I’m fighting to protect your rights and bring about fair tax policies that help grow our economy and jobs. As your taxpayer advocate and elected member of the California State Board of Equalization, I welcome your ideas about how we can work together to solve the problems facing our state.
California Returning Millions to Business Owners
This spring thousands of business owners throughout California are receiving a welcome surprise in their mailbox. Rather than a notice of a new tax, fee or audit, they’re getting a check from the State Board of Equalization.
No, we’re not talking about annual income tax refunds from the Franchise Tax Board. These checks are marked "SECURITY REFUND" and represent a dramatic shift in how California’s elected tax board welcomes new businesses to our state.
Previously new corporations and LLCs were forced by the BOE to turn over anywhere from $2000 to $50,000 of their own money as security before they could make a single legal taxable sale. This "security" was held just in case a business might default on its taxes during its first three years of operation.
It was a uniquely California-style shake down. Rather than encourage new business start-ups, the government robbed them of the capital they needed to be successful, only to sit on it for three years before returning it.
I took a close look at the program and found it didn't make sense for taxpayers or the state. Security was rarely applied, and staff time and energy were needlessly being diverted from assignments that could yield real revenue for the state.
At my urging, the Board of Equalization voted in December to end its long-standing security policy. Going forward, the Board will require security only when a business has a history of non-payment or poses a high compliance risk.
So far, we’ve identified nearly 10,000 accounts with security totaling $95.4 million eligible for release. We are releasing this security back to its rightful owners. Nearly all non-cash refunds, like bonds, TCDs and guaranties, are already out the door. Cash refunds begin mailing this month.
Tax Legislation For Disabled Veterans
Veterans wounded in the defense of our country have earned our appreciation and respect. That’s why I am proud to sponsor legislation to enhance tax benefits for California’s disabled veterans. Authored by Senator Steve Knight, SB 1113 will help ensure that disabled veterans who encounter bureaucratic delays can still claim a key property tax exemption.
Under California law, veterans who receive a 100% disability rating from the U.S. Department of Veterans Affairs (VA) may be eligible for a property tax exemption on the value of their home of up to $124,932 or $187,399 in 2014 and equivalent amounts adjusted for inflation in future years. The exemption starts on the date of disability and disabled veterans may claim a refund for up to four years of back taxes paid.
Unfortunately, VA backlogs force some veterans to wait more than four years to receive their disability rating certifications. As a result, they’ve missed out on thousands of dollars in property tax refunds to which they are entitled to receive.
SB 1113 would increase the availability of refunds on taxes previously paid from four years to eight years, allowing veterans to receive the full benefit of their exemption, even if the rating process takes more than four years to complete.
These brave men and women have sacrificed greatly for our country and should not be penalized by a slow bureaucratic process. This legislation is necessary to give veterans better access to the full benefit offered to them by a grateful state.
California’s Gas Tax Nightmare
California taxpayers don’t have to fall sleep to have a nightmare. They experience one each and every day when they encounter a costly, confusing and constantly-changing tax system. Unfortunately, most efforts to change this system only make matters worse.
Take the gas tax, for instance.
California consumers currently pay 71 cents per gallon in taxes every time they fill up their tanks. That’s the highest gas tax rate in the country. The average American pays less—about 50 cents per gallon. That translates into hundreds of dollars a year in higher taxes for Californians.
Adding insult to injury, Californians are double taxed for gas. Sales tax is calculated after excise taxes have already been added. That means we pay a tax on a tax, which is just plain wrong.
Double taxation aside, most California motorists wouldn’t mind paying high gas taxes if it meant we could drive the nation’s finest roads. But that’s not how things work. Instead of seeing our tax dollars invested wisely, we’re constantly told we should pay more. Our freeway system, once the envy of the world, has become an embarrassment.
Further complicating matters, in 2010 the Governor and Legislature adopted a convoluted gas tax scheme over my objections. This scheme, known as the "fuel tax swap," is so confusing even tax experts have a hard time understanding it.
Lawmakers didn’t adopt this scheme to make taxes simpler; they did it to move about a billion dollars to the general fund.
Although the Board of Equalization (BOE) didn’t create the formula, we at the BOE have to live with it. Each year we must adjust the fuel tax rate to ensure the state receives neither more nor less revenue than it would have under the prior tax system.
Audit of BOE Headquarters Building Could Save Taxpayers Millions
I recently testified in front of the Joint Legislative Audit Committee in support of Assemblyman Roger Dickinson’s request for an audit to determine the overall costs of repairing the problem-plagued Board of Equalization headquarters building versus relocating to a new facility.
The state is currently wasting millions of taxpayer dollars on repairs, while ignoring the obvious need for a new cost-effective headquarters location.
I’m confident a state audit will provide the evidence we need to move forward.
My district includes the Sacramento area, home to the BOE headquarters building and many of the employees who work there.
I am pleased to report that the audit was approved and should be completed in about five months.
Mark your calendars for some upcoming events that may be of interest to you.
- On Wednesday, April 30, at 10:00 a.m. I’ll be hosting a telephone townhall for grocers. The event, co-hosted by the California Grocers Association, will provide information on tax issues specific to the grocery and convenience store industry. The tele-townhall will address such topics as sales and use tax, taxable versus non-taxable sales, recordkeeping, cigarette and tobacco products, and prescription drugs. To participate in the event, register in advance at boe.ca.gov/townhall or call 916-324-4970.
- If you are a small business owner, I invite you to join me at one of my upcoming free Small Business Seminars. These seminars will address topics such as sales and use tax problems, loan programs and services, forms of ownership and recordkeeping. For more information, or to register online, please visit boe.ca.gov/seminars.
- Fresno Small Business Seminar
May 2, 2014, 9:00 a.m. - 2:30 p.m.
Gap Distribution Center
3400 Gap Drive
Fresno, CA 93727
- Santa Clarita Small Business Fair and Expo
May 20, 2014, 9:00 a.m. - 2:30 p.m.
City of Santa Clarita-Activities Center
20880 Centre Pointe Pkwy
Santa Clarita, CA 91350
- I will also be holding a free event for nonprofit organizations in the Sacramento area, covering topics such as sales and use tax, property tax exemptions, compliance for expempt organizations and federal tax issues. The seminar will be on May 15 from 9:00 a.m. to 2:30 p.m. at the Ark of the Salvation Church in North Highlands. For more information, or to register online, please visit boe.ca.gov/nps.
- If you live in the Inland Empire, there are upcoming Sales and Use Tax Seminars taking place in your community. For more information, including a list of classes, please visit boe.ca.gov/runner/events.
Q - Are there property tax exemptions available for nonprofit organizations?
A - The Welfare Exemption is available for property owned and operated by organizations formed and operated exclusively for religious, scientific, hospital, or charitable purposes. It is jointly administered by the BOE and county assessors.
You can learn more about the Welfare Exemption by reading Publication 149.
In the News
Runner Cutting Ribbon for SCV Tax Office (SCV News, 4/15/14)
Ventura County businesses will see state cash refunds soon (Ventura County Star, 4/8/14)
BOE returns deposits to new businesses (The Sacramento Bee, 4/8/14)
Runner Fire Fee Legislation To Face First Committee Hearing (Big Bear Grizzly, 4/4/14)
My turn: California’s gas tax nightmare (Mountain Democrat, 3/26/14)
California State Board of Equalization Member George Runner Says the Fire Fee Bad Tax Gets Worse (Sierra Sun Times, 3/24/14)
Runner Proposes Tax Help for Disabled Veterans (The Santa Clarita Valley Signal, 3/17/14)
BOE Chairman calls for audit of BOE’s building repair costs (Central Valley Business Times, 3/12/14)