In-State Service Business Use Tax Collection Effort Component
- BOE-403-CL, Tax Gap Instate Service Contact Letter
- BOE-403-CLW, Tax Gap Instate Service Contact-Use Tax Return Worksheet
- Publication 123-TG, California Businesses: How to Identify California Use Tax Due
- Voluntary Disclosure of Use Tax for In-State Consumers
The Board of Equalization (BOE) is currently pursuing the collection of use tax owed by service industry businesses statewide. California businesses that are not required to hold a seller's permit are being contacted by the BOE by letter and asked to review their records and self-report any use tax due for the past three years. Use Tax is the complement to the state's sales tax and was approved in 1935 to ensure California merchants are not at a competitive disadvantage to out-of-state competitors.
The BOE administers 25 tax and fee programs that produce more than $53 billion annually. The Sales and Use Tax is the largest tax program comprising about 88 percent of total revenues. While most taxes owed by taxpayers are appropriately paid, some taxes owed go unpaid. The difference between taxes owed and taxes paid is referred to as the "tax gap." Estimates are that $2 billion in sales and use tax goes unpaid each year. The in-state service industry use tax effort is one way the BOE is trying to address a portion of the tax gap.
To offer ideas on tax gap solutions, you can email or write to Board of Equalization's Tax Policy Division MIC: 92, P.O. Box 942879, Sacramento, CA, 94279-0092.