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.