As part of the emergency budget legislation last year, the California legislature added section 6225 to the Revenue and Taxation Code, which requires a "qualified purchaser" to register for reporting its use tax with the Board of Equalization (BOE). Under this section, a "qualified purchaser" is a person with at least $100,000 in annual gross receipts from business operations.

This new registration requirement INCLUDES nonprofit organizations, which are considered a qualified purchaser if they have $100,000 or more in gross receipts from business operations IN ANY calendar year. (To check for your own nonprofit, look at your federal IRS Form 990, line G, located in the top section on the first page of the form).

The BOE has sent out notices to some business and organization – however, an organization that is a qualified purchaser MUST register by the April 15 deadline regardless of whether it received any notices from BOE.

• What does registration require? A qualified purchaser may register for a use tax account by completing the BOE-404-A, Qualified Purchaser Use Tax Registration, and mailing it to the local BOE field office. Upon registration the person will be assigned an account number and express login code, which is used for eFiling returns.
• What is use tax? You may owe use tax on purchases you made from out-of-state or Internet sellers. Use tax is similar to the sales tax paid on purchases you make in California. In general, you must pay California use tax if you purchase an item out-of-state (for example, by telephone, over the Internet, by mail, or in person) and

o The seller does not collect California sales or use tax, and
o You use, give away, store, or consume the item in this state.

• What does this mean for IOLTA programs?

· If you reported gross receipts of $100,000 or more on your Form 990 (line G) in any year, you must now register with the BOE (and pay any applicable use taxes) – by the April 15th deadline.

The BOE released a special notice in September 2009 on this issue that includes the registration form. Link is: http://www.boe.ca.gov/news/pdf/l232.pdf

PIC cannot answer questions about this issue.

There is a series of answers to Frequently Asked Questions regarding the use tax registration requirement is available on the Board of Equalization's website. Links for more information are:

* http://www.boe.ca.gov/sutax/useTaxRegFAQ.htm
* http://www.boe.ca.gov/news/2009/84-09-G.pdf