Sales Tax Evasion
What is sales tax evasion?
Under the California Revenue and Taxation Code, any person who intentionally evades the reporting, assessment or payment of sales taxes that would otherwise be due is guilty of sales tax evasion. Violators are subject to fines and/or jail time.
In general, retail sales of tangible personal property in California are subject to sales tax. The responsibility for paying the sales tax is upon the seller (retailer). The sales tax rate varies statewide; however, the statewide tax rate base is 7.25 percent. The rate is higher in locations where voters have approved additional "district taxes." See the Sales and Use Tax Rates page to find the current sales tax rate for your location.
Examples of sales tax evasion:
- Retailers collect sales tax reimbursement from their customers on sales but intentionally fail to report and pay the tax collected.
- Retailers intentionally fail to report all retail sales on which sales tax is due.
Why is sales tax evasion harmful?
- Sales tax supports a broad range of state services, from parks to prisons. Sales tax evasion reduces the revenue available to fund these important public services.
- In addition, sales tax is a major source of revenue for many cities and counties, which depend on the income for police and fire service, courts, roads, health care, and more. Tax evasion hurts all of us by reducing the amount of money available for these essential services.
- Honest businesses are placed in a competitive disadvantage by deceitful sellers who do not pay the tax they owe.
Report Sales Tax Evasion
Public awareness and involvement are essential in eliminating sales tax evasion. To report suspected sales tax evasion, contact the Board of Equalization Investigations Division at 1-916-324-0105 or the Tax Evasion Hotline at 1-888-334-3300. You can also submit a complaint online. By law, all complaints are kept confidential unless a court orders otherwise.