Unregistered Out-of-State Businesses with Nexus in California - Voluntary Disclosure Program


The Board of Equalization (BOE) encourages businesses to voluntarily register and pay use tax obligations due the State of California. The Voluntary Disclosure Program provides incentives for unregistered out-of-state companies to satisfy their use tax obligations.

Benefits from the Voluntary Disclosure Program

Revenue and Taxation Code section 6487.05 governs voluntary disclosures in California. Out-of-state retailers who are engaged in business in California are required to collect use tax on sales of taxable merchandise to consumers in California. Section 6487.05 was adopted to encourage out-of-state retailers who have failed to collect and pay this tax to voluntarily come forward and register. Some of the benefits of this program are:

  • Limits the time the BOE can make an assessment for prior taxes to three years. Without this section, the applicable statutory period would be eight years.
  • Allows the BOE to waive late filing or late payment penalties.
  • Applicants may obtain a written opinion as to whether or not the BOE would be inclined to approve a voluntary disclosure request based on circumstances presented anonymously.

Who is Liable for California Use Taxes?

Persons who are "engaged in business" in California (as defined by Revenue and Taxation Code section 6203) are responsible for collecting and remitting the sales or use taxes on all sales of tangible personal property (unless the transaction is otherwise exempt). Circumstances where a retailer is considered to be engaged in business in California, commonly referred to as "nexus," for sales and use tax purposes include (but are not limited to) the following:

  • Maintaining, occupying or using any type of office, sales room, warehouse or other place of business in California. This includes use that is temporary, indirect or through an agent or other representative.
  • Having any kind of representative operating in the state for the purpose of taking orders, making sales or deliveries, installing, or assembling tangible personal property.
  • Making repairs or providing maintenance or service to property sold, whether by employees, agents or other representatives.
  • Deriving rentals from a lease of tangible personal property located in California.

Who Qualifies for the Voluntary Disclosure Program?

To qualify for the Voluntarily Disclosure Program, you must meet the following five conditions:

  • Be located outside California and cannot have been previously registered with the BOE;
  • Be engaged in business in California as defined by section 6203;
  • Register voluntarily with the BOE;
  • Have not been previously contacted by the BOE or its agents regarding its activities in California; and
  • Failure to pay the tax or file a return was due to reasonable cause and not as a result of negligence or intentional disregard of the law.

Who Does Not Qualify for the Voluntary Disclosure Program?

The voluntary disclosure program is not applicable to cases involving:

  • Any purchases subject to the California use tax.
  • Sales by persons, registered or unregistered, which are subject to California sales tax.
  • Any person holding or who held a seller's permit.

To request an opinion as to whether or not the BOE would be inclined to approve a voluntary disclosure request or to discuss your eligibility for consideration under the Voluntary Disclosure Program, please contact the Voluntary Disclosure Specialist at the following address:

Board of Equalization
Voluntary Disclosure Program
PO Box 942879 (MIC: 44)
Sacramento, CA 94279-0044
1-916-322-0187 (fax)
voluntary.disclosure@boe.ca.gov (e-mail)

To receive the most accurate response possible to your request, please include the following:

  • A description of how you meet all of the qualifications listed above.
  • A description of your business activities, including how products are marketed and sold to California customers.
  • A detailed description of the flow of goods to the customer from the time an order is placed.

How to Apply

To apply for consideration under the Voluntary Disclosure Program, you should complete electronic registration (eReg) and submit a Form BOE-38, Application for Out-of-State Voluntary Disclosure within thirty (30) days of eReg. The completed Application for Out-of-State Voluntary Disclosure document may be sent to the following address:

State Board of Equalization
Out-of-State District Office
3321 Power Inn Road, Suite 130
Sacramento, CA 95826-3893

eReg will provide you with an eClient ID Login Code to eFile your tax returns. Payment may be made online at the time of filing or mailed with a printable voucher.

If your application is approved, you will receive an acceptance letter. You will be notified in writing if you do not meet the requirements for the Voluntary Disclosure Program.

Relief of Penalty

To seek relief from penalty charges a written request must be made, signed under penalty of perjury, which sets forth the facts why the late filing occurred. Form BOE 38, Application for Voluntary Disclosure, contains a section where the applicant may request relief from penalty. Once the tax and interest are received, the relief of penalty will be processed.

For more information, see Publication 178