California State Board of Equalization is closing a few tax loopholes when it comes to obtaining a seller’s permit.
When do you need a seller’s permit? Generally, if you make three or more sales (including online sales) in a 12-month period, you are required to hold a seller’s permit. Usually this mainly applies to businesses. But if you hold more than two garage sales in a 12 month period, you technically need a seller’s permit in CA.
Previously, it was apparently a little too easy to get a seller’s permit, allowing individuals to evade outstanding tax obligations. Prior to the enactment of Revenue and Taxation Code section 6070.5, a business with an outstanding tax liability could close out a seller’s permit prior to revocation for nonpayment of taxes, then apply for a new seller’s permit.
Now, before the BOE Business Taxes Committee hands out permits, they’ll be checking in to be sure that an individual does not owe business tax. The approved amendment interprets and explains Revenue and Taxation Code section 6070.5, to Regulation 1699 giving the BOE the authority to refuse to issue a seller’s permit to individuals with outstanding tax liability. In order to do this, BOE will look at the individuals behind corporate seller’s permit applications, so that individuals can no longer apply for permits under a different identity (as a corporation or LLC) to circumvent any obligation to pay outstanding taxes on a prior seller’s permit.
If you need help with the bookkeeping aspect of your sales, we’re here to help! Give us a call at 310-534-5577 or email us at [email protected].
