Pssst.. In Case You Haven't Heard, Check Your Local Sales Tax Rates

If you do business in California and are one of those who throw in their sales tax and do not list it separately on an invoice: Congratulations! You just lost one percent of your profits to the State of California!

Many are unaware that our local California State Sales Tax has gone up as of April 1, 2009.

The fact that most people now know who AIG is, but do not know that their tax has gone up is proof positive that their has been a shift-change in what the California populace thinks is most important to them.

What an economy!

Check out your new sales tax rate. California Sales Tax Database. Be glad you don't live in Pico Rivera or Southgate where they pay double digit sales tax rates. (Note to self: do not buy anything in those cities)

I thought I would also take this opportunity to write up something on how sales tax can affect your business.

I am no tax lawyer, but as someone who is in sales (I sell environmental remediation equipment and services) and someone who does quotes and responds to RFPs on a regular basis to dozens of folks every month, I believe it is very important to your business to make sure you charge the proper sales tax. If you forget to charge sales tax or charge the wrong sales tax rate, it is highly unlikely you will be able to go back to your customer and get them to pay it 3 months later. However, the government will want to take their due regardless. If the government force the issue and you do not have recourse, paying that back sales tax will ultimately come back and bite your business' bottom line. Who wants that headache? Get this done the right way, the first time.

Similarly, it is important that you as a buyer insure you know whether sales tax is included in the purchase price of your equipment. I can think of dozens of times where a I have sold a piece of equipment to a customer only to have them come back and say, "You didn't tell me there was going to be $3000 worth of sales tax! I did not budget for that! What can you do for me?"

That is as tough a question to answer. Usually I refer them to the quote where right under the price it says the price "does not include taxes, permits, or governmental / documentation fees". I then tell them that the proper thing to do is pay the sales tax and then pass along the charge to their customer. Of course if they are reselling the item, they can provide a resale certificate to be kept on file in case of an audit.

Last point on this: Sales tax/Use tax is usually based on where the product is being delivered, not where your office is or where my office is. The sales tax rate is higher in locations where voters have approved additional "district" taxes. Most of these districts encompass an entire county-wide area; however, some districts are limited to a single city. Since the sales and use tax rate varies statewide, you need to know where the product is being delivered and charge sales tax accordingly.

Keeping these thoughts in mind could save yourself a lot of heartache later on... Maybe pass the link above to the person that does your accounting. They might thank you for it later.

Remediating California's Underground Storage Tank Fund

I had the opportunity to attend the California State Water Resource Control Board's workshop on the topic of the Underground Storage Tank Clean-up Funds "DISCUSSION OF FUND CONDITION, DELAY IN REIMBURSEMENTS, AND SUSPENSION OF LETTERS OF COMMITMENT".

The background:

The UST fund had recently delayed funding and essentially suspended remediation projects until revenue levels equalize. A contributing effect is that reimbursement for some or most UST remediation projects is delayed, causing consultants and others to decide on such things as whether they want to finance leaking UST projects for up to two years at what is essentially interest free financing before being reimbursed.

In this economic environment, many or most leaking UST projects have come to a screeching halt, causing consultants to adjust their business models (a euphemism for laying off staff) and responsible parties to be left with little recourse for assistance in cleaning up leaky tanks.

The workshop consisted of a PowerPoint presentation given by Allan Patton outlining a short history on the fund and a narrative to how the fund is "funded" and what has been happening to the fund over the last year (in short revenue is down and costs are up).

From their the workshop was opened up to attendees to give their thoughts, air grievances and offer up suggestions to the board leadership.

First to speak were members of CIOMA, including Responsible Parties and then their consultants. After CIOMA, individuals were allowed to speak for up to 5 minutes per person to air their suggestions and thoughts.

At a certain point, the ideas and grievances mostly started to become repetitive. The main take away points, for me at least, came down to the following:

• Increase collection activity from UST operators (a percentage of them are delinquent causing revenue shortfall)
• Reduce monitoring frequencies on sites to semi-annual wherever prudent
• Condense Roles and Responsibilities of local and regional oversight officials.
• Speed up closure process. Too many sites are being left open for seemingly illegitimate reasons.
  
• Moved to a Risk Based Corrective Action model instead of a one size fits all approach to remediation
• Convene independent board for review of cases for closure.
• Raise the UST pump tax to $0.02 per gallon. (it is currently .014/gallon)

There seems to be no question that people and officials are interested in addressing issues. Let's face it, they all want jobs and the security that comes with real progress in getting these sites cleaned-up. There are many changes that could be made to make things more efficient and I would expect that some changes will be made on many fronts.

Nonetheless, as a realist, I think the biggest question that needs to be answered is: "Will the CA UST gas tax be increased"? In this economic climate, will the motoring public pay an extra $0.75 to fill up their tank, thereby allowing the extra funding for the cleaning up of their already limited water supply?

My prediction is that a critical mass composed of business, the green movement and soccer moms will all say yes.