Use tax: registration: qualified purchaser.
The implications of AB 1097 are significant as it seeks to broaden the scope of who qualifies to be registered for use tax in California. By lowering the threshold from $100,000 in gross receipts to $10,000 in purchases, the bill is expected to involve a larger number of smaller businesses and individuals in the use tax framework. This change is designed to facilitate better compliance and tax collection, aiming to enhance state revenue from the use tax, which pertains to goods purchased outside of California but used within the state.
Assembly Bill 1097, introduced by Luz Rivas, aims to amend the definition of 'qualified purchaser' under California's sales and use tax law. Currently, a qualified purchaser must receive at least $100,000 in gross receipts annually to register with the California Department of Tax and Fee Administration (CDTFA) for use tax collection. The bill proposes to remove this income threshold and instead require that a person makes more than $10,000 annually in purchases subject to use tax if the tax has not already been paid to a retailer. This amendment is scheduled to remain in effect until January 1, 2029, allowing for a period of evaluation and adjustment to the new criteria.
Overall, the sentiment surrounding AB 1097 appears supportive among legislators and economic stakeholders who advocate for improved tax compliance. Proponents argue that the bill will simplify the registration process for numerous small businesses, making it easier for them to comply with tax regulations, thereby generating additional revenue for the state. However, some concerns have been raised about the potential burden on smaller businesses that may now be required to navigate tax registration processes without the previous revenue threshold to exempt them.
Notable points of contention include the potential increase in regulatory burden for smaller entities that now must adhere to tax regulations previously applicable only to larger businesses. Detractors worry that while the intentions are to increase tax compliance and revenue, it could lead to unintended consequences wherein small businesses may face challenges in adapting to the new requirements. This concern highlights the balance the bill seeks to strike between enhancing state revenue and ensuring that compliance does not become a hindrance to small business operations.