Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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460.0000 REIMBURSEMENT FOR SALES TAX—Regulation 1700

Annotation 460.0210

460.0210 Sales Tax Credit. A taxpayer located in this state has been audited and assessed sales tax on certain transactions. The audit may have utilized either a block or random statistical sample. After completion of the audit, the taxpayer decides to do a complete review of sales during the audit period to recover sales tax reimbursement from its customers.

If, as a result of the complete review, the taxpayer is able to collect tax greater than that assessed in the Board's audit, the taxpayer is not entitled to keep the excess. The Board could issue a new determination for the same period, assessing the tax with respect to transactions not included in the previous assessment. The taxpayer has an obligation to return the excess amount collected to the persons from whom the additional sales tax reimbursement was collected if payment is not made to the state. If, as a result of the complete review, the taxpayer determines that the actual tax due is less than assessed as a result of the Board's sample audit, the taxpayer is entitled to a refund of the difference, provided a claim for refund is filed within the period authorized by the statute of limitation. The key period is the six-month period commencing with the overpayment. Any claim filed within this period would allow the entire amount of overpayment. In the event the claim was not filed within the six-month period, some portion of the amount subject to refund also may be within the three-year limitation rule, which is measured from the period with respect to which the tax should have been paid.

In a use tax collection situation, the taxpayer must report and pay to the state any additional use tax collected from California customers. If there has been an overpayment, the taxpayer may file its claim for refund if the taxpayer has paid the amount in question out of its own pocket in satisfaction of its obligation. 4/4/88.