November, 2009


BOE-Use Tax, not a scam

The California Board of Equalization has announced that it would like to give you the “opportunity” to register and pay Use Tax. It will be mailing out registration forms between September and December this year.

They’re starting with companies that GROSS $100,000 or more. If you’re in this category, or if you ever were in this category, expect to be hearing from the state Board of Equalization soon, inviting you to register your company. Registering is basically a “postcard” of information. It doesn’t mean you’re getting a resale number. You can proactively register by going to http://www.boe.ca.gov/pdf/boe404a.pdf and filling out the form, but registering is not optional.

Once you’re registered, they’ll want you to file Use Tax returns. They’re going to want you to file for 2007, 2008 and 2009. You get credit for having already paid the Use Tax if you “volunteered” and paid on your California return already. If you owe for unpaid Use Tax for prior years, there will be penalties and interest. You might be able to avoid penalties if you have a really really good excuse, but you probably don’t.

What the heck is “Use Tax?”

Remember years ago when you bought those books from Amazon.com and they didn’t charge you sales tax because you were buying from out of state? Well, you were supposed to pay the sales tax on those goods to California; instead of sales tax, they call it Use Tax when you’re paying California for purchases that originate out of state. Really. No really, you were supposed to pay the use tax. Yes. Since 1935. Yep.

California “helped” taxpayers by adding a line on the Form 540 where you could voluntarily pay the sales tax, but it looks like not enough people volunteered.

You only need to pay Use Tax on the purchases from out of state that you used (and did not resell) in California.

If you already have a sales tax license you don’t need to do this, because you’re already filing a combined sales and use tax return.

The CA BOE requires people to file electronically, and the rates for Use Tax are the same as Sales Tax rates.

You can find your rate at http://www.boe.ca.gov/pdf/pub71.pdf which lists cities and counties.

This is why tax preparers have been asking ‘did you purchase anything out of state for use in California that you didn’t pay sales tax on? The Use Tax applies to everyone, not just businesses with receipts over $100k, but they’re starting with businesses.

The Eightfold Path to Pay Less Tax and Avoid an Audit

Eight basic things business owners want to know printed in booklet form. This is ten years of working with the IRS Tax Code distilled down so it doesn’t take YOU ten years.

Just another way we’re trying to simplify your life. And the purchase is tax deductible!

You can order from Amazon.com.  Here’s the link to Amazon: http://www.amazon.com/Eightfold-Path-Less-Avoid-Audit/dp/0615233422/ref=sr_1_22?ie=UTF8&s=books&qid=1226611038&sr=1-22

The booklet also contains a sections on how returns are selected for audit, when to seek professional help, and how long to keep your tax records.

Classes – Intermediate S Corporation, Basic Payroll, Schedule C, and Household Employees

Intermediate S Corporation Class will be presented in Alameda to up to five participants. This is an intermediate class, so we won’t be discussing how to fill out the form. Rather, we’ll be looking at how to quickly solve the most common problems encountered with preparing an 1120S, and what to do now to reduce the likelihood of future problems. Class is limited to 5 participants, so you’ll be able to ask all your questions. I moved the time up by an hour because it was difficult to get to Alameda in morning traffic.

“This is the best class on S Corps I’ve ever been to, and I’ve been to a lot.”

There are three new dates:
Tuesday, January 5, 2010 from 10 am to 2 pm – only 3 seats left.
Thursday, January 21, 2010 from 10 am to 2 pm – only 3 seats left.
Tuesday, February 9, 2010 from 10 am to 2 pm – still 5 seats available.

This class will be held in the Law Office Conference Room, 1516 Oak Street, Suite 109 in Alameda CA. Fee to attend is $225, but reduced to $175 for NAEA/CSEA members. CPE credit of 4 hours available for Enrolled Agents who attend, no credit currently available for CTEC, but it’s a good class.

Send me an e-mail if you want to attend.  Flyer is on the website at www.TaxBuddha.com/1120_S_Flyer_2010.pdf

In conjunction with the IRS and EDD, Andy's going to be doing some Basic Payroll seminars coming up in the near future.

Basic Payroll: Seminar runs 9 am – 3 pm with an hour for lunch

The next seminars will be:

Basic Payroll in San Francisco at the SBA office 455 Market Street, 6th floor (I take BART to Embarcadero) 9 am – 3 pm.
November 18th, and December 16th.

Basic Payroll in Oakland at Elihu M. Harris State Building,1515 Clay Street, Room 2, Second Floor, 9 am – 3 pm.
November 4th and December 2nd.

Register by going to http://www.edd.ca.gov/Payroll_Tax_Seminars/ and find your favorite location. We’re working on the 2010 schedule, and trying to figure out how I can present this in other states.

These seminars have proven to be very popular, plus they’re free.

How to Prepare your Own Schedule C
Prepare your business taxes for ’09 and get ready for ‘10. Review what the IRS wants to know from you and how to report it on the Schedule C for your business. This is a class for business owners who need a basic understanding of their 1040 Schedule C tax forms. We’ll also talk about what to do with the numbers once you have them. We can’t guarantee you won’t get audited, but this class will make it less likely.

Andy will be at the US Small Business Administration offices in San Francisco at 455 Market Street, 6th Floor Thursday November 19th, 6-8:30 pm.  This class will be free. To register, check out the SBA website www.SBAtraining.eventbrite.com, or just show up. This class will be offered again mid-February.

Household Employees class will be December 14th, 100 Lafayette Circle, in Lafayette, for a half day.  If you or your clients want to be confirmed for senate, you may want to attend.  The IRS rules for Household Employees are very different from commercial employers.  We’ll review what needs to happen to properly close out ’09 and changes for 2010.  This will be through the East Bay Association of Enrolled Agents, who will handle registration.  Go to www.EBAEA.org.events.html#seminars

I went to a class on QuickBooks given by Kim Woodrum.  If you’re in the market for QuickBooks training in a classroom setting, I recommend her. She teaches a two day QuickBooks seminar and travels a great deal.  Her website is http://www.manibusinessservices.com/

For Relaxation and Clear Thinking: On The Spot

To carry you through the stressful tax season, we recommend meditation and that you check out On The Spot Massage at http://www.onthespotmassage.com/corporate.html to help you relax. A relaxed mind is a clear thinking mind. We have some discount cards for $5 off at the Alameda Natural Grocery location on Park Street, open daily 11 am – 7 pm.

Classes I’ve been Taking

In October, I attended a class about working with Financial Planners, and worked on some at-home correspondence education.

Phone and Fax Numbers

Our northern California physical office is shared commercial space in Alameda. Phone numbers are:
Phone (510) 522-2300
Fax (510) 522-2307
Our mailing address:
3527 Mt. Diablo Blvd #366, Lafayette CA 94549

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist