state seller did not collect California sales or use tax.
- The California resident or business utilizes the item in California.
Any person or business that intentionally fails to report the assessment and fails to subsequently make payment of legally incurred sales and use taxes is guilty of sales tax evasion and can be faced with monetary fines and/or incarceration. See full article HERE.
CONTACT: Dave Klasing, 949-681-3502, [email protected]
SOURCE Tax Law Offices of David W Klasing, PC
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