Sales Tax- "Doc Fees"/ " Discounting Leases"

 

Bette Kerhoulas of Pacifica-Capital***( bettek@pacifica-capital.com)

informed Leasing News her company is one of six that the California

Franchise Tax Board audited. When title is passed to another, the Franchise

Tax Board is determining this to be a "sale."

 

Bette says the tax board is now determining that all discounting to a

funding source is a sale if "title is passed."  In many master documents,

the funder takes title. The Franchise Tax Board is ruling that all these

transaction are subject to tax, and are going back three years with a

penalty of ten percent per year on the taxes not paid.

 

In addition, Bette says the tax board is claiming that because "document

fees" were included, they were part of the sale and there is sales/use tax

on this charge, going back three years with a 10% penalty fee for each year

the alleged tax is not paid.

 

Bette states the Franchise Tax Board plans to audit all leasing companies in

California to see if they are compiling with the law.

 

If the tax is being charged monthly, evidently there is compliance.

 

The Equipment Leasing Association has a group headed by Dennis Brown that

has been following the streamline sales tax laws to be uniformly adopted by

the states.    Perhaps other states will view the California action as a

precedent for their state.  It is not secret, all government entities are

looking for "extramoney."

 

Readers interested in learning more may want to attend this special meeting

in Los Angeles being sponsored by  United Association of Equipment Leasing:

 

August 20,2002

 

 

United Association of Equipment Leasing

Los Angeles Region

Sales and Use Tax Issues in Equipment Leasing

 

  Sales Tax on Documentation fees?

 

  Radisson Hotel-Los Angeles West Side

616 West Centinela Avenue

Culver City, Ca. 950230

 

310-659-1776

 

 

Time: 2:00pm -2:30pm  Registration & Networking

          2:30pm-5:00pm  Program

 

 

Speakers: Sylvia Le, Senior Tax Auditor

 

                 Eileen Smith, Senior Tax Auditor

 

                 (Both speakers are from the Board of Equalization )

 

 

***( bettek@pacifica-capital.com)

Pacifica-Capital

8105 Irvine Center Drive, Suite 500, Irvine, California 92618 ·

Phone 949.727.3711 · Toll Free 800.800.8081 · Main Fax 949.727.3722

· Sales Fax 949.727.1242