Open Letter to the Legislature - Spidell's California Taxes for

Call to action: Extend use tax due date, abate penalties
Spidell Publishing, Inc.® is launching a campaign for legislation to extend the due date for
filing use tax returns for registered taxpayers, and to abate penalties for the first year.
Allowing businesses an automatic (paperless) extension will ensure the success of the new
use tax registration program, as it would be aligned with the extended due date for filing the
business income and franchise tax returns. Thus, a calendar-year taxpayer would be required
to file the 2009 use tax return on or before October 15, 2010, without facing penalties.
We are asking for your help to try to make this change that will help you and your clients not
only this tax season, but all future tax seasons.
Allowing an extended due date change would allow taxpayers to gather use tax information
at the same time as income and franchise tax information. Also, software companies may be
able implement electronic filing for both FTB returns and use tax returns (they are not
currently offering e-filing for use tax returns).
In short, aligning the due date of use tax returns with income tax returns would make sense
for taxpayers and the state.
Help us by contacting your Legislator and Board of Equalization representative. We have a
letter and contact list below that you can use.
Thanks for your help in trying to make tax filing easier and more reasonable.
February 3, 2010
Open letter to the Legislature
And the elected members of the Board of Equalization
Dear Elected Representatives:
The new use tax registration and filing requirements imposed under ABX4 18 (Ch. 09-16)
are set to create havoc on the Board of Equalization staff and businesses throughout
California. We support the efforts of the State of California to collect the correct amount of
tax, and use tax filing is one acceptable method to collect this tax. However, there is a clear
need to change the mandatory April 15 deadline in order to make this program successful.
Therefore, we ask that you immediately sponsor legislation to make these changes:
Allow a six-month automatic (paperless) extension for filing (October 15 for
calendar-year businesses, consistent with FTB tax return extensions); and
Provide for automatic penalty abatement for businesses who file 2007, 2008, and
2009 use tax on or before October 15, 2010.
Like many budget trailer bills, ABX4 18 was enacted in haste in late July 2009. As drafted, it
did not give enough time for the BOE to implement a brand new program — one never
before in place in California or any other state. The BOE has made great efforts to notify
businesses of their new registration and filing requirements, and to put processes in place in
time to meet the April 15 filing deadline. However, not all businesses are aware of their new
registration requirement, let alone of their obligation to file use tax returns, even when no tax
is due (yes, the legislation requires that returns be filed showing a zero tax liability).
An easy fix to the problems that ABX4 18 is about to cause is to allow businesses an
automatic extension of the filing due date from April 15 to October 15. Here are the reasons
to substantiate this legislative change:
Taxpayers are currently allowed an automatic filing extension for income and
franchise tax returns with the FTB and should be allowed a similar extension for
use tax returns (currently, only a one-month extension is allowed, but taxpayers
must make a written request and wait for approval from the BOE);
The existing April 15 due date will not allow enough time for businesses,
especially fiscal-year filers, to gather needed information;
Allowing an extended due date for BOE returns that is aligned with FTB extended
due dates, will allow businesses to file their use tax returns at the same time as their
income and franchise tax returns (most businesses file on extension); and tax
preparation software developers might be able to support e-filing for both returns at
the same time (no tax preparation software currently supports the new use tax
registration program, again because there is no time for program development);
P.O. Box 61044  Anaheim, CA  92803-6144  Telephone: (714) 776-7850  Fax: (714) 776-9906
Web site:  E-mail: [email protected]
February 3, 2010
Page 2
Fiscal-year taxpayers may not have an opportunity to meet with their tax advisors
prior to the April 15 due date to register, gather information, and timely file use
tax returns;
Tax professionals, who will file a majority of use tax returns, are at their busiest
with personal income tax return filings during April, and it will be extremely
difficult, if not impossible, to comply with an April 15 due date for businesses,
especially since tax preparation software does not currently support use tax return
filing; and
An October 15 extended due date will likely result in returns coming into the
BOE over a ten-month time period. Taxpayers who file their FTB returns will file
their use tax returns at the same time and the work volume will not be all in April.
Besides allowing a six-month automatic extension, we believe there should be legislative
forgiveness of penalties for the first year because many taxpayers are not aware of the use tax
registration requirement. The BOE did their best with outreach, but they clearly did not reach
all businesses. Plus, automatic use tax registration will not occur until March 2010. This
provides little time for taxpayers to search through records to obtain the needed information
to file by the April 15 filing deadline. Under current law, businesses must file a paper request
with the BOE for penalty forgiveness.
We believe that, by allowing businesses an automatic six-month extension to file, you will
increase compliance. By allowing automatic penalty forgiveness, we believe that you will
decrease the anger and frustration felt by the taxpaying community.
We have just completed a series of tax seminars where we instructed close to 20,000 tax
professionals throughout California about this new requirement. When we explained the
provisions of ABX4 18, they were astounded that the Legislature selected April 15 as the due
date. You may have not heard any complaints from your constituents at this juncture
because, frankly, they may just not be aware of the new mandates placed upon them.
If I can be of any assistance in this quest for change, please contact me at (714) 776-7850, or
you may contact Gina Rodriquez, Spidell’s Sacramento editor, at (530) 676-0662.
Thank you for your prompt consideration.
Lynn Freer
Spidell Publishing, Inc.®
Gina Rodriquez
Sacramento Editor
Spidell Publishing, Inc.®
P.O. Box 61044  Anaheim, CA  92803-6144  Telephone: (714) 776-7850  Fax: (714) 776-9906
Web site:  E-mail: [email protected]
February 3, 2010
Call to Action: Request Legislative Fix to
Use Tax Registration/Filing Requirements
(please see corresponding link for the open
letter to our elected officials)
Here are the people you should contact about allowing businesses,
including tax professionals an automatic six-month extension for
filing 2007, 2008, and 2009 use tax returns, which are due April
15, under current law, and to allow automatic penalty abatement
for businesses that file their 2007, 2008, and 2009 use tax returns
with the BOE by the extended due date.
Legislative Members
Go to, and type in your Zip Code
and click the “Search” box. The contact information of your elected
representatives will appear on a list.
Board of Equalization Members
Betty Yee, Chairwoman, State Board of Equalization
[email protected]
Tel: 916-445-4081
Fax: 916-327-4003
Staff: [email protected] (Gary Qualset)
Bill Leonard, Member
[email protected]
Tel: 916-445-2181
Fax: 916-327-4003
Staff: [email protected] (Margaret Pennington)
[email protected] (Barbara Alby)
[email protected] (Eric Reslock)
Michelle Steele, Member
[email protected]
Tel: 916-445-5713
Fax: 916-323-0546
Staff: [email protected] (Neil Shah)
[email protected] (Louis Barnett)
[email protected] (Ken Maddox)
Jerome Horton, Vice Chair
Tel: 916-445-4154
Fax: 916-323-2869
Staff: [email protected] (Doug Anderson)
John Chiang, Ex Officio Member
[email protected]
Tel: 916-445-2636
Fax: 916-322-4404
Staff: [email protected] (Marcy Jo Mandel)