Tuesday, July 26, 2011
State Leaders Push For Business Tax Fix
A number of state leaders are seeking to fix an unpopular program being run by the California State Board of Equalization, which seeks to force small businesses to report and pay out-of-state sales taxes. George Runner, a former state senator and current member of the state's Board of Equalization, said this week that he is looking to change regulations to ease the burden to businesses, who he says have been forced to comb through their invoices and find out-of-state purchases, and pay "use tax" through a separate tax filing. The "Qualified Purchaser Program" is one of a number of programs concocted by the State legislature to try to bridge the state's budget shortfalls.
According to the Sacramento Business Journal, the program has collected an additional $56M in taxes, but has cost $23M in administrative costs, not to mention a "huge burden" on small businesses. The program was put in place as a stopgap measure to try to capture some of the tax revenue being lost to online retailers like Amazon.com, who have refused to collect sales taxes for California on purchases made by its residents. California residents are required by law to pay "use tax" for those online sales, but those laws and use taxes are widely disregarded and ignored by consumers. The Qualified Purchasers program was an attempt to sidestep more aggressive tax enforcement on consumers of the "use tax", and instead go after small businesses for a portion of that use tax.