April 12, 2011 > Remember to report and pay use tax
Remember to report and pay use tax
Submitted By Anita Gore
Betty T. Yee, First District Member of the Board of Equalization, reminds taxpayers to report and pay the amount of use tax owed when they file their income tax returns, due on April 18.
"The dollars lost to California in unpaid use tax significantly impact the State's publicly funded programs and affect all Californians," said Ms. Yee.
Use tax is what is owed by the consumer on items purchased from out-of-state retailers who do not collect sales or use tax. That includes internet, mail-order or phone purchases. Use tax has been law since 1935 in California. The easiest way to report and pay use tax is on the Franchise Tax Board State Income Tax return. On the line called "Use Tax," a consumer state the amount of use tax owed and send in the payment.
Use tax owed is calculated based on the purchase price of the item and sales tax rate in your local area. Sales tax rates in California range from 8.25 percent to 10.75 percent, depending upon where you live. Consumers should retain their receipts and invoices and check to see if sales or use tax was collected at the time of sale. Consumers should also look for other indications that there is no use tax obligation, e.g. a notation that the item was shipped from within the state or an invoice or statement that California tax requirements have been met.
While the simplest way to pay use tax is through the use tax line on the income tax return, consumers may also register with the BOE for a consumer use tax account to report and pay use tax. Retailers registered with the BOE are required to pay use tax with their regular sales tax returns. Service industry businesses with gross receipts of over $100,000 are required through legislation passed in 2009 to register with the BOE as a "qualified purchaser" for the purpose of paying use tax.
For more information about use tax, visit www.boe.ca.gov.