Annual Report 2010-2011
Revenues and Operations
California property tax levies for fiscal year 2010-11 totaled $48.9 billion, a decrease of 0.6 percent from the previous year's total of $49.2 billion. County-assessed property values fell $76 billion during 2010-11 to reach $4.297 trillion for the 2011-12 tax year.
In 2011, the BOE set the values of state-assessed properties, primarily privately owned public utilities and railroads, at $85.5 billion for the 2011-12 roll. This was a $6.5 billion increase from 2010-11 values. State-assessed properties produced an estimated $947.3 million in local property tax revenues for the state’s 58 counties in 2010-11.
For detailed property tax information, please see the Appendix, pages A-5 through A-25.
2010-11 General Property Tax Revenue
Billions of dollars
Under its constitutional mandate, the BOE oversees the assessment practices of the state's 58 county assessors, who are charged with establishing values for approximately 13.5 million assessments each year. In addition, the BOE assesses the property of regulated railroads and specific public utilities, and assesses and collects the private railroad car tax and timber yield tax.
General Property Taxes
County-assessed property values for the 2011-12 roll were essentially flat, increasing 0.1 percent from the previous year. This follows two consecutive years of declining assessed values. Increases in residential and nonresidential building construction activity offset declines in existing home prices and sales.
Proposition 13, passed by California voters in 1978, imposed a property tax rate of one percent of the property's full cash value, with limited exceptions. In addition, it allows reappraisal of real property at current fair market value only when there is a change in ownership or upon completion of new construction. Otherwise, Proposition 13 limits annual increases in the value of real property to the previous year's California Consumer Price Index for all items, up to a maximum of two percent.
In accordance with Article XIII, section 19 of the California Constitution, the BOE assesses certain public utility and other specified properties and allocates the assessed values among the counties where the properties are physically located. Each county taxes the allocated value of state-assessed properties at the same rate as locally assessed properties.
State-assessed properties include:
- Pipelines, flumes, canals, ditches, and aqueducts lying within two or more counties.
- Property (except franchises) owned or used by regulated railway, telegraph, or telephone companies; railroad car companies operating on railways in the state; and companies transmitting or selling gas or electricity.
Private Railroad Car Tax
Private railcar owners pay the private railroad car tax on railcars operated in California. For 2011-12, the Board-adopted assessed value for private railroad cars totaled $564 million. The total assessed value reflects the application of a 65.1 percent assessment ratio as required by the Federal Railroad Revitalization and Regulatory Reform Act. The estimated private railroad car tax revenue for the state's 2011-12 General Fund is $6.2 million.
Additional information on the private railroad car tax can be found in the Appendix on pages A-23 through A-25 and in publication 41, Taxes and Fees Administered by the California State Board of Equalization.
Timber Yield Tax
Timber owners pay the 2.9 percent timber yield tax based on the immediate harvest value of trees harvested for wood products. Revenues are returned to the counties where the timber was harvested. Calendar year 2010 revenues totaled $5.2 million.
Timber harvest volume increased from the 0.8 billion board feet in 2009 to 1.2 billion board feet in 2010. The total value of the year's harvest increased to $199.5 million. The number of registered timber owners decreased from 1,573 active program registrants at the end of June 2010 to 1,541 active program registrants as of June 30, 2011. Thirty timber owners paid approximately 82 percent of the tax collected in 2010.
County-Assessed Properties Division
The County-Assessed Properties Division develops property tax assessment policies and informational materials to guide county assessors and local assessment appeals boards. The division conducts periodic Assessment Practices Surveys of each county assessor's office and issues reports to state and local officials.
In 2010-11, the BOE issued survey reports for the counties of Butte, Colusa, Nevada, Sacramento, San Diego, San Mateo, Sonoma, Stanislaus, Yolo, and Yuba. Copies of the reports are found in the Property Tax section of the BOE’s website.
Additionally, the division provides technical expertise and guidance to assessors, the Legislature, and others concerned with property tax assessment matters, and ensures that the content of property tax forms is uniform throughout the state.
The division also collects and administers the state’s timber yield tax, described above. Timber Tax Section staff gathers data on timber harvest sales and develops timber harvest value schedules for consideration by the BOE’s Timber Advisory Committee and approval by the Board Members. The division also registers timber owners who harvest timber, and collects the timber yield tax.
In 2010-11, County-Assessed Properties Division staff provided the following services to local governments and the public:
- Updated three sections of the Assessors' Handbook to reflect current, annually collected data: Residential Building Costs (AH 531), Rural Building Costs (AH 534), and Equipment and Fixtures Index, Percent Good and Valuation Factors (AH 581).
- Issued revised forms, BOE-502-A, Preliminary Change of Ownership Report, and BOE-502-AH, Change in Ownership Statement.
- Issued a new section of theAssessors' Handbook: Change in Ownership(AH 401).
- Developed Guidelines for Appraiser Certification and Training.
- Issued revised BOE-502-P, Possessory Interests Annual Usage Report.
- Amended Property Tax Rule 1020, Timber Value Areas, and repealed Property Tax Rule 471, Timberland.
- Issued 65 advisory Letters to Assessors.
- Responded by telephone to more than 9,800 public inquiries regarding property tax matters, prepared 1,500 written responses, and responded to 450 inquiries from users of the BOE website.
- Reviewed over 1,088 claims for Organizational Clearance Certificates and 445 claims for Supplemental Clearance Certificates associated with the welfare exemption.
- Issued 580 Organizational Clearance Certificates and 305 Supplemental Clearance Certificates.
- Reviewed 398 periodic filings of organizations holding Organizational Clearance Certificates to ensure continued eligibility for the welfare exemption.
- Conducted 17 formal appraisal courses and workshops attended by more than 500 students comprised of property tax appraisers from county assessors’ offices and the BOE.
- Conducted 10 online courses taken by 275 property tax appraisers. Also reviewed results of web-based, self-study training sessions taken by 613 students.
- Issued 77 new appraiser certificates and 88 advanced appraiser certificates to property tax appraisers of county assessors’ offices and the BOE.
- Developed a web-based, self-study training session titled Change in Ownership.
- Sent more than 15,160 questionnaires to legal entities, including corporations, resulting in the reassessment of 5,610 parcels owned by 842 legal entities.
State-Assessed Properties Division
The State-Assessed Properties Division provided the Board Members with value indicators for state-assessed properties, and allocated the BOE-determined value of those properties to the counties where the properties are physically located. The division also audited the financial records of utility and transportation companies for property tax purposes and was responsible for the valuation of private railroad cars located in California. Since 1977, their audits have resulted in adjusted property tax assessments of more than $18.2 billion, yielding additional property tax revenue for local governments.
Tax Area Services Section
The Tax Area Services Section continued to maintain maps of more than 10,000 revenue district boundaries that encompass 61,675 tax rate areas, helping to ensure the proper allocation of local tax revenue to counties, cities, and special tax districts.
Local assessment appeals boards hear and decide appeals of county-assessed property values. The Board hears and decides appeals of state-assessed property values, appeals filed under the Timber Yield Tax and Private Railroad Car Tax Laws, appeals of welfare exemption denials, and appeals made by local governments concerning assessments of properties they own outside their boundaries. For more information regarding appeals filed with the BOE in 2010-11, see the Appeals chapter.
Sales and Use Taxes
California sales and use tax revenue totaled $42.5 billion in 2010-11, an increase of 0.8 percent from the $42.2 billion total in 2009-10. Sales and use tax revenue included:
- $33.4* billion from the state sales tax, with:
- $27.3 billion allocated to the state’s General Fund.
- $2.5 billion allocated to the state’s Local Revenue Fund; tax rate of 0.50 percent.
- $2.5 billion allocated to the Local Public Safety Fund; tax rate of 0.50 percent.
- $1.2 billion allocated to the state’s Fiscal Recovery Fund; tax rate of 0.25 percent.
*Detail may not add up to total due to rounding.
2010-11 Sales and Use Tax Revenues
Billions of dollars
- $4.9 billion from the 1.00 percent Bradley-Burns Uniform Local Sales and Use Tax, allocated among all of the state’s 58 counties and 480 cities.
- $4.2 billion in special district transactions (sales) and use tax; rates vary by district.
Sales and use tax allocations to the General Fund were 1.3 percent lower than in 2009-10, as a result of the fuel tax swap.
Retailers engaged in business in California pay the state’s sales tax, which applies to all retail sales of goods and merchandise, except those sales specifically exempted by law. Consumers in California of tangible personal property that is used, consumed, or stored in this state pay use tax. Use tax applies to purchases from out-of-state vendors (including purchases made by mail order, telephone, or Internet) and applies to most leases of tangible personal property. The state sales tax and use tax are "mutually exclusive" which means either sales tax or use tax applies to a single transaction, but not both.
The sales and use tax rate in a specific California location has three parts: the state tax rate, the local tax rate, and any district tax rate that may be in effect. The statewide combined sales and local tax rate, effective April 1, 2009 through June 30, 2011, is 8.25 percent (7.25 percent state tax rate and 1 percent current local tax rate.) State sales and use taxes provide revenue to the state’s General Fund, to cities and counties through specific state fund allocations, and to other local jurisdictions.
Local Sales and Use Tax
In 2010-11, the BOE collected and allocated the one percent Bradley-Burns Uniform Local Sales and Use Tax for all California cities and counties. For each sale, the 0.25 percent local tax was allocated to the county where the sale occurred, for local transportation projects. The remaining 0.75 percent local tax was allocated to the county or an incorporated city, generally depending on the location of the sales negotiations.
2010-11 Local Sales and Use Tax Distributions
Billions of dollars
Between 1981 and 1993, cities could finance redevelopment projects with revenue derived from the local sales and use tax and distributed under agreement to city redevelopment agencies. While this authority was repealed effective January 1, 1994, existing city ordinances were permitted to continue. As of June 30, 2011, 27 redevelopment projects in 23 California cities were receiving sales and use tax revenue.
District Transactions (Sales) and Use Tax
The BOE collects and distributes district transactions (sales) and use tax on behalf of voter-approved tax districts throughout the state. The districts fund a range of local services and infrastructure, including general government, transportation projects, open space, hospitals, and public libraries. Some California locations lie within more than one tax district. These district taxes are applied in addition to the state tax rate of 8.25 percent.
A complete list of tax districts, jurisdictions, and revenues is found in Appendix Table 21C, beginning on page A-34.
At the beginning of 2010-11, there were 114 district taxes in effect, with rates ranging from 0.10 percent to 1.0 percent. On March 31, 2011, two district taxes expired: The City of Scotts Valley Transactions and Use Tax and the Sonoma County Open Space Authority. The following lists all of the new districts that went into effect during fiscal year 2010-11.
Effective October 1, 2010
City of Calexico General Fund Transactions and Use Tax—0.50%
City of Cathedral City Transactions and Use Tax—1.00%
City of Cotati Transactions and Use Tax—0.50%
City of Rohnert Park Transactions and Use Tax—0.50%
City of Woodland Supplemental Transactions and Use Tax—0.25%
Effective April 1, 2011
City of Concord Transactions and Use Tax—0.50%
City of El Cerrito Transactions and Use Tax—0.50%
City of Eureka Supplemental Transactions and Use Tax—0.50%
City of Marina Transactions and Use Tax—1.00%
City of Novato Transactions and Use Tax—0.50%
City of Placerville Special Transactions and Use Tax—0.25%
City of San Leandro Transactions and Use Tax—0.25%
City of Santa Monica Transactions and Use Tax—0.50%
City of Santa Rosa 2010 Transactions and Use Tax—0.25%
City of South El Monte Vital City Services Protection Transaction and Use Tax—0.50%
City of Tracy Transactions and Use Tax—0.50%
City of Union City Transactions and Use Tax—0.50%
City of Wheatland Transactions and Use Tax—0.50%
Sonoma County Agricultural Preservation and Open Space District—0.25%
Sales made by retailers in a jurisdiction levying a district tax are generally subject to a total sales tax rate that includes the statewide rate and the applicable district tax rate (see Appendix Table 23B, on page A-40). While the provisions of the Transactions and Use Tax Law are similar to state and local sales and use tax laws, significant differences do exist. These include an exemption for sales shipped to a location outside the district for use in that location and special requirements for sales of aircraft, registered vehicles, and undocumented vessels. Property purchased for use in a district may be subject to that district's use tax.
The BOE encourages voluntary tax law compliance and offers sales and use tax assistance through its Sacramento Headquarters and 21 field offices located across the state. The BOE also maintains offices to assist taxpayers located outside California who are registered to do business in this state. These office locations include New York, Chicago, and Houston. The Sacramento field office handles the western states.
As of June 30, 2011, the number of sales and use tax permits totaled 1,331,209, which represented 1,532,278 business locations. This fiscal year, these totals include 302,000 new permits added under Revenue and Taxation Code section 6225 created by AB x4 18 requiring Qualified Purchasers to register with the BOE and report purchases subject to use tax.
The agency processed 4,124,810 sales and use tax returns and prepayments, of which, more than 3.7 million were efiled. Each year the number of taxpayers/feepayers who efile continues to increase as the BOE actively promotes and expands the eServices BOE offers.
BOE compliance staff ensures that sellers properly comply with permit requirements, assist sellers in interpreting tax laws and regulations, provide classroom instruction and individual assistance in the correct preparation of tax returns, and collect outstanding tax amounts. In 2010-11, the Sales and Use Tax Department collected over $926 million in delinquent sales and use taxes.
Consumer Use Tax Section
The Consumer Use Tax Section works closely with state and federal agencies in administering the use tax due on nondealer sales of vehicles, vessels, aircraft, and mobile homes. In 2010-11, revenues totaled $541.6 million, including funds collected by the BOE and:
- $499.5 million collected by the Department of Motor Vehicles (DMV).
- $3.5 million collected by the Department of Housing and Community Development (HCD).
The BOE maintains an effective audit program to ensure that businesses report neither more nor less tax than required. The program audits nearly one percent of active master accounts each year, concentrating on those considered most likely to be inaccurate in their tax reporting. In fiscal year 2010-11, the sales and use tax audit program disclosed net deficiencies of more than $497.7 million. Taxpayers received more than $131.5 million in sales and use tax audit refunds.
Areas of Taxpayer Noncompliance
To comply with requirements of the Taxpayers' Bill of Rights, the BOE annually:
- Identifies the areas of the Sales and Use Tax Law where taxpayer noncompliance is highest.
- Classifies the types of businesses making errors.
Failure to pay use tax on purchases from out-of-state vendors was the most costly and the most frequent error, representing one in six taxpayer errors. This noncompliance category accounted for nearly 29 percent of all net sales and use tax audit deficiencies (less refunds) or more than $122 million in unpaid tax.
The category of Unsupported sales for resale category was the second most costly and the third most frequent category of taxpayer noncompliance. Almost one in eight taxpayer errors occurred in this category. This area of noncompliance made up 18 percent of all net sales and use tax audit deficiencies (less refunds), totaling more than $76 million in unpaid tax.
The following charts summarize the BOE's findings on the types of taxpayer noncompliance for fiscal year 2010-11 and provide other tax compliance information required by the Taxpayers' Bill of Rights.
Analysis of Noncompliance, 2010-11
Types of Noncompliance
Frequency of Errors/Revenues Collected
Types of Business Making Errors
Ranked by Revenues Collected
|Type of Business||Percentage
listed from high to low
|Public Utilities, Transportation, and Allied Services||12.95%||1|
|Publishers and Distributors of Light Industrial Equipment||11.35%||2|
|Manufacturers and Wholesalers of Store and Office Equipment||8.19%||3|
|Eating and Drinking Places with General On-Sale Licenses||6.78%||4|
|Construction Contractors and Sellers of Building Materials||5.40%||5|
|Eating and Drinking Places without Alcoholic Beverages||4.76%||7|
|Producers, Manufacturers, and Wholesalers of Petroleum Products and Related Equipment||3.93%||8|
|Manufacturers and Wholesalers of Electronic Equipment||3.87%||9|
|Full-Time Specialty Stores||3.67%||10|
|All Other Businesses||34.20%|
Noncompliance may also be intentional. As a result of identified tax evasion, the Investigations Division issued sales and use tax audit billings in the amount of $13.4 million in 2010-11.
Special Taxes and Fees
In 2010-11, the BOE administered more than 20 special tax and fee programs that encompass a broad range of activities and transactions. Revenues from the insurance tax, alcoholic beverage tax, and a portion of cigarette tax receipts are allocated to the state’s General Fund. Other special taxes and fees fund specific state services, from highway construction to recycling programs. The BOE administers most of the special tax and fee programs in cooperation with other state agencies.
BOE-administered special tax and fee program revenues totaled $10.3 billion in 2010-11, an increase of 35 percent from 2009-10 total revenues of $7.67 billion (again, driven by the fuel tax swap). Fuel taxes totaled $5.7 billion, while alcohol and tobacco taxes totaled approximately $1.2 billion.
2010-11 Special Taxes and Fees Revenues
Billions of dollars
This section includes information regarding special tax and fee program revenue, significant program highlights, and the number of program registrants. More detailed information regarding individual tax and fee programs is found in publication 41, Taxes and Fees Administered by the California State Board of Equalization, which accompanies this report. This chart includes information on what is taxed or licensed, who pays, tax and fee rates, year-to-year revenue changes, and how revenues from each program are used on behalf of California residents.
Activity fees revenue totaled $331,000 in fiscal year 2010-11. Entities pay the fees when applying for permits and other types of requests from the Department of Toxic Substances Control (DTSC). They are not required to be registered with the BOE on an ongoing basis.
Aircraft Jet Fuel Tax
Aircraft jet fuel tax collections for the year totaled $2.4 million, based on the taxable sale or use of 119 million gallons of jet fuel. As of June 30, 2011, 217 jet fuel dealers were registered with the BOE.
Alcoholic Beverage Tax
Alcoholic beverage tax revenues totaled $334 million in 2010-11, a 7.4 percent increase from 2009-10. Program registrants numbered 6,563 at the end of the fiscal year. Consumption data is found in Tables 28 and 29 in the Appendix.
California Tire Fee
Revenues totaled $47.9 million in 2010-11. At fiscal year-end, 12,355 businesses were registered for the program that the BOE administers in cooperation with the California Department of Resources Recycling and Recovery (CalRecycle) and the Air Resources Board (ARB).
Childhood Lead Poisoning Prevention Fee
In 2010-11, fee collections totaled $19.8 million. At the end of the fiscal year, 975 feepayers were registered for the program. The BOE administers this fee in cooperation with the California Department of Public Health (CDPH).
Cigarette and Tobacco Products Licensing Program
This program requires statewide licensing of all manufacturers, importers, distributors, wholesalers, and retailers of cigarette and tobacco products. License revenues for 2010-11 totaled $1.7 million. During the fiscal year, the Special Taxes and Fees Division issued licenses to 26 cigarette manufacturers and importers, 70 tobacco product manufacturers and importers, 582 distributors, 424 wholesalers, and 36,748 retailers. The division also processed 430 citations and conducted 240 appeal hearings.
The program also requires the BOE to conduct compliance inspections of cigarette and tobacco product vendors. In 2010-11, the Investigations Division conducted 10,385 compliance inspections, issued 406 citations for various violations of the cigarette and tobacco tax laws, and executed 423 seizures of contraband products. The seizures included contraband tobacco products with a wholesale cost of $370,002 and 124,197 packs of contraband cigarettes.
Cigarette and Tobacco Products Taxes
Combined revenues from these taxes totaled $911 million in 2010-11, including $833 million from cigarettes and $77 million from other tobacco products. These taxes are collected from cigarette and tobacco products distributors. At the end of June 2011, 671 distributors held licenses under this program. This registration figure does not include California cigarette or tobacco product consumers who are required to pay tax on their out-of-state (Internet or mail order) purchases because they do not hold licenses on an ongoing basis. Consumption data is found in Appendix Table 30B on page A-57.
Diesel Fuel Tax
There were 29,667 businesses and individuals registered for the diesel fuel tax program as of June 30, 2011. Most are registered for fuel tracking or refund purposes. Two hundred and forty-nine (249) diesel fuel suppliers paid more than 91 percent of the 2010-11 diesel fuel tax.
Please note: Combined revenues from diesel and use fuel taxes totaled $478 million for 2010-11, including $69.4 million from the interstate user tax.
Disposal fee revenue totaled $4.5 million. There were nine registered facilities for fiscal year 2010-11. The BOE administers this hazardous waste fee program in cooperation with the DTSC.
Electronic Waste Recycling Fee
Electronic Waste Recycling Fee revenue totaled $156 million in 2010-11. As of June 30, 2011, 10,333 retailers of specified new or refurbished electronic equipment were registered for this program. These retailers sell "covered electronic devices" (CEDs) that are subject to the fee. The BOE administers the program for CalRecycle in cooperation with the DTSC.
Emergency Telephone Users Surcharge
Total revenues for 2010-11 were $86.5 million. With 505 telephone and Voice over Internet Protocol (VoIP) service suppliers registered as of June 30, 2011, the BOE administers this surcharge in cooperation with the California Office of Technology Services (OTech).
Energy Resources Surcharge
Revenues totaled $56.9 million in 2010-11 with 110 electric utilities and consumers as of June 30, 2011.
Revenues totaled $40.7 million in 2010-11 with 49,948 program registrants as of June 30, 2011.
Revenues totaled $4.8 million in 2010-11. At the end of the fiscal year, 190 facilities were program registrants. The BOE administers this hazardous waste fee program in cooperation with the DTSC.
Generator fee revenues totaled $20.6 million in 2010-11. Program registrants included 6,151 feepayers with a total of 19,587 sites in the state as of June 30, 2011. The BOE administers this hazardous waste fee program in cooperation with the DTSC.
Revenue from this tax, levied against insurance companies instead of most other California taxes, totaled $1.9 billion for 2010 business. With 2,040 insurance companies registered to pay the tax, and 550 surplus line brokers registered for administrative purposes as of June 30, 2011, the BOE, the State Controller's Office (SCO), and the Department of Insurance (DOI) share administrative responsibilities.
Integrated Waste Management Fee
Revenues totaled $42.3 million in 2010-11. With 169 solid waste landfill and wood waste facility operators registered for the program as of June 30, 2011, the BOE administers the program in cooperation with CalRecycle.
Marine Invasive Species Fee
Revenues totaled $5 million for 2010-11. With 4,175 feepayers registered, the BOE administers the program in cooperation with the State Lands Commission (SLC).
Motor Vehicle Fuel Tax
Revenues totaled $5.2 billion for 2010-11. There were 282 businesses (133 suppliers and 149 other accounts) registered in the program as of June 30, 2011.
Natural Gas Surcharge
Surcharge revenue totaled $597 million in 2010-11. As of June 30, 2011, eight public utility gas corporations and four consumers who purchased gas through interstate pipelines were registered for the program, which the BOE administers with the California Public Utilities Commission (CPUC).
Occupational Lead Poisoning Prevention Fee
Total revenues for 2010-11 were $3.1 million. With 12,021 feepayers were registered as of June 30, 2011, the BOE administers the program in cooperation with the CDPH.
Oil Spill Prevention and Administration Fee
Revenues for 2010-11 totaled $24.8 million. With 41 registered for this program as of June 30, 2011, the BOE administers the fee in cooperation with the Department of Fish and Game (DFG).
Oil Spill Response Fee
Oil spill response fees were not collected from the 29 program registrants in 2010-11 because the Oil Spill Response Trust Fund reached its maximum $50 million level in 1991-92. The BOE administers the fee in cooperation with the DFG.
Underground Storage Tank Maintenance Fee
Revenues totaled $332 million in 2010-11. With 7,695 feepayers with 13,605 tank locations registered, the BOE administers the program in cooperation with the State Water Resources Control Board (SWRCB).
Water Rights Fee
Revenues totaled $8.1 million in 2010-11. With 13,168 feepayers registered as of June 30, 2011, the BOE administers this program in cooperation with the SWRCB.
Motor Carrier Office Programs
International Fuel Tax Agreement (IFTA)
Interstate User Tax
Most interstate motor carriers who travel on California highways pay the state's interstate user tax through the International Fuel Tax Agreement (IFTA), an agreement among the 48 contiguous states and 10 Canadian provinces. The vast majority of IFTA revenue comes from diesel fuel use. There were 25,244 California-based IFTA licensees at the end of the fiscal year. Carriers who travel only between California and Mexico instead pay the interstate user tax. There were 1,008 of these non-IFTA carriers registered as of June 30, 2011.
Use Fuel Tax
As of June 30, 2011, 843 alternative fuel users and 204 fuel vendors were registered with the BOE.
Please note: Combined revenues from diesel and use fuel taxes totaled $478 million for 2010-11, including $69.4 million from the interstate user tax.
Staff members in the BOE’s Special Taxes and Fees Division provide direct assistance to the businesses that pay special taxes and fees. The BOE processed 324,190 special tax and fee program returns during the 2010-11 fiscal year.
Staff in the Special Taxes and Fees Division have the primary responsibility for auditing special tax and fee program accounts. This year, special tax and fee audits revealed more than $24.6 million in net tax and fee deficiencies and identified more than $84.8 million in refunds.
BOE special taxes and fees compliance staff ensure proper registration and licensing of businesses, assist taxpayers in interpreting tax and fee laws and regulations, and provide help with tax and fee returns. Compliance personnel also collect delinquent tax and fee payments and refer suspected tax evasion or fraud cases to the agency's Investigations Division.
Fuel Tax Compliance
BOE staff members at California Highway Patrol (CHP) Truck Inspection Facilities and the CDFA Agricultural Inspection Stations enforce the state’s fuel tax laws. They ensure that motor carriers traveling into California without current fuel tax licenses or fuel trip permits are brought into compliance before traveling on the state’s highways. Staff members assess penalties for noncompliance and collect outstanding taxes. BOE personnel at the CHP inspection facilities also identify goods and equipment being shipped into California that may be subject to sales or use tax.
Cigarette Tax Compliance and Enforcement
The BOE continued its efforts to identify out-of-state sellers of cigarettes who sell to California consumers through the mail or over the Internet. The out-of-state vendors are required by the federal Jenkins Act to report information regarding these sales to the BOE. California consumers who buy unstamped cigarettes in this manner are responsible for the excise and use tax on these purchases.
In California, it is illegal to sell cigarettes or roll-your-own tobacco unless the brand is included on the Tobacco Directory maintained by the AG. To provide retailers relief of financial hardship resulting from the loss of cigarette and roll-your-own tobacco inventory when it becomes illegal as a result of its removal from the Tobacco Directory, Assembly Bill 2496 was passed, effective January 1, 2011. Among other provisions, this law permits a licensed retailer to possess, transport, and sell previously purchased cigarettes up to 60 days from the effective date of the product’s removal from the Tobacco Directory.
In 2010-11, 76 percent of cigarette seizures contained products not listed on the Tobacco Directory. Although this is a 15 percent increase from the previous year, it is anticipated that the rate of cigarette seizures for violation of the Tobacco Directory may begin to decrease as a result of AB 2496.