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Editorial

The missing-in-action Board of Equalization

That elected board has done a remarkably poor job of educating California online shoppers about their tax responsibility.

August 26, 2011

You're a savvy shopper and a solid citizen, so you already know this: When you buy something online, over the phone or from a mail-order catalog from out-of-state sellers, they won't add up your sales taxes or include them on the bill. You have to add them up and send in the money yourself. Even if you're out of the state and you buy something worth more than $400 — say, an Elvis outfit from a shop in Las Vegas — you're going to be wearing it here, so you still have to figure out the sales tax. And you know that these sales taxes on out-of-state goods are known as "use taxes." And you know that you have a choice of either sending your check to the state Board of Equalization right away or waiting until April and including it in the use tax line on your income tax return, which you send to the Franchise Tax Board.

And you know you probably won't do it, because, really, who's going to know? But the Board of Equalization wanted to find out how many Californians did their civic duty and sent in their use tax money at the end of the year. Turns out that a whopping 0.42% of taxpayers who report any adjusted gross income include any use taxes on their returns.

We choose to see this abysmal statistic not as an indictment of you, the responsible Californian who really wants to pay use taxes but just seems to keep forgetting. Nor, just this once, do we want to bash or trash Amazon.com and its ilk — out-of-state sellers that build their business models on making it easy for buyers not to pay their use taxes. The Legislature is confronting them for now with a law to make them collect their customers' taxes — a law they are not obeying. We'll deal with them again when they come back with all those referendum signatures they're collecting in front of Best Buy, Barnes & Noble and their other brick-and-mortar competitors that do have to include sales tax on the bill.

No, the blame for the puniness of the use tax filings can and should be laid directly at the 10 feet of the members of the Board of Equalization itself. That elected board until now has done too little to educate California online shoppers about their tax liability. Next month the board will decide whether to seek funding for a media campaign and other steps to improve collection. Meanwhile, though, vendors have been compiling online sales data and want desperately to sell it to the board, which would then have enough information to find and go after the biggest use tax cheats. That's a promising venture and should be pursued. Privacy concerns are easily rectified; the vendors don't have to tell the board what shoppers bought online, just how much they spent.

The Board of Equalization isn't waiting to see the outcome of the Amazon referendum, and that's a good thing. But it can and should do more to collect hundreds millions of dollars that we need to keep parks open, improve schools and protect us and our neighbors.

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