...

Closing Out Your Account |

by user

on
Category: Documents
2

views

Report

Comments

Transcript

Closing Out Your Account |
Closing Out Your Account
PUBLICATION 74 | DECEMBER 2015
BOARD MEMBERS (Names updated 2016)
SEN. GEORGE RUNNER (Ret.)
First District
Lancaster
FIONA MA, CPA
Second District
San Francisco
JEROME E. HORTON
Third District
Los Angeles County
DIANE L. HARKEY
Fourth District
Orange County
BETTY T. YEE
State Controller
DAVID J. GAU
Executive Director
PREFACE
As a retailer, you knew the importance of obtaining an account when you started a business. It is equally important
to know that you must inform the Board of Equalization (BOE) to close out your account when any one of the following occurs:
• You are no longer actively engaged in business;
• You no longer sell prepaid wireless products or services;
• You sell your business or stock of goods to someone else;
• You change the type of ownership for your business (for example, from a sole proprietorship to a corporation or
partnership);
• When your partnership agreement calls for dissolution of the partnership and the formation of a new partnership when a change in partners occurs.
If you fail to notify the BOE of these changes, you could be held liable for tax, fee, surcharge, interest and penalties
which are incurred after you no longer own or operate the business.
This publication covers the following topics related to closing out your account:
• Notifying the BOE
• Filing your final tax, fee, or surcharge return
• Sales after closing out your account
• Successor’s liability and tax clearances
• Changes in ownership
If you want more information about any of these topics, please contact the BOE’s Customer Service Center at
1-800-400-7115. Staff will be happy to answer your questions.
We welcome your suggestions for improving this or any other publication. If you would like to comment, please
provide your comments or suggestions directly to:
Audit and Information Section, MIC:44
State Board of Equalization
PO Box 942879
Sacramento, CA 94279-0044
Note: This publication summarizes the law and applicable regulations in effect when the publication was written,
as noted on the cover. However, changes in the law or in regulations may have occurred since that time. If there
is a conflict between the text in this publication and the law, the decision will be based on the law and not on this
publication.
To contact your Board Member, see www.boe.ca.gov/members/board.htm.
NOTIFYING THE BOE
If you sell, change partners, or close out your business, you should let us know. The following information may be
needed before we can close out your account:
• The date you stopped being actively engaged in business.
• Your reason for not being actively engaged in business.
• The name(s) of any partner(s) who have dissociated from or been added to the partnership with effective dates.
• The means you used to dispose of your resale inventory, fixtures, and equipment. If you sold any of these
items, you will need to disclose the selling price. If you sold your entire business or resale inventory, you need
to provide the selling price, name of the buyer, and a copy of the Bill of Sale or purchase agreement with the
amount of purchase price.
• The purchase price of retained inventory.
• Your current address, daytime telephone number, and email address.
• The address where you retain your books and records.
• Your business website address, if available.
You can use the enclosed BOE-65, Notice of Close Out, to notify us. The form will be reviewed by staff, who will
contact you if additional information is required. If no additional information is needed, staff will close out
your account.
You also need to file your final return and any prior returns (including prepayments) which you have not yet filed.
To expedite your closeout, you should file these returns with the local office and pay any tax, fee, surcharge, penalty
and interest with certified funds. If you pay by personal check and cannot provide a copy of the cancelled check, it
may take eight or more weeks to complete the close out of your account. Accounts required to make their tax, fee,
or surcharge payments by EFT must also make their final payments through the EFT process.
After you have paid your entire liability (including liabilities resulting from an audit), staff will return any security
you have on deposit. It is important to remember that, even after providing all information and having your account
closed out, you must still keep your business records for four years.
Filing your final tax, fee, or surcharge return
Even though you have closed out your account, you must still report your sales up to the closeout date. This
includes any sales of fixtures or equipment that occurred as part of the closure or sale of your business. You must
also report any inventory you intend to retain for your own use if that inventory was purchased without payment of
any tax, fee, or surcharge.
To help expedite the closeout you should separately report and identify the sale of “fixtures and equipment” and
“retained inventory” on your final return.
Sales of inventory to another retailer or to the purchaser of your business are not taxable, but should be reported as
“Sales to Other Retailers for the Purpose of Resale” on your return. A resale certificate should be obtained from the
buyer and saved with your records.
Normally, you may file your final return on its regular monthly or quarterly due date. However, if you report
annually, you must file the final return by the due date of the quarter in which you close out your account.
Closing out your account and filing your final return does not relieve you of a liability for any unpaid tax, fee, or
surcharge whether reported or unreported. You are required to pay all tax, fee, or surcharges incurred for the period
you were actively engaged in business.
1
CLOSING OUT YOUR ACCOUNT | DECEMBER 2015
If the business is a corporation or LLC which has added or included tax as part of the price of the property sold, or
owes use tax, corporate officers or other persons will be held personally liable for unpaid tax if they willfully failed to
pay or caused not to be paid the tax that was due and were:
• Responsible for filing returns or paying tax, or
• Under a duty to act for the corporation in complying with the Sales and Use Tax Law.
If you think you may have difficulty paying tax that is due, you should contact the local office handling your
account.
Taxable sales after closing out your account
Before requesting the close out of your account, you should be sure that you will make no more sales. You qualify
as a seller if you make three or more sales of tangible personal property (including retained inventory, fixtures, or
equipment) in any 12-month period. As a seller, you are required to register with the BOE and to report and pay any
tax, fee, or surcharge due.
In certain cases, a single sale of fixtures and equipment which occurs after the close out can also be taxable. A sale
which occurs within 60 days is normally considered taxable unless you can prove that the sale was not planned at
the closeout date. A sale that occurs after 60 days, but within one year, is taxable if:
• There was a contract of sale at the closeout date, or
• A lease with an option to buy existed at the closeout date, or
• There is evidence that a plan existed to sell the fixtures and equipment in due course
You are liable for use tax if you make personal or business use of property purchased without tax, for example,
resale inventory. You are required to report and pay use tax on the cost of such property.
Successor’s liability and tax clearance
If you are buying a business, you need to be aware of successor’s liability.
Under the law, the buyer of a business or stock of goods must withhold from the purchase price an amount
sufficient to cover the seller’s liability for tax, interest, and penalties. If a sufficient amount is not withheld, the buyer
becomes personally liable for the amount that should have been withheld. This is called “successor’s liability” and is
limited to an amount equal to the purchase price of the business or stock of goods.
To be released from this liability, the buyer may request a certificate of tax clearance from the BOE.
The following is a list of information to include in your written request for a tax clearance:
• The name, address, and phone number of the purchaser.
• The name, address, and phone number of the seller.
• The business address. If the business has more than one location and the purchaser is buying one or more
locations, but not all of the locations, each location for which a tax clearance is requested must be listed. If the
business has more than one location and all the locations are being purchased, please note that in the request.
• A copy of the Bill of Sale or purchase agreement with the amount of purchase price.
• The name of the escrow company and escrow number if applicable.
• The date the business was purchased.
If a tax clearance is needed to complete the sale of your business, you need to remember that it can take up to
60 days or more to obtain a clearance, especially if an audit is required and your books and records are not available
for review. You can help the clearance process by ensuring that the escrow company or buyer promptly files a
written request for a clearance with the local BOE office.
DECEMBER 2015 | CLOSING OUT YOUR ACCOUNT
2
You should also remember that:
• The liability of a successor does not replace your primary liability for unpaid tax, interest, or penalties. The BOE
will generally only try to collect from a successor if unable to do so from the seller of the business.
• The amount of money you actually receive on the sale of your business may be reduced by the amount you
owe. If you owe tax, you will be advised to pay the amount due and the escrow company will be informed of
the amount to withhold from the purchase price to cover the liability. This liability must be paid to the BOE,
including the tax due on the value of the furniture, fixtures and equipment, before a certificate of tax clearance
is issued.
Changes in ownership
If you plan to change the ownership of your business or have already done so, you should contact the BOE’s
Customer Service Center. Failure to notify the BOE of a change in ownership can make you liable for the taxes owed
by the new owner(s).
If you continue to operate your business but change its form of ownership, you are required to obtain a new
account. An account is valid only for the business entity (such as a sole proprietorship, partnership, corporation,
limited liability company, or joint venture) in whose name it was issued and certain changes in ownership will
invalidate it. For example, a new account is required when:
• A partnership adds or drops a partner and the partnership agreement requires that a new partnership be
formed.
• There is a change in marital status for a married co-ownership.
• There is a change in the status of a registered domestic partnership.
• Your business converts from one type of organization (such as those named above) to another type of
organization.
• A corporation reorganization or merger results in a new corporation.
Since some changes in ownership might also include taxable transfers of tangible personal property, it is
recommended to contact the BOE before making the change. The staff can review the planned change and tell you
if it would be subject to tax and if you will need a new account.
3
CLOSING OUT YOUR ACCOUNT | DECEMBER 2015
FOR MORE INFORMATION
For additional information or assistance with how the tax and fee laws apply to your business operations, please take advantage of the resources listed below.
CUSTOMER SERVICE CENTER
1-800-400-7115
TTY:711
Customer service representatives are available
weekdays from 8:00 a.m. to 5:00 p.m. (Pacific
time), except state holidays. In addition
to English, assistance is available in other
languages.
FIELD OFFICES
City
Area
Code
Number
Bakersfield
1-661
395-2880
Culver City
1-310
342-1000
El Centro
1-760
352-3431
Fairfield
1-707
427-4800
Fresno
1-559
440-5330
Glendale
1-818
543-4900
Irvine
1-949
440-3473
Norwalk
1-562
466-1694
Oakland
1-510
622-4100
Rancho Cucamonga
1-909
257-2900
Rancho Mirage
1-760
770-4828
Redding
1-530
224-4729
Riverside
1-951
680-6400
Sacramento
1-916
227-6700
Salinas
1-831
443-3003
San Diego
1-858
385-4700
San Francisco
1-415
356-6600
San Jose
1-408
277-1231
Santa Clarita
1-661
222-6000
Santa Rosa
1-707
576-2100
Ventura
1-805
677-2700
West Covina
1-626
480-7200
Out-of-State Field Offices
Chicago, IL
1-312
201-5300
Houston, TX
1-713
739-3900
New York, NY
1-212
697-4680
Sacramento, CA
1-916
227-6600
INTERNET
www.boe.ca.gov
You can log onto our website for additional information—such as laws, regulations, forms,
publications, and policy manuals—that will help you understand how the law applies to
your business.
You can also verify seller’s permit numbers on the BOE website (look for “Verify a Permit/
License”) or call our toll-free automated verification service at 1-888-225-5263.
Multilingual versions of publications are available on our website at www.boe.ca.gov.
Another good resource—especially for starting businesses—is the California Tax Service
Center at www.taxes.ca.gov.
FAXBACK SERVICE
Our faxback service, which allows you to order selected publications, forms, and
regulations, is available 24 hours a day. Call 1-800-400-7115 and choose the fax option.
We’ll fax your selection to you within 24 hours.
TAX INFORMATION BULLETIN
The quarterly Tax Information Bulletin (TIB) includes articles on the application of law to
specific types of transactions, announcements about new and revised publications, and
other articles of interest. You can find current and archived TIBs on our website at
www.boe.ca.gov/news/tibcont.htm. Sign up for our BOE updates email list and receive
notification when the latest issue of the TIB has been posted to our website.
FREE CLASSES AND SEMINARS
Most of our statewide field offices offer free basic sales and use tax classes with some
classes offered in other languages. Check the Sales and Use Tax Section on our website at
www.boe.ca.gov for a listing of classes and locations. You can also call your local field office
for class information. We also offer online seminars including the Basic Sales and Use Tax
tutorial and how to file your tax return that you can access on our website at any time.
Some online seminars are also offered in other languages.
WRITTEN TAX ADVICE
For your protection, it is best to get tax advice in writing. You may be relieved of tax,
penalty, or interest charges that are due on a transaction if we determine that we gave
you incorrect written advice regarding the transaction and that you reasonably relied on
that advice in failing to pay the proper amount of tax. For this relief to apply, a request
for advice must be in writing, identify the taxpayer to whom the advice applies, and fully
describe the facts and circumstances of the transaction.
Please visit our website at: www.boe.ca.gov/info/email.html to email your request. You may
also send your request in a letter to: Audit and Information Section, MIC:44, State Board of
Equalization, P.O. Box 942879, Sacramento, CA 94279-0044.
TAXPAYERS’ RIGHTS ADVOCATE
If you would like to know more about your rights as a taxpayer or if you have not been
able to resolve a problem through normal channels (for example, by speaking to a
supervisor), please see publication 70, Understanding Your Rights as a California Taxpayer,
or contact the Taxpayers’ Rights Advocate Office for help at 1-916-324-2798 (or toll-free,
1-888-324-2798). Their fax number is 1-916-323-3319.
If you prefer, you can write to: Taxpayers’ Rights Advocate, MIC:70; State Board of
Equalization; P.O. Box 942879; Sacramento, CA 94279-0070.
DECEMBER 2015 | CLOSING OUT YOUR ACCOUNT
4
Regulations, forms, and publications
Lists vary by publication
Selected regulations, forms, and publications that may interest you are listed below. A complete listing of
regulations, forms, and publications appears on our website. Multilingual versions of our publications and other
multilingual outreach materials are also available at www.boe.ca.gov/languages/menu.htm.
Regulations
1595
1596
1699
1702
Occasional Sales–Sale of a Business–Business Reorganization
Buildings and Other Property Affixed to Realty
Permits
Successor's Liability
Publicaciones disponibles en su idioma
以您的母語出版的出版物
Các Ấn Phẩm Có Sẵn Trong Ngôn Ngữ Của Quý Vị
귀하의 언어로 된 간행물이 있습니다
5
CLOSING OUT YOUR ACCOUNT | DECEMBER 2015
BOE-65 (FRONT) REV. 29 (10-15)
STATE OF CALIFORNIA
NOTICE OF CLOSEOUT
BOARD OF EQUALIZATION
INSTRUCTIONS: Please provide the following information to assist us in closing your account(s), releasing security, or issuing an escrow clearance. If you have a seller’s permit, before completing this form you should refer to a copy of the Board of Equalization (BOE)
publication 74, Closing Out Your Seller’s Permit. Publication 74 contains important information about closing out your permit. If you
have any questions regarding closing your account(s), please call our Customer Service Center at 1-800-400-7115.
SECTION 1: ACCOUNT INFORMATION
NAME
ACCOUNT NUMBER(S)
CURRENT ADDRESS (street address)
DAYTIME TELEPHONE NUMBER
(
)
(city, state, zip code)
SECTION II: CLOSEOUT INFORMATION (see back for instructions)
1. Date the business was closed
2. Did you make any purchases for your own use using your seller’s permit?
If YES, did you pay tax on those purchases to:
a. your vendor
YES
NO
b. the BOE
3. If you have a prepaid Mobile Telephony Services account, please provide the date you discontinued selling prepaid phone
cards and/or services
4. Your forwarding address and telephone number
5. Location of your books and records
6. Was the business sold?
YES
NO
a.
Date the business was sold
b.
Name, address, and telephone number of the purchaser
c.
Total sales price $
d.
Sellingpriceoffixturesandequipment$
Note: Ifyousoldyourfixturesandequipment,evenifyoudidnotsellyourbusiness,youmustincludethesellingpriceof
theseitemsonyourfinalreturnunder“PurchasesSubjecttoUseTax.”
e.
Escrow number
f.
Name, address, and telephone number of escrow company
SECTION III: LIST OF ITEMS NEEDED FOR CLOSEOUTS (see back for instructions)
Thefollowingitemsmaybeneededtofinalizetheclosingofyouraccount(s),thereleasingofanypostedsecurity,orissuingofan
escrow clearance.
•
Payments of any other outstanding balance due.
•
Yourfinaltaxreturnwithpayment(ifareturnisnotavailable,call1-800-400-7115).Paymentsofanyamountsduemustbe
madeincertifiedfundsinordertoexpeditefinalizingyourreturn.IfyouarerequiredtomakepaymentsbyEFT,youmustalso
makeyourfinalpaymentthroughtheEFTprocess.
•
Acopyofyourescrowinstructionsorbillofsaleshowingthevalueofinventory,fixtures,andequipmentsold.
Send this completed form and supporting documents to:
Board of Equalization Customer Service Center
PO Box 942879
Sacramento, CA 94279-0090
SECTION IV: SIGNATURE
SIGNATURE
PRINT NAME AND TITLE
DATE
BOE-65 (BACK) REV. 29 (10-15)
NOTICE OF CLOSEOUT
SECTION V: INSTRUCTIONS
If the items listed below do not pertain to your closeout and you have completed Sections I and II, and signed in Section IV,
send this document to the appropriate BOE office. See publication 74 for a list of field office locations.
Location of your books and records–The location of your books and records is important for audit purposes. Audits are important
because they protect the state against an underpayment and protect the taxpayer against an overpayment.
Copy of your escrow instructions or bill of sale–Thesedocumentsshowthevalueofinventory,fixturesandequipmentsold.Ifa
saleoffixturesandequipmentisnotconsideredatthedateofcloseout,asubsequentsinglesaleofthefixturesmaybetreatedasan
occasionalsale.Thesinglesaleoffixturesandequipmentsubsequenttothedateofcloseoutistaxableifeither:
1. Thesaleoccurswithin60daysofthedateofcloseoutandthetaxpayercannotestablishthatthesalewasnotconsideredatthe
time of closeout; or
2. Thesaletakesplaceafter60daysandwithinoneyearofthecloseoutdate,and:
a. A contract of sale existed at the date of closeout, or
b. A lease with an option to buy exists, or
c. Arrangementshavebeenmadeforaplantosellthefixturesandequipmentinduecourse.
If these items are not provided, the BOE must wait 30 days before refunding any security deposits posted and/or closing
your account. If you need assistance in providing any of the items listed above, contact your nearest BOE office for detailed
instructions.
FOR BOE USE ONLY
Is registration information current?
YES
NO
F&E?
YES
NO
Isafinalreturnfiled?
YES
NO
Inventory?
YES
NO
Wasafinalreturnprovidedtotaxpayer?
YES
NO
Is the documentation attached
YES
NO
Arethereanydelinquencies?
YES
NO
CALIFORNIA STATE BOARD OF EQUALIZATION • 450 N STREET • SACRAMENTO, CALIFORNIA
MAILING ADDRESS: P.O. BOX 942879 • SACRAMENTO, CA 94279-0001 • LDA
Fly UP