BOE use tax issues: plus: child support withholding; filing status guidance.

• Author: Williams, Leonard W.
• Position: CATax

Taxpayers with annual gross business receipts of at least $100,000 have been receiving letters from the California Board of Equalization stating that they must register with the BOE as "qualified purchasers" and report and pay use tax.

Use tax isn't new, but the registration requirement is. Most CalCPA members probably have received calls from clients who are wondering what these letters are all about, despite the fact that the letters explain the phenomenon.

'We're From the Government. We're Here to Help You'

A BOE "sales tax compliance & outreach representative" recently visited a CalCPA member. The representative had proper identification and said that the BOE hired 70 representatives to review compliance with sales and use tax regulations at all businesses in California. He then asked to see the CPA's purchase invoices for recently purchased fixed assets and supplies, and explained the new registration requirement.

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Representatives also check the reasonableness of what is being reported, i.e., how the business owners can make a living on what they report, compared to what the business looks like. They also check the type of permit against the type of business they observe. Certain aspects of these visits seem similar to those made by IRS and FTB auditors.

Child Support Withholding Guide for Businesses

California's Employment Development Department issued "California Child Support A Guide for Business," which includes procedures on new hire reporting, remitting payments electronically, income withholding procedures and FAQs. The user-friendly format contains links to critical forms and websites and can be obtained at www.childsup.ca/Employers.

Newly Married Couple--One Person Has a Large Pre-marital Year Tax Problem

The first time a lax preparer usually hears of these types of problems is when the couple comes in for their tax appointment at the beginning of the year following their marriage. It usually starts with: "Should we file as married filing jointly or married filing separately?" Often, the question is whether or not each may file as single. The answer is no.

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In a recent phone call, a client told his tax preparer that his divorce was final Dec. 28, but he's having a hard time getting the data from his ex-wife for what she did last year. When told that they can't file married filing jointly because marital status is determined as of Dec. 31 of the year in question, he replied, "You mean...