Sales tax applies to most in-state purchases, but the “use tax” generally applies to sales made outside the state or online when sales tax isn’t applied. Individuals can report and pay use tax on their California income tax returns, which are due April 17 this year.
The use tax was established in 1935 to protect California retailers from untaxed out-of-state or mail-order competition.
Today, most of that competition comes in the form of out-of-state Internet sales. According to BOE estimates, over $1.1 billion in use tax from Internet sales goes unreported each year. One-third of all sales and use tax billings include liabilities from out-of-state purchases.
The five-member Board of Equalization is a publicly elected tax board. The board collects nearly $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 plays a significant role in the assessment and administration of property taxes. DP
Originally published in the Santa Monica Daily Press print edition on April 5, 2007. Read the original PDF.