New Marketing Practices Increase Sales and Use Tax Audit Risk for MetroPCS Retailers
Early in 2015, MetroPCS introduced a new marketing campaign to attract additional customers to its products and services. The marketing campaign allows customers to receive an instant “rebate” for a portion of the purchase price for a new phone. After the phone is purchased, the authorized dealer is subsequently reimbursed by MetroPCS for the instant rebate that was provided to the customers at the time of sale. This marketing practice is common with other cell phone dealers as well, such as AT&T and Verizon, and it generally comes with the requirement that the customer sign a long term contract with [...]
The Complexities of California Law for Construction Contractors
By Lucian Khan, Of Counsel to McClellan Davis This article discusses some of the complexities of the California sales and use tax law, as it applies to construction contractors. Pursuant to California Code of Regulations, title 18, section 1521, Construction Contractors, a construction contract is a contract to erect, construct, alter or repair any building or structure, project, development, or other improvement to realty. However, the tax consequences can vary depending on the type of property installed, how the property is installed, the type of contract you have, how the contract is billed, whether the contractor does any further processing [...]
CA BOE to start processing Nortel and Lucent related refund claims!
Next week the California State Board of Equalization (BOE) will be considering changes to Regulation 1502 (Computers. Programs. and Data Processing), and Regulation 1507 (Technology Transfer Agreements), or TTAs. The proposed changes relate to the TTA status of certain transfers of canned software on tangible media (tapes and discs) that also include the transfer of copyright and patent interests, which allow the transferee to reproduce or copy the software. The pending changes are based on the California Supreme Court’s recent denial of BOE’s petition for review of the Court of Appeal's opinion in Lucent Technologies. Inc. v. State Board of [...]
Jesse McClellan Obtains another Favorable Decision before the California Board of Equalization
Jesse W. McClellan, Esq., Principal, obtained another favorable decision on behalf of his client at the Board hearings held in Culver City on February 24, 2016. His second victory at the Board level hearings, which are held monthly, in the last three months. The case involved an audit of a California based manufacturer of ink and related products used in the textile industry. The Board’s auditor disallowed numerous claimed exempt sales for resale for a variety of different reasons. Most of the disallowed transactions were resolved prior to the hearing, but the audit staff, and the Appeals Division, refused to [...]
What’s the Difference Between a Seller’s Permit Issued by the California Board of Equalization and a Resale Certificate?
When making a sale for resale, a common mistake that businesses make is accepting a copy of the purchaser’s seller’s permit, instead of a timely, valid, resale certificate. Businesses are frequently unaware of the difference between a seller’s permit and a resale certificate, and if they are, they often fail to put adequate controls in place to make sure a proper resale certificate is accepted. Understanding the difference is actually very important, especially for manufacturers, wholesalers and other business that commonly make sales for resale. Although sales for resale are one of the most fundamental exempt sales a business can [...]