Tax man cometh

If only the state's small business owners knew. Come April 15, 180,000 of them will be required to file returns covering a sales tax on their Internet or telephone purchases from out of state. You might be unfamiliar with the law because the state doesn't have any money to publicize the new requirements. No electronic registration either - businesses have to download a form, fill it out, and mail it to the agency. Bill Leonard, one of the two Republicans on the five-member Board of Equalization, would like a one-month delay (so far just 2,000 businesses have filed). From Bill Barrett at Forbes:

Last summer, as part of its response to a budget crisis, the California legislature approved, and Gov. Arnold Schwarzenegger signed, a bill stepping up collection efforts of the state's "use" tax. This is a sales tax on items purchased from out-of-state sellers and then used in California. It is at the same level as the sales tax, as high as 10.75% in some cities. In-state taxpayers are supposed to declare and pay the use tax, but traditionally few have done so. The new law required any business with $100,000 or more in gross revenues not already registered with the equalization board to register and pay three years of use taxes, including 11% interest on back taxes, by April 15. The law was one of several California measures that aimed to raise money without raising taxes, a tactic in which the state has considerable experience.

Not that we're talking big bucks here - state revenues from the extra filing requirement would bring in $81 million for the fiscal year that ends June 30 (increasing over the following two years).