Does your manufacturing equipment qualify for the CA partial exemption? Read this article to find out more.
Remember when the California Manufacturing Sales Tax Exemption first came into fruition, on July 1, 2014? It seems like so long ago. But maybe it’s a good time to remind companies about this useful partial exemption available to manufacturing companies.
What exactly is this exemption?
It allows certain manufacturers and biotech companies to exempt a portion of California sales and use tax on purchases of qualified equipment used in manufacturing and R&D (research and development).
This exemption went into effect July 1, 2014 and applies to any sale, purchase, and lease of qualified tangible personal property on or after this date. The exemption was formerly set to sunset on July 1, 2022. However, the Governor of California recently signed Assembly Bill (A.B.) 398, which extends the exemption for manufacturing and research and development equipment to July 1, 2030. The bill has also expanded the exemption to include additional companies (see below).
Audits tend to worry companies, however there are many ways to make sure every thing goes smoothly.
When people hear the word “audit”, it’s safe to say that the term doesn’t generally elicit very positive emotions. In fact, whether internal audits, IRS audits, or state tax audits, people just don’t like them, or on the far end of the spectrum, actually fear them. Call me crazy, but I’m one of the few people (besides auditors themselves) that don’t HATE them – partially because I feel that we can generally help clients who are being audited, and we can help bring them peace of mind.
Of course, the best option is to not get audited at all, but if you do find yourself in an audit situation, there are some things that you can do to mitigate the pain, and also to make it go smoothly. Here are some examples of things you can do when notified by a state that an audit is coming. Continue reading
What do you think of this solution to California’s sales tax system?
It’s no secret that California’s sales tax system isn’t working. The state currently generates two-thirds of its revenue from income taxes; 65 years ago only 12% came from income taxes and 60% was generated by sales taxes.
About The Upward Mobility Act
Former Assembly Speaker Bob Hertzberg, now a member of the state senate, proposed what he calls the Upward Mobility Act, which focuses on:
- Expanding CA sales taxes to include more services
- Lowering the state’s base rate from 7.5% to 4%
- Getting rid of local add-on taxes
He claims this would, “Generate billions of extra dollars that he says the state could use to fund schools, local government and the university systems while providing tax credits to protect the poor.” He also says this would encourage entrepreneurs by reducing corporate tax burdens on small businesses. Continue reading
How much sales tax would Santa have to pay each year? This post breaks it down.
The holidays are almost here! Although you may not think about sales tax while Christmas shopping, it’s interesting to think about how the rates vary from one place to another. For example, if you were buying a toy here in the Golden State, you’d be charged California sales tax. However, if you purchased it just one state north, in Oregon, where there is no sales tax, you would be exempt from the tax.
In honor of the holidays, I thought it would be fun to take a look at sales tax costs Santa Claus would need to budget for, assuming he bought each gift in state rather than relying on his elves in the North Pole. Continue reading