The state Board of Equalization announced Friday that it plans to send e-mails to 680,000 retailers informing them of the potential 1 percent sales and use tax reduction should lawmakers take no action before July 1.
Gov. Jerry Brown is calling on lawmakers to extend the state's higher sales tax rate to help bridge a $9.6 billion deficit. State leaders in 2009 enacted temporary tax hikes on sales, income and vehicles for two years. The income tax provisions already expired, while the sales and vehicle tax hikes are set to expire June 30.
The Board of Equalization is responsible for collecting sales and use tax in California, though it does not have the power to set statewide rates.
"Unless the Legislature extends the tax rate increase before July 1, 2011, California retailers should adjust their calculation of sales tax," said Board of Equalization Chairman Jerome E. Horton. "That failure to adjust their computers and registers for the reduced rate, will result in excess taxes being collected from California consumers."
The higher statewide sales tax rate is 8.25 percent, which includes funds for state and local programs. Local governments generally impose additional sales taxes that lead to higher rates based on jurisdiction. Without legislative action, the statewide rate would decline to 7.25 percent.
Brown signed a bill earlier this month halting vehicle registration renewals until the Legislature decides whether to extend the higher tax rates, hoping to avoid confusion, as well as the political peril of billing drivers twice. Lawmakers and Brown did not take action to prevent the Board of Equalization from notifying retailers of the sales tax reduction.