New BOE Regulation Changes
The Board Members approved two important amendments to business tax regulations at the November 19-20, 2013 Board of Equalization meeting. These amendments are:
Authority to Refuse Seller’s Permit
The BOE Business Taxes Committee approved an amendment that 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 an individual that retains an outstanding business tax liability. 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. A person might have used this as a loophole to obtain new seller’s permits without paying outstanding tax obligations.
The new amendment to Regulation 1699 explains that BOE will look at the individuals behind corporate seller’s permit applications to ensure they are not simply applying for permits under a different identity (that is, as a corporation or LLC) to circumvent any obligation to pay outstanding taxes on a prior seller’s permit.
Tax-Included Basis Presumption for Mobile Food Vendors
The BOE Business Taxes Committee also approved a revision to Regulation 1603, which creates a presumption in the mobile food vendor industry that all sales are made on a tax-included basis. Under current rules, such vendors must post signs to notify customers that sales are made on a tax-included basis. Issues sometimes arise for mobile food vendors that intend to make their sales on a tax-included basis, but did not post such signs. The failure to post such signs results in higher levels of noncompliance. Accordingly, this change to Regulation 1603 will provide support to mobile food vendors to ensure that their sales are on a tax-included basis at all times