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Accounting for the sales tax decrease

July 12, 2011

Sales tax went down one whole percent on July 1, thanks to the new state budget. Statewide the tax is now 7.25 percent, and 7.75 percent in Inyo County. Among the retailers who have adjusted to the change is Jack’s Restaurant in Bishop, which offers residents a “locals” discount. Photo by Mike Bodine

The elected officials of the Golden State have passed a budget that includes the discontinuance of a 1 percent sales tax increase.
As of July 1, the first day of the 2011-12 fiscal year, the statewide base use rate is 7.25 percent; in Inyo County, it is 7.75 percent, to accommodate additional, local taxes.
The State Board of Equalization explained in a press release, “In areas where there are voter-approved district taxes, the total tax rate related to sales and purchases is the statewide base tax rate of 7.25 percent plus any applicable district tax.”
The BOE has also published tips about the new taxes, including partial exemption rates, what to do and what to look for as a consumer or a business.
The BOE said it is aware that some retailers may have not yet reprogrammed cash registers and other systems in time for the tax rate change. A business must return to the customer or pay to the state the balance of any charge or sale compiled using the old tax rates.
For returning merchandise purchased before July 1, but returned after that date, the refund should be based on the rate in effect at the time of the sale.
The BOE defines a “date of sale” as when a customer takes title to or possession of an item and not when payment is received. And, “sales are subject to the applicable tax rate in effect when the merchandise is delivered to the customer, unless a contract specifically identifies and passes title to the customer at a different time,” according to the BOE website.
For fixed-price contracts, the BOE says that these agreements are not subject to tax increases. However, if tax decreases during the term of the contract, any future sales would be based on the new, lower rate.
Rates on partial state tax exemption rate decreased from 6.25 percent to 5.25 percent for qualifying sales of the following: teleproduction or other postproduction service equipment; farm equipment and machinery; diesel fuel used in farming activities or food processing; timber harvesting equipment and machinery; and racehorse breeding stock.
New tax rate charts, the BOE-180, Sales Tax Reimbursement Schedules, for transactions up to $100, are available at www.boe.ca.gov/sutax/streimsched.htm.
Businesses and contractors may receive future notices of tax changes by registering with the BOE. An account e-mail address may be added or updated when logged in as a registered eClient and select the Maintain Your Sales and Use Tax Account link. To register or to log in as an eClient, begin by selecting the eServices tab at www.boe.ca.gov.
For current listings of California sales and use tax rates by city and county, go the BOE’s website at www.boe.ca.gov/. The website also includes a link to a free sales and use tax rate locator, http://www.geotax.com, that allows you to determine a tax rate for any address in the state. However, the BOE provides the GeoTax link only as a public service. The BOE does not maintain the website and is not responsible for the content or accuracy of the information on that site.
For more information, go to www.boe.ca.gov or call the Taxpayer Information Section at (800) 400-7115, from 8 a.m.-5 p.m.

 

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