Consumer

ConsumerWatch: State Warns Californians To Pay Overlooked ‘Use Tax’

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A woman shopping online. (CBS)

A woman shopping online. (CBS)

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SACRAMENTO (KPIX 5) – A lot of Californians got a surprise in the mail as 2013 came to a close. The state has been sending out hundreds of thousands of letters to residents telling them there’s a good chance they probably owe “Use Tax” and will have to pay it when they file their 2013 state tax return.

“Use Tax is the same as sales tax,” explained Jaime Garza of the State Board of Equalization. “The easiest way to look at it is if you buy something from an out-of-state retailer and you’re not charged California tax, then there is a good chance you will owe use tax.”

Garza said it applies to online purchases that weren’t taxed at the time of purchase, as well as items purchased in other states or countries where sales tax is not charged. Essentially, California is trying to make sure it gets its share of the transaction.

The State Board of Equalization says the letters are going out to Californians who have not paid Use Tax in the past, even though it’s been required by law since 1935.

The letters also warn unpaid Use Tax from prior years is still due.

“I’m surprised they’re going to all this effort,” said a Bay Area letter recipient identified only as Martin.

So how are Californians supposed to figure out how much they owe? Garza said the easiest way is to consult the state’s Use Tax lookup table. It estimates someone with a yearly gross income of $65,000 would owe $32. “It makes it very easy to comply,” he said.

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