Punitive Sales and Use Tax Modified

The Board of Equalization (BOE) has an unusual deadline for the payment of Sales and Use taxes by California businesses, making it very easy for payments to be considered late, mounting large interest payments.

The Senate Revenue and Taxation Committee passed SB 1028, authored by Senator Lou Correa, D-Anaheim, aimed at removing the punitive interest payment on “late” payments made to the Board of Equalization.

Any tax payments received by the BOE after the 3:00 p.m. deadline are automatically considered late — even if they were received by 5:00 p.m. on the due date. Instead of charging the business one day of interest on a late tax payment as other state taxing agencies do, the BOE penalized businesses by charging a full month of interest.

Senator Correa proposed to instead require the BOE to charge a “modified adjusted daily rate” and to find, under specified circumstances, that “it is inequitable to compute interest on a monthly basis and to instead compute interest on a daily basis.”

The BOE representative at the hearing offered that the BOE Board of Directors was in unanimous support of the change. Representatives from the California Taxpayer’s Association and the the California Chamber testified that it was “good business practice” and would go to “improve the overall perception of the state’s taxing agencies.”

The bill passed but will remain on call in the committee for other committee members to hear.

-Katy Grimes

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