Certain CA Service Providers Must File Use Tax Return

The California State Board of Equalization (BOE) is notifying approximately 300,000 service business owners that they may owe use tax. Businesses that meet the statutory definition of a "qualified purchaser" are required to register with the BOE, file returns by April 15 (April 18 in 2011) of each year, and report all purchases subject to use tax from the previous calendar year. A "qualified purchaser" is a business that receives at least $100,000 in gross receipts per year from business operations, is not required to hold a seller's permit with the BOE, is not a holder of a use tax direct payment permit, is not required to be registered with the BOE, and is not otherwise registered with the BOE to report use tax. Businesses that do not meet the $100,000 gross receipts threshold are still required to report and pay use tax, but are not required to register with the BOE for that purpose. Persons that have multiple businesses with the same ownership must register if the aggregate gross receipts of those businesses meet or exceed the $100,000 threshold. New applicants have been automatically registered to eFile their returns for 2010. If a taxpayer is not a retailer or service business currently required to register with the BOE, the easiest way to report and pay use tax is on the California state income tax return.