Legislature May Review Sales Tax Issue

Small business owners may soon get a break from a program requiring them to pay taxes on their internet purchases. 

According to the Sacramento Business Journal legislators have agreed to review the state’s Qualified Purchaser Program, which was designed to generate extra revenue in the 2009 budget by requiring small businesses the generate more than $100,000 in gross revenue to pay use tax on items bought out of state going back to 2007. The provision is part of ABx1 28 signed into law at the end of June.  

Small Business California founder and IBA West member Scott Hauge, Cal-Insure, says George Runner, a former state senator and current member of the Board of Equalization who authored an opinion piece called ”A Qualified Mess” is urging the BOE eliminate the automatic registration of businesses and allowing the businesses to leave the program if they don’t owe tax  or their annual income falls below $100,000.

According to the Business Journal the program has collected an additional $56 million in taxes, but has cost $23 million in administrative costs and small business advocates say it has placed a huge burden on businesses that don’t have accounting departments. It was expected to generate four times as much revenue for the state as it has collected.

Amazon. com, the largerst internet retailer, is currently circulating a ballot measure that would overturn the law if passed.