Tax inspectors to search for unlicensed retailers
By Anna Molin, Bay City News Service
August 21, 2006
The state Board of Equalization will begin to crack down on
retailers that operate without a seller's permit in San Francisco
and San Mateo counties this month.
A seller's permit is necessary for a store to report and pay
sales taxes to the state. The Board of Equalization hopes that
the pilot program will reduce the sales "tax gap" or
the disparity between taxes owed and taxes paid. According to
the Board of Equalization's communication's office, the program
is expected to generate up to $25 million in annual revenue.
"Reducing the sales tax gap is one objective for this new
program," acting board member Betty Yee, who represents the
San Francisco Bay Area, said in a statement. "But the inspectors
will also be there to eliminate the unfair advantage enjoyed by
businesses that don't play by the rules. When such businesses
operate without paying taxes or without the necessary permits,
they undercut legitimate California retailers."
The board will soon send out letters informing the more than
51,000 registered retailers in San Francisco and San Mateo counties
that inspections are forthcoming. The board estimates that about
1,500 to 2,000 retailers in that area operate either unlicensed
or without paying the proper sales taxes.
Retailers found selling taxable goods without a permit will be
required to register within one week or risk a misdemeanor citation,
which could be issued if the business owners show "obvious
intent to evade tax" laws, according to the Board of Equalization.
In 2004, shoppers spent $24 billion on taxable goods in San Francisco
and San Mateo counties alone, according to the Board of Equalization.
Sales taxes benefit various state, county and city services, such
as bond paybacks, transportation, health and public safety programs.
The bulk of the money goes to the state's General Fund coffers.
Seller's permits should be prominently displayed inside the store.
Applications can be downloaded online at http://www.boe.ca.gov
or ordered from the Board of Equalization Information Center at
(800) 400-7115. They are also available at the board's San Francisco
office located at 121 Spear St., Suite 460.
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