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Contributors
Bill Leonard - Contributor
Bill Leonard is a Member of the State Board of Equalization
 A
Week Under the Dome...
Use Tax, Tax Rights, Governor's CPR, FTB vs. BOE
[Bill Leonard] 3/30/04
Do You Owe Use Tax?
As the April 15th filing deadline approaches
for personal income taxes, consider that you may also owe use
tax on items you purchases
from out-of-state sellers in 2003 for which you did not pay California
sales tax. The use tax applies to an out-of-state purchase when
you use, store, give away, or otherwise consume the purchased
product in California. This is true whether you buy the item
in person in another state (or country), over the Internet, or
by mail or phone. Generally, if sales tax applies to the sale
of an item in California, use tax applies to the purchase of
a similar item from an out-of-state seller. This is an awful
tax and at the very least the first several thousand dollars
of out of state purchases ought to be exempt just to keep the
paperwork and blood pressure down. Beginning this year, all California
income tax returns include a line on which you can report any
use tax you owe. While the income tax return provides an option
for use tax payment, you can choose instead to file the use tax
return in the BOE publication 79-B, California Use Tax. If you
have a seller’s permit, you must continue to report your
purchases subject to use tax on your sales and use tax return.
The use tax has been on the books since 1933. Few people know
about it and even fewer pay it. I believe we should set a threshold
that requires payment of the use tax only when out-of-state purchases
exceed a large amount or just repeal it. But until we can convince
the legislature to make that change, we owe use tax on anything
and everything that qualifies. Free E-filing Offer A company
located in Oxnard, Fileyourtaxes.com, had a promotion for California
residents in which they offered free federal and California state
personal income tax return construction and eFiling for the 2003
tax year. The free offer was only for March 25 and 26. I checked
with the Franchise Tax Board, and they said the company and its
offer, was legitimate. I would very much like to hear from anyone
who used this service. I would like to know if the people who
took advantage of this offer and whether they are satisfied.
I did not hear about this until the deadline had passed. I am
disappointed that the Franchise Tax Board would first endorse
this private company’s program and then not do much to
tell taxpayers about it.
New Taxpayer Rights Advocate
Todd Gilman has been appointed as the Board’s new Taxpayers’ Rights
Advocate. I am pleased with Mr. Gilman’s appointment and
believe he will do an outstanding job representing taxpayer interests.
He has worked in the Taxpayers’ Rights and Equal Employment
Opportunity Division since August 2001. His experience in the
department qualifies him to be responsible for helping resolve
taxpayer problems and complaints. If you have a problem or complaint,
call me and the Advocate’s Office at 1-888-324-2798.
UNDER THE DOME
Blowing Up Boxes
Governor Schwarzenegger called on all Californians, particularly
state employees, to help identify those areas of state government
that could be made more efficient. To accomplish this, he has
created the California Performance Review (CPR) project to comprehensively
examine what state government does and how it does it. CPR has
four charges: Executive Branch Reorganization; Program Performance
Assessment and Budgeting; Improved Services and Productivity;
and Acquisition Reform. Over the next several editions of the
Leonard Letter, I will be looking at each of the areas and soliciting
your recommendations.
The Governor’s guiding assumption about the Executive
Branch Reorganization is clear and accurate: “The organization
of California’s state government today does not facilitate
rational decision- making in the public’s interest.” He
speaks about the sheer number of boards, commissions, agencies
and departments without clear lines of authority or responsibility,
noting that they do not produce outcomes for which any elected
official can be held accountable by voters. Staff is frustrated
with the lack of flexibility and bureaucratic inertia, taxpayers
are angry about waste and worthwhile policy goals languish. The
Governor is asking the CPR staff to examine the function of each
agency and board and make recommendations for consolidating or
eliminating them so that a new system encourages innovation rather
than stifling progress.
For more about the California Performance Review
project, see http://cpr.ca.gov/. See below my top recommendation
to the Governor
for making needed changes to the state’s taxing agencies.
FTB vs. BOE
After last week’s article explaining the
different roles of the Taxpayer Advocate offices in the Board
of Equalization
and Franchise Tax Board, I received inquiries from readers asking
me to clarify the difference between the two boards and wondering
why we have two tax collecting agencies in California. The FTB
collects personal income taxes. The BOE collects sales and use
taxes along with more than 30 other special program fees and
taxes, creates the rules for county assessors, and serves as
the appeals board for sales tax disputes, property tax rulings
and FTB decisions on income tax. The BOE is the only elected
tax board in the U.S. and as such helps protect the taxpayers'
rights. I believe, and have recommended to the Governor, that
the functions of the BOE and FTB be consolidated into one agency
under the authority of the elected Board of Equalization. We
would gain efficiencies in the collection and administration
of all the different taxes and streamline taxpayers' ability
to communication with their tax officials. I believe we would
be able to increase attention to taxpayers' rights by having
elected officials oversee all taxes, rather than just some of
them.
AROUND THE STATE
More
Jobs Lost
I received
the bad news this week that a company I have helped over the
years with many state regulation
and job climate issues
is throwing in the towel. InterMetro Industries of Rancho
Cucamonga tells me the allure of China was a factor, but “the high
cost of doing business in CA makes it difficult for companies
to survive.” It is a new world order and Sacramento
needs to wake up and lead our state to a more job friendly
climate
to stem these losses. Between 150 and 200 jobs will be lost.
Victims Rights
We are approaching the annual National Victims Rights Week,
April 18-24, 2004, which is sponsored by the National Organization
for Victims Assistance. In my years in the state legislature,
I was always touched to come to the State Capitol during that
week and see the photographs and families of victims of crime.
These people, in the midst of their personal sorrow and tragedy,
are reaching out to others, providing comfort and counseling,
and working to improve the laws and legal processes better serve
the victims of crime. This year, April 20 is the Victims Rights
march on the Capitol in Sacramento. CRO
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