Beall Proposes Bill To Simplify Use Tax Refunds For Consumers

February 27, 2015

SACRAMENTO -- A bill streamlining sales and use tax refunds for California’s consumers was introduced Friday by Senator Jim Beall, D-San Jose.

“Senate Bill 640 can speed up the refunds to customers who have paid a use tax and are owed large refunds,’’ Beall said. “The bill makes the refund process cleaner and simpler for customers by allowing them to directly apply for the refund and receive that refund directly from the Board of Equalization instead of through the retailer.’’

California’s use tax was enacted in 1935 to protect local vendors or retailers who would be at a competitive disadvantage when out-of-state sellers sold goods to California customers without charging sales tax. For example, Californian consumers would pay a use tax on purchases made through the Internet, mail-order catalogues, or a television shopping show.

Under existing law, the BOE is obligated to channel the use tax refund to the retailer, who then is supposed to transfer the money to the customer who is owed the refund.
But many times the refunds are held up. Some consumers who are rightfully owed a refund have not been able to obtain them because the retailer was not willing or able to file a claim on their behalf. Others say they did not get their refund because the retailer did not pass it on.

SB 640 lets the retailer assign the right to file for a refund to the consumer who, in turn, will be able to file directly to the BOE for a refund. The bill allows BOE to pay the refund directly to the consumer.

“The bill simply eliminates the ‘middleman’ in the refund,’’ Beall said. “The change in the law would shorten the refund process by two to three months. It also frees the retailer from having to keep track of parceling out refunds from the BOE. For the BOE, there is the assurance that the taxpayer who is rightful owed the refund will actually receive it.’’

Consumers must meet eligibility requirements in order to seek refunds under the proposal; the criteria are designed to promote administrative efficiencies for BOE and to meet the needs of customers or businesses who are owed large refunds. Among the requirements is that the refund amounts is $50,000 or more.

The bill is supported by the Bureau of Equalization and the California Retailers Association.