California --Sales and Use Tax: Bill Would Require Notification to Purchasers on Online Sellers' Web


W

Wallace

Is this supposed to apply to out of state (California) businesses? What
authority does California have over such businesses?
"Legislation passed by the California Assembly would, if enacted, provide
that each retailer that is not required to collect use tax but that makes
sales of tangible personal property, the storage, use, or other consumption
of which is subject to tax, is required to provide readily visible
notification on its retail Internet Web site or retail catalogue that tax is
imposed on the storage, use, or other consumption in California of the
tangible personal property purchased from the retailer that is not exempt
and is required to be paid by the purchaser."
 
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S

Stuart A. Bronstein

Wallace said:
Is this supposed to apply to out of state (California)
businesses? What authority does California have over such
businesses?
In theory if a retailer is knowingly advertising to and doing
business with California residents, it is, by that act, submitting
itself to the jurisdiction of the state. They can simply refuse to
sell to Californians, which can generally be determined by the
buyer's IP address.
 
T

Tom Russ

In theory if a retailer is knowingly advertising to and doing
business with California residents, it is, by that act, submitting
itself to the jurisdiction of the state.  They can simply refuse to
sell to Californians, which can generally be determined by the
buyer's IP address.
Going by the IP address isn't really all that easy or reliable. And
for tangible goods, it would seem that going by the shipping address
would be the simplest and most reliable solution. For downloadable
items, I suppose the billing address could be used. But I don't think
California taxes intangibles. I certainly haven't seen any tax
charged on my iTunes songs....
 
H

Han

Going by the IP address isn't really all that easy or reliable. And
for tangible goods, it would seem that going by the shipping address
would be the simplest and most reliable solution. For downloadable
items, I suppose the billing address could be used. But I don't think
California taxes intangibles. I certainly haven't seen any tax
charged on my iTunes songs....
I pay tax on my iTunes purchases (New Jersey)
 
S

Seth

In theory if a retailer is knowingly advertising to and doing
business with California residents, it is, by that act, submitting
itself to the jurisdiction of the state.
Only if the advertising is specifically aimed at California
residents. If they put an ad in the New Yorker, and someone in
California has a subscription and sees the ad, that doesn't count as
advertising to California residents.
They can simply refuse to sell to Californians, which can generally
be determined by the buyer's IP address.
No, it can't. I have several web proxies available to me, in several
different states; additionally, I can buy stuff while travelling.

For physical shipments, it can be determined by the blue sky room
address. For other stuff purchased by credit card, they can look at
the billing address. And for stuff purchased neither way, they can't
tell where it's going.

Seth
 
R

removeps-groups

Is this supposed to apply to out of state (California) businesses?  What
authority does California have over such businesses?
"Legislation passed by the California Assembly would, if enacted, provide
that each retailer that is not required to collect use tax but that makes
sales of tangible personal property, the storage, use, or other consumption
of which is subject to tax, is required to provide readily visible
notification on its retail Internet Web site or retail catalogue that tax is
imposed on the storage, use, or other consumption in California of the
tangible personal property purchased from the retailer that is not exempt
and is required to be paid by the purchaser."
I think they're paving the way for enforcing Use Tax on line 95, page
2 of form 540.
 
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M

Mark Bole

I think they're paving the way for enforcing Use Tax on line 95, page
2 of form 540.
Reporting anything on line 95 of Form 540 is optional, so what is there
to enforce? In any case, Franchise Tax Board (income tax) is not
responsible for enforcing sales/use tax collection, that would be the
Board of Equalization.


-Mark Bole
 
R

removeps-groups

Reporting anything on line 95 of Form 540 is optional, so what is there
to enforce?  In any case, Franchise Tax Board (income tax) is not
responsible for enforcing sales/use tax collection, that would be the
Board of Equalization.
If it were optional, why would they have it? From the 540
instructions:

Use Tax
Line 95 – Use Tax. This is not a total line.
As explained on page 19, California use tax applies to purchases from
out of
state sellers (for example, purchases made by telephone, over the
Internet,
by mail, or in person).

Then there is a worksheet that says to write how much you bought in
other states where no CA tax was paid, the CA tax on this amount, any
tax the other state charged (usually zero), followed by the difference
or how much you owe CA. In other words, if the out of state internet
store does not charge sales tax, you should be a good citizen and
report it on your tax return.

It's not really optional, according to my reading. It's just there's
no way for the FTB/BOE to enforce it, so it appears to be optional.
Maybe they can enforce it on big businesses by auditing them.

The FTB/BOE are still part of a larger picture -- the broke CA
government, and they will work hand in hand to collect more taxes.
 
M

Mark Bole

If it were optional, why would they have it? From the 540
instructions: [...]
It's not really optional, according to my reading. It's just there's
no way for the FTB/BOE to enforce it, so it appears to be optional.
Maybe they can enforce it on big businesses by auditing them.

Check BOE Pub 79-B http://www.boe.ca.gov/pdf/pub79b.pdf

They've modified the language slightly since a few years ago, it used to
say:

"If you do not want to report use tax on your income tax return, or are
not required to file California income tax returns, you can complete the
use tax return included in this publication."

However, it is still not mandatory to report use tax on the CA personal
income tax return, and there are no issues of filing an incomplete or
inaccurate income tax return if you do not do so.

The alternative, the BOE Use Tax return, doesn't even require a signature.

-Mark Bole
 
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R

removeps-groups

 > If it were optional, why would they have it?  From the 540
 > instructions:
[...]
It's not really optional, according to my reading.  It's just there's
no way for the FTB/BOE to enforce it, so it appears to be optional.
Maybe they can enforce it on big businesses by auditing them.
Check BOE Pub 79-Bhttp://www.boe.ca.gov/pdf/pub79b.pdf

They've modified the language slightly since a few years ago, it used to
say:

"If you do not want to report use tax on your income tax return, or are
not required to file California income tax returns, you can complete the
use tax return included in this publication."

However, it is still not mandatory to report use tax on the CA personal
income tax return, and there are no issues of filing an incomplete or
inaccurate income tax return if you do not do so.

The alternative, the BOE Use Tax return, doesn't even require a signature.
You must report use tax on either the personal tax return or the BOE
use tax return. It is optional to report it on any one form, but then
reporting on the other form makes it necessary.

My observation with the law is that it is trying to point out to CA
residents that they need to pay use tax.
 

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