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Q: How do I report and pay use tax on a documented vessel or an aircraft?
A: A documented vessel is a vessel for which the U.S. Coast Guard has issued a valid marine certificate. To report use tax on a documented vessel, complete the use tax return found in the Board’s publication 79. Use tax for an aircraft can be reported using the tax return in the Board’s publication 79-A.

• Make, model, year of property, date of purchase
• Total purchase price
• Location where property will be used, stored, or registered, and a daytime phone number
  

Include a copy of the signed bill of sale, invoice, or closing statement which verifies your purchase price. Mail the use tax return or letter with payment for the tax due to the Consumer Use Tax Section of the Board of Equalization.

Q: How do I report and pay use tax on a vehicle or undocumented vessel?
A: When you register a vehicle or undocumented vessel with the Department of Motor Vehicles (DMV), you report and pay the use tax to DMV who is acting as the Boards statutory agent in collecting the tax. (An undocumented vessel is a vessel that is not required to have a marine certificate issued by the U.S. Coast Guard.) The registration constitutes filing a return with the Board. You do not need to file a separate use tax return with the Board for purchases of vehicles or undocumented vessels if you complete registration with the DMV. However, if you had purchased a vehicle or undocumented vessel and later sold it without completing registration with DMV, then use tax is due directly to the Board.

Q: Are there penalties and interest due if my payment is late?
A: Generally yes. Penalties and interest are calculated on the unpaid tax portion.

Q: Is there a provision for reduction or elimination of penalties and interest?
A: Yes, under certain circumstances. Please see the Board’s publication 75.

Q: Can I dispute or appeal a Board determination of tax due?
A: Any person against whom a determination (billing) is made or any person directly interested may petition for re-determination of a billed liability. You have 30 days from the date of the Notice of Determination (bill) to submit a Petition for Re-determination. It must be in writing and specify the grounds on which you base your claim. If you have additional documentation to verify your exemption from tax, you may submit it along with your petition. (Revenue and Taxation Code section 6561).

The Board’s Petitions Section will acknowledge receipt of your request and inform you of the additional documentation required to qualify for exemption/exclusion. If your petition is approved or adjusted, you will receive a statement showing the revised or canceled billing. If your petition is denied, you will be notified that the tax remains due.

If a Petition for Re-determination is not filed within the 30-day petition period, the determination becomes “final” and is forwarded to the Board’s Centralized Collection Section for action. To avoid interest charges, you may choose to pay the tax portion of your liability while in the petition process.

Q: How do I request a refund?
A: If the Board finds that tax, penalty, and/or interest has been paid more than once or was unnecessarily collected, the person who paid the tax is entitled to a credit or refund. If the overpayment is caused by an error on a return, a refund claim must be filed within three years from the date the return was due. In the case of a determination, the refund claim must be filed within six months from the date the determination became final or within six months from the date of overpayment, whichever period expires later.

If an overpayment of tax was made to a dealer or broker on a retail sale subject to sales tax, you must request the refund directly from the retailer. The retailer, being the person who is liable for the tax, would apply for a credit or refund on their quarterly sales tax return and submit verification of its refund to you, the purchaser.

If you paid the tax to the Board or the DMV, you would make a request for a refund in writing to the Board. Your request should detail the facts explaining why you feel the tax was overpaid or collected in error and include copies of receipts, returns, canceled checks, and any other documentation that verifies your claim.

Q: What if I paid tax to a broker? Who is responsible?
A: Normally, when a broker acts as an agent without authority to bind the parties or transfer title, the broker is not considered a retailer and is not obligated to collect sales or use tax. However, effective January 1, 1996, the Sales and Use Tax Law was amended to provide that a purchaser who can provide receipts verifying that the sales or use tax was paid to a broker is relieved of the liability up to the amount of tax paid. The broker becomes liable for the tax, up to the amount collected, as a retailer. Any additional tax determined to be due is the obligation of the purchaser. Tax on transactions which occurred prior to January 1, 1996, remain the obligation of the purchaser, even if the broker collected use tax on the transaction.

Q : Do you have a California sales tax exemption update for aircraft, vessels and vehicles?
A: UPDATE: TAX LAW CHANGE AS OF SEPTEMBER 23, 2008 ~ with the signing of California’s budget the Sales and Use tax laws have changed. The 90 Day exemption has been eliminated permanently. The new exemption period is 12 months. This law change has no effect on tax exemptions for aircraft, vessels or vehicles purchased for use in Commercial Interstate or Foreign Commerce, Common Carriage etc. For further information on the law change and how it may effect your transaction, contact a tax expert at (866) No CA Tax (662-2829).

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