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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  1. EastBayLarry
    EastBayLarry 14 April, 2010, 15:19

    Amazing! This article does not mention the magnatude of these fines, but I’d bet they are a significant percentage of the ‘late’ tax bill.

    With these kinds of policies in place, one wonders why the state is so far in debt. Oh yes, I remember, businesses closed or moved out-of-state because of the hostile business climate.

    Reply this comment
  2. stevefromsacto
    stevefromsacto 14 April, 2010, 18:07

    MYTH: California’s high-taxes and cost of doing business is driving businesses and jobs to states with fewer regulations
    .
    FACT: California loses very few jobs from businesses leaving the state. In fact, only 11,000 jobs leave the state annually out of a total of 18 million jobs. That’s only 0.06% of California’s total jobs that are lost by businesses moving out of state. The biggest job creation and loss engine are businesses opening, expanding, shrinking and closing within the state due to normal business cycles-very few businesses leave the state to our neighbors.

    California has lost fewer jobs than our ostensibly “business-friendly” neighboring states. California does not rank in the Top 10 of states suffering job loss from 2008-09 and three of our five neighboring states lost more jobs than California. Our low-tax neighbors of Arizona, Nevada and Oregon had over 6.5% job loss, while California only had 4%. Even notoriously low-tax, little regulation states like Florida and the Carolinas have suffered more job losses than California

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  3. EastBayLarry
    EastBayLarry 14 April, 2010, 19:17

    stevefromsacto:
    And what’s Californias’ unemployment rate? I mean the REAL rate, the one that counts people who have been out of work so long they are not drawing unemployment anymore.
    And Steve, we ARE one of the most unfriendly places for business. It’s not JUST the taxes, it’s also the tougher, some would say impossible, regulatory environment. Maybe you are just as happy that these ‘dirty’ businesses can’t survive here, but every one that closes leaves people unemployed.
    The ‘high cost of doing business’ in California caused my job to be outsoursed to China in 2007. The rest of that company’s full-time California workforce was also reduced. It was cheaper for them to have their recruiters work from their homes as ‘part time contractors’ avoiding messy benefits packages and minimum wage restrictions.

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  4. John Seiler
    John Seiler 14 April, 2010, 23:03

    If I had a business, I wouldn’t start it here in Taxifornia. Would you?

    As I noted in a previous blog, Arnold said profits are bad. (After he made his hundreds of millions of profits, of course.) So, how can you make a profit here?

    — John Seiler

    Reply this comment
  5. PRI
    PRI Author 15 April, 2010, 05:58

    Steve – you are incorrect. California has lost 600000 manufacturing jobs since 2001 — that’s just manufacturing jobs! And if you want real unemployment rates, visit the central valley where some towns have 47% unemployment thanks to Democrats turning off the water spigot.

    If you are concerned about losing jobs to China, your former employer will tell you why: We can’t compete with the labor. Our state and country has priced us out of the market with absurd labor costs. So of course employers are looking at every way to save wherever they can.

    – Katy Grimes

    Reply this comment
  6. Dennis Sein
    Dennis Sein 17 April, 2010, 07:12

    The BOE has gotten to the point where they impose fees, penalties, which grow exponentially. I forgot to submit a form (yes, one piece of paper declaring my name and address had not changed) as a corporation, and got slapped with a $250 fee, which I tried to fight, which led to a $600 penalty, and a threat of a $2000 lien on my business. They are a cancerous organization hell bent on driving small businesses out of business. Someone needs to revamp the entire system.

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