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Use Tax Registration

A recent law change requires many businesses that do not currently hold a seller’s permit to register with the Board of Equalization (BOE), and report and pay, by April 15, any use tax due from purchases made in the preceding year.

Use tax is imposed on tangible personal property that is used, consumed, or stored in this state. Use tax applies to purchases from out-of-state vendors that are not required to collect tax on their sales. If you purchased property that would have been subject to sales tax if purchased in a local store, it is subject to use tax if purchased over the Internet or out of California and brought into the state to be used, stored, or consumed.

The BOE will begin sending letters to taxpayers, informing them of the new registration requirement, over the next few months. You may receive one of those letters.

The registration process

The BOE will send letters to taxpayers with at least $100,000 in business gross receipts who are not already registered with BOE, and do not hold a seller’s permit. If you receive one of these letters, you will be asked to verify your contact information, and then the BOE will register you.

Once you are registered, the BOE will send you an account number and log-in information so that you can e-file your returns.

If you receive one of these letters, please contact me so I can verify whether you meet the registration requirements. If you don’t, we will respond to the BOE, letting them know you are not required to register. If you do, I will explain how this registration requirement will affect you, and the steps you will need to take.

Sincerely,

Cynthia Teders Glassman, EA