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Business-tax scofflaws to pay new fee

New law begins Jan. 1, 2011, to pay for collection of delinquent taxes

As if the economy isn't bad enough, more than 90,000 California businesses owing back taxes could be assessed a fee on past-due amounts beginning in 2011, the California State Board of Equalization (BOE) announced Monday (Dec. 27).

Under the recently enacted Senate Bill 858, businesses will be notified of the "potential fee" beginning Jan. 1, the board announced.

In Palo Alto, 84 businesses could be affected and 72 Menlo Park businesses are on the list, a board spokeswoman said.

The new law requires the board to collect a fee on any person failing to pay owed taxes and applies to most taxes and fees collected by the board, including sales tax. The fee is intended to cover collection costs of past-due amounts.

The fee may only be imposed after the board has notified a delinquent taxpayer of the potential fee by mail. The fee amount, adjusted annually, ranges from $185 to $925 for calendar year 2011.

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Businesses owing $250.01 to $2,000 would be assessed $185; medium-liabilities between $2,000.01 and $50,000 would pay $550 and anyone owing in excess of $50,000 would pay $925.

Business owners would have a 90-day grace period from the time of notification to pay taxes in full before the fee is imposed, according to the board.

Taxpayers unable to pay in full could avoid the fee if they qualify for and complete an installment-payment agreement. The board can waive the collection-recovery fee if it finds that failure to pay the taxes was due to reasonable cause and circumstances beyond the taxpayer's control.

The fee is estimated to generate $5.2 million additional revenue from the collection of taxes, fees, and surcharges for the remainder of the 2010-11 fiscal year and $19.4 million to $22.6 million annually beginning in 2011-12, according to the board.

The five-member board of equalization collects more than $48 billion annually in taxes and fees supporting state and local government services. It hears business tax, franchise and personal income-tax appeals, and aids in the assessment and administration of property taxes. The notice is available at www.boe.ca.gov/news/pdf/l267.pdf.

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Sue Dremann
 
Sue Dremann is a veteran journalist who joined the Palo Alto Weekly in 2001. She is a breaking news and general assignment reporter who also covers the regional environmental, health and crime beats. Read more >>

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Business-tax scofflaws to pay new fee

New law begins Jan. 1, 2011, to pay for collection of delinquent taxes

by / Palo Alto Online

Uploaded: Tue, Dec 28, 2010, 10:30 am

As if the economy isn't bad enough, more than 90,000 California businesses owing back taxes could be assessed a fee on past-due amounts beginning in 2011, the California State Board of Equalization (BOE) announced Monday (Dec. 27).

Under the recently enacted Senate Bill 858, businesses will be notified of the "potential fee" beginning Jan. 1, the board announced.

In Palo Alto, 84 businesses could be affected and 72 Menlo Park businesses are on the list, a board spokeswoman said.

The new law requires the board to collect a fee on any person failing to pay owed taxes and applies to most taxes and fees collected by the board, including sales tax. The fee is intended to cover collection costs of past-due amounts.

The fee may only be imposed after the board has notified a delinquent taxpayer of the potential fee by mail. The fee amount, adjusted annually, ranges from $185 to $925 for calendar year 2011.

Businesses owing $250.01 to $2,000 would be assessed $185; medium-liabilities between $2,000.01 and $50,000 would pay $550 and anyone owing in excess of $50,000 would pay $925.

Business owners would have a 90-day grace period from the time of notification to pay taxes in full before the fee is imposed, according to the board.

Taxpayers unable to pay in full could avoid the fee if they qualify for and complete an installment-payment agreement. The board can waive the collection-recovery fee if it finds that failure to pay the taxes was due to reasonable cause and circumstances beyond the taxpayer's control.

The fee is estimated to generate $5.2 million additional revenue from the collection of taxes, fees, and surcharges for the remainder of the 2010-11 fiscal year and $19.4 million to $22.6 million annually beginning in 2011-12, according to the board.

The five-member board of equalization collects more than $48 billion annually in taxes and fees supporting state and local government services. It hears business tax, franchise and personal income-tax appeals, and aids in the assessment and administration of property taxes. The notice is available at www.boe.ca.gov/news/pdf/l267.pdf.

Comments

Disgusted
College Terrace
on Dec 28, 2010 at 11:08 am
Disgusted, College Terrace
on Dec 28, 2010 at 11:08 am

The State Franchise Tax Board is nothing more than a State run Mafia. We have to adjust down to our straitened circumstances and they just keep upping the ante. Worse than loan sharks.


why now?
Adobe-Meadow
on Dec 28, 2010 at 11:09 am
why now?, Adobe-Meadow
on Dec 28, 2010 at 11:09 am

If I don't pay my income taxes, IRS fines and interest start piling up quickly. Why has the government been so lax on business scofflaws?


Crescent Park Dad
Crescent Park
on Dec 28, 2010 at 12:49 pm
Crescent Park Dad, Crescent Park
on Dec 28, 2010 at 12:49 pm

Disgusted - I'm guessing you owe sales taxes?

I have my own business and pay sales taxes on a quarterly basis. I have no problem with penalizing late or past-due accounts.

You collect the taxes when you make your sale. There's no excuse as to why you don't have that money to pay the state when due.


anonymous
another community
on Dec 28, 2010 at 1:15 pm
anonymous, another community
on Dec 28, 2010 at 1:15 pm

"Why has the government been so lax on business scofflaws?"

See:

"Welfare, Corporate."


Walter_E_Wallis
Registered user
Midtown
on Dec 28, 2010 at 6:48 pm
Walter_E_Wallis, Midtown
Registered user
on Dec 28, 2010 at 6:48 pm

The only reason a business does not pay a tax is that they have no money to pay it. Another tax penalty and they might just go under more rapidly. Is that what you want?


anonymous
another community
on Dec 29, 2010 at 10:00 am
anonymous, another community
on Dec 29, 2010 at 10:00 am

Wally:

"The only reason a business does not pay a tax is that they have no money to pay it. "

Ridiculous blanket statement. Absurd on the face of it, and more so when you think about it.

Related - see:
Web Link

Most businesses will delay payments as long as possible, whether they have cash or not. American businesses (albeit large corporations that make it difficult for small businesses to compete) are sitting on over a trillion in cash.


mattress
Los Altos Hills
on Dec 29, 2010 at 10:54 am
mattress, Los Altos Hills
on Dec 29, 2010 at 10:54 am

Seems to me they're 'practicing' what the State 'preaches' - delaying payment until they have the money or the last possible moment.


Crescent Park Dad
Crescent Park
on Dec 29, 2010 at 11:17 am
Crescent Park Dad, Crescent Park
on Dec 29, 2010 at 11:17 am

"The only reason a business does not pay a tax is that they have no money to pay it."

You collect your payments from your customers - which includes sales tax. You divide the receipts between two accounts...accounts receivable and sales tax receivable. Sales tax receivable is an "untouchable" account - which then is paid to the state. The money should be there.


Dennis
Downtown North
on Dec 29, 2010 at 12:50 pm
Dennis, Downtown North
on Dec 29, 2010 at 12:50 pm

I hope Disgusted & Wallis are just trolling for the fun of it. Crescent Park Dad says it all.


Walter_E_Wallis
Registered user
Midtown
on Dec 29, 2010 at 7:02 pm
Walter_E_Wallis, Midtown
Registered user
on Dec 29, 2010 at 7:02 pm

CPDad - In an ideal world...
In the REAL world, the money goes where it will do the most for the company.


Dennis
Community Center
on Dec 29, 2010 at 7:41 pm
Dennis, Community Center
on Dec 29, 2010 at 7:41 pm

in the real world money that is owed to the government should not be diverted for "the company good". I am surprised anyone would support such behavior
Sounds like tea bagger speak


Crescent Park Dad
Crescent Park
on Dec 29, 2010 at 7:45 pm
Crescent Park Dad, Crescent Park
on Dec 29, 2010 at 7:45 pm

W: Perhaps you didn't read my opening post --- I run my own small business. I collect sales tax and I pay it to the CA BOE on a quarterly basis.

That is the real world - budget and always perform proper accounting.


anonymous
another community
on Dec 29, 2010 at 8:21 pm
anonymous, another community
on Dec 29, 2010 at 8:21 pm

CP Dad:

Wally wants a libertarian paradise where the invisible hand of the free market rules without "guvment" interference. Like in...

....Somalia.

Ah, the invisible hand:
Web Link
Web Link
Web Link


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