UC Tax Issues.pptVIP

UC Tax Issues Accounting Services Controls October 2011 Is UC “Tax Exempt”? UC is an exempt organization for income tax purposes only under Section 501(c)(3) of the Internal Revenue Code CA BOE considers UC subject to Sales/Use Tax UC also has non-payroll income tax withholding and information reporting responsibilities Agenda Sales Use Tax Unrelated Business Income Employee vs. Non-employee Relations Employee Fringe Benefits Taxable Payments through the Vendor System Tax Treatment of Moving Expenses Travel Most Common Sales/Use TaxAccrual Overpayments By dollar amount: Invoice with tax Goods used/shipped outside CA Services Medicines Construction contracts By frequency: Freight Medicines Invoice with tax Services Goods used/shipped outside CA Other Common Sales/Use TaxAccrual Overpayments Tax paid by vendor in audit Accrual tax calculation errors Software Maintenance/service agreements Repair, installation, training labor Qualified periodicals Resale inventory Food for human consumption Printed sales messages Mailing lists Human body parts Overview Sales Tax – Retail Perspective Imposed on retailers for the privilege of making retail sales of tangible personal property in California Based on gross receipts from the sale of tangible personal property (cash, trade-in, and other consideration) Sales tax applies to intrastate transactions (within California) Retailer is liable for collecting and paying sales tax Services - generally exempt unless related to the sale of tangible personal property (“true object test”) Use Tax – User Perspective Imposed on every person who stores, uses, or consumes in the state, tangible personal property purchased from an out-of-state retailer Applies to the cost (cash, trade-in, and other consideration) Applies to taxable transactions that are not subject to sales tax Some out-of-state retailers are “permitized” to collect University is liable for self-assessing and paying the tax Use outside California may be exempt Sales and