The California Department of Tax and Fee Administration (CDTFA) recently adopted emergency Regulations 4076, Wholesale Cost of Tobacco Products and 4077, Tobacco Product Manufacturer. The regulations interpret and implement the changes made to the Cigarette and Tobacco Products Tax Law (CTPTL) under Proposition 56, California Healthcare, Research and Prevention Tobacco Tax Act of 2016. The new law increases the excise tax on cigarettes by $2.00 per pack which results in an “equivalent” increase in tax for other tobacco products (OTP), e.g., cigars, chewing tobacco, snuff (and now Vapor Products). The new rate set for OTP of 65.08% is significantly higher than the prior rate of […]
On May 24, 2016, Jesse W. McClellan, Managing Partner, testified before the Members of the State Board of Equalization (Board) at the California Taxpayers’ Bill of Rights Hearings in Sacramento, California to address a variety of concerns he had with Board policies. Part of his testimony focused on procedural problems with appeals cases that are scheduled for hearings before the elected Members of the Board. Specifically, Mr. McClellan stressed the need to establish guidelines for appeals cases that are removed from the hearing calendar by Board […]
On May 24, 2016, Jesse McClellan, Esq., Managing Partner, testified before the Members of the Board of Equalization at the California Taxpayers’ Bill of Rights Hearings regarding two issues that have been historically problematic for taxpayers. The first issue addressed pertained to the Board’s practice of permitting the Business Tax and Fees Department (Department) and/or the Legal Appeals Division (Appeals) to remove cases from the board hearing calendar without any meaningful reason or timetable. The second issue pertained to the lack of review for Administrative Protest denials.
The first problem:
A hearing before […]
On March 30, 2016 the California Board of Equalization (BOE) held a public discussion regarding pending medical marijuana legislations SB 987 and AB 2243. Representing the legislature was Senator Mike McGuire’s Chief of Staff, Jason Liles. The central focus of the discussion was SB 987’s introduction of a 15% tax on sales of medical marijuana that would be collected by retailers. The anticipated revenue to be generated by this tax is estimated to be $251 million dollars with the caveat that retailers would be in 100% compliance. The bill is set to go into effect on January 1, 2018.
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 […]
Tobacco products that are “lost through theft” are currently deemed to have been distributed and are thereby taxable.
The Board of Equalization Tax Policy Division is in the process of proposing two additional regulations for the Board’s approval at the January 2016 Board Meeting. The two regulations- 4076, Wholesale Cost of Tobacco Products and 4001, Retail Stock are intended to provide definitions for the wholesale cost of tobacco products and retail stock, respectively, as they relate to the Cigarette and Tobacco Products Tax.
McClellan Davis is working in conjunction with staff from Board […]