January 2016 - McClellan Davis, LLC

Medicinal Marijuana: Taxable or Exempt? – At SalesTaxSupport.com

This month, James R. Dumler, a senior sales tax specialist at McClellan Davis and featured contributor at Sales Tax Support writes about sales tax on medical and recreational marijuana. Sales Tax Support publishes articles written by experts and thought leaders in the specialized field of sales and use tax with small and medium sized business owners in mind.

Visit salestaxsupport.com to read James’informative article “Medicinal Marijuana: Taxable or Exempt?”

Tax Update for California’s Wine Industry

As a result of a very recent change to a legal interpretation that dates back to 1961, viable yeast used in the production of wine is no longer considered to be subject to sales or use tax in California. The Board of Equalization has historically considered wine yeast to be taxable because it doesn’t all remain in the final product. Therefore, yeast was considered to be consumed by the wine producer in the production process. That interpretation, however, was inconsistent with rulings that considered beer yeast to be exempt, and it overlooked the fact that the presence of wine yeast during the fermentation process is instrumental […]

California Board of Equalization seeks to Amend Personal Liability Regulation

Close-up Photo Of Gavel And Law Book

The Board of Equalization is in the process of making changes to Regulation 1702.5, Responsible Person Liability, which is the regulation that addresses the Board’s ability to pursue collection action against individuals for sales and use tax owed by closed businesses. Any meaningful changes to the regulation will have a significant impact on California taxpayers, because the changes will impact the State’s ability to hold individuals personally responsible for unpaid sales and use tax obligations. Over the past several years, personal liability collection efforts by the […]

Sales Tax Implications of Business Reorganizations and Dissolutions

This article discusses the application of tax to transfers of business (capital) assets, when a business is sold, reorganized, or dissolved. It also discusses problems which can occur when transactions are not properly structured, and sales tax issues that may arise.
Generally, sales tax applies to the retail sales of tangible personal property. Thus, when a business is sold, tax does not apply to intangibles, inventory for resale, or realty. Tax applies to any remaining sales of tangible personal property (capital assets) used in a business, unless an exemption or exclusion from tax is available.

Regulation 1595 discusses the rules for exempt […]

Statewide Compliance and Outreach (SCOP)

Statewide Compliance and Outreach (SCOP) So, you’ve been contacted, either in person or by letter, by the California Board of Equalization’s, Statewide Compliance and Outreach Program (SCOP)…what do you do now? Well, let me provide you with some background information before we answer that question.

Statewide Compliance Outreach Program Caution First, let me discuss what the unit is supposed to be doing. The mission of SCOP, at least in theory, is one that’s beneficial to taxpayers. In short, they are supposed to be educating business owners on their sales/use/property tax responsibilities. In a business […]

McClellan Davis Prevails on Large Fraud Case

Jesse McClellan, Esq.

Jesse McClellan, Esq., Principal, obtained a 4-1 vote in favor of our client at the December 16, 2015 Board Hearing. The case involved a 2007 audit of a popular Santa Barbara restaurant and nightclub, with the total liability exceeding $1.4 million.

The primary issue addressed at the Board Hearing was the assessment of a 25 percent fraud penalty, which expanded the audit period by an additional 5 years. Jesse successfully argued that the Sales and Use Tax Department failed to carry its burden to prove fraud by clear […]

Construction Contractors as Consumers When Installing Property of Others – at SalesTaxSupport.com

This month, Jesse W. McClellan, Esq, co-founder of McClellan Davis and featured contributor at Sales Tax Support writes about sales tax and construction contractors. Sales Tax Support publishes articles written by experts and thought leaders in the specialized field of sales and use tax with small and medium sized business owners in mind.

Visit our blog to read Jesse’s informative article “Construction Contractors as Consumers When Installing Property of Others?”

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