TAX NEWS - April 2009

California business permits: california Board of Equalization Specialists Verify Business Permits

Businesses in Specific Areas Notified of Future Visits

The next in a series of letters to retailers notifying them of upcoming visits by Board of Equalization (BOE) specialists have been sent today to more than 12,000 businesses in ten zip codes: 94541 and 94544 in Hayward; 95203 and 95204 in Stockton; 95119 and 95120 in San Jose; 90277 in Redondo Beach; 91761 in Ontario; 92234 in Cathedral City; and 92880 in Corona.

In addition, more than 6,800 businesses will be similarly notified on April 15 in five zip codes: 95404 in Santa Rosa; 95121 in San Jose; 91748 in the City of Industry; 90278 in Redondo Beach; and 92879 in Corona.

The BOE specialists will be canvassing the areas to ensure that businesses are properly registered and paying taxes. The new enhanced compliance effort began in mid-September 2008 with 53 zip codes already notified.

These visits are part of the Statewide Compliance and Outreach Program (SCOP). The goal of these visits by the specialists is to ensure all businesses are properly registered so there is no unfair business advantage over those businesses that are properly registered and reporting their taxes/fees. A recent two-year pilot, the Business License Inspection Program, estimated that over three percent of businesses operating in California do so without the appropriate permits or licenses that allow for collection of sales and use tax, as well as other taxes and fees. Non-compliance is a part of the more than $2 billion sales and use tax gap. The tax gap is the difference between the amount of taxes owed and the amount paid.

The BOE specialists will conduct checks for seller's permits of all storefronts and other known business locations. When the specialists visit, business owners will be asked business-related questions and not be asked for personal financial information. If an owner has questions about the inquiries from the specialists, they should call their regional SCOP contact or the Taxpayer Information Section at 800-400-7115. There are seven teams of approximately eight people located throughout the state that began their door-to-door visits based on zip code. Registered retailers will be checked for appropriate permits and licenses as well as service industry businesses, especially if the particular service industry also sells taxable retail items. Those businesses found to be out of compliance will be given instructions on how to register with the BOE and given information about other necessary licenses. For more information, visit: Statewide Compliance and Outreach Program

The five-member California State Board of Equalization is a publicly elected tax board. The BOE collects more than $53 billion annually in taxes and fees supporting state and local government services. It hears business tax appeals, acts as the appellate body for franchise and personal income tax appeals, and serves a significant role in the assessment and administration of property taxes.