Sales Tax Evasion
What is sales tax evasion?
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".
Under the California Revenue and Taxation Code, any person who evades the reporting, assessment or payment of sales taxes that would otherwise be due may be guilty of sales tax evasion. Violators are subject to fines and/or jail time.
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 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.
- Sellers who do not pay the tax they owe put honest businesses at a competitive disadvantage.
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 916-324-0105 or the Tax Evasion Hotline at 888-334-3300. To submit a complaint by e-mail, please click here.