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 Board of Equalization have spiked significantly, and we have been involved in many cases where the elements under the law were not properly established by the agency’s collection staff. In an effort to help clarify the required elements under the law, McClellan Davis has been an active participant in the rule making process. Below are links to the associated rule making documents, including two submission that were made by our firm.

http://www.boe.ca.gov/meetings/pdf/1702_5SDPweb121815.pdf

Reg 1702.5 – McClellan Davis Submission 1

Reg 1702.5 – McClellan Davis Submission 2

We will continue to provide updates on the amendments to Regulation 1702.5, and will provide a summary of the changes when the process is complete.