The “Qualified Purchasers Program” was created by the State Legislature, when it approved Assembly Bill X4 18 in 2009. I was serving as a Senator at the time and voted against the legislation. I continue to believe this new use tax collection program is a costly mistake.
To date BOE has identified more than 500,000 businesses as “qualified purchasers” and has automatically registered many of them with a “use tax” account. A qualified purchaser is defined as a service enterprise with more than $100,000 in gross receipts per calendar year that is not already registered with the Board of Equalization.
Most people are understandably confused about ‘use tax.’” The use tax applies to all Californians when you purchase items from a retailer who is not located in California and not registered to remit tax to California. Prior to the creation of the Qualified Purchaser Program, there were already two different ways for Californians to report use tax—(1) BOE Form 79b and (2) a dedicated line on state income tax forms.
My review of this new program has revealed the average qualified purchaser pays almost as much to their accountant to comply with this program as they pay in use tax. The program imposes more of a burden upon businesses than it benefits the state.
I’m asking California business owners and entrepreneurs who have received a ‘qualified purchaser’ letter from the Board of Equalization to let me know what they think of this new program. I’ve posted a short survey on my website to provide an opportunity for impacted taxpayers to express their views.