The Courts:
Board Decision in Sales Tax Appeal Could Result in Double Taxation

In an appeal on the question of whether the state had the authority to impose on an out-of-state business the duty to collect use tax (Appeal of Werther International, Inc.), the board unanimously agreed with its staff that tax should have been collected. Board staff pointed out that the president of the firm made several business trips to California.

(Cal-Tax: This decision could result in double taxation. Because Werther International did not collect use tax from its customers, the use tax presumably was paid by purchasers either through the personal income tax line for payment of use tax or through board audits of businesses. If the tax has been paid by the customer and the board is going to assess Werther International for the tax on the same product, this is double taxation. This problem needs prompt attention in light of AB 469 and AB 4X 18.)

Cal-TaxReports, September 8, 2009

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