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December 31, 2010 > Delinquent taxpayers face fee

Delinquent taxpayers face fee

Submitted By Anita Gore

Thousands of California businesses will potentially be assessed a fee on past due liabilities beginning in 2011. SB 858 was recently enacted and adds the new collection cost-recovery fee to the Revenue and Taxation Codes. The California State Board of Equalization (BOE) will notify more than 90,000 businesses of this potential charge which takes effect on January 1, 2011.

Legislation requires the BOE to collect the fee, which is intended to cover costs incurred in obtaining payment of past due amounts and applies to most taxes and fees administered by the BOE. The agency must notify a debtor that failure to pay the amount due may result in collection action and potential assessment of the recovery fee before imposing the charge itself.

Taxpayers with liabilities greater than $250 that remain unpaid for more than 90 days after the notice expires could face a collection charge ranging from $185 (amounts owed $250.01 - $2,000), $550 (liabilities between $2,000.01 - $50,000) to $925 (outstanding taxes $50,000.01 and greater) for calendar year 2011.

There are more than 90,000 tax and fee payers with outstanding sales and use tax liabilities or overdue payments in the many tax and fee programs administered by BOE.

Taxpayers can avoid the fee by settling their liability in full within the 90-day grace period. Taxpayers unable to pay in full may still avoid the fee if they qualify for, enter into and complete an installment payment agreement. The BOE may also waive the collection fee if the taxpayer's failure to pay is due to reasonable cause and circumstances beyond his/her control.

The BOE estimates additional annual revenue of $5.2M from the collection of taxes, fees and surcharges for the remainder of Fiscal Year 2010-11 and $19.4M - $22.6M annually beginning in 2011-12.

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