Were returns filed under a predecessor's seller's-permit number treated as no returns at all for the new operator's audit and penalty periods?

Plain-English summary

Returns filed under a predecessor's seller's-permit number were treated under Board policy as returns filed by the actual seller, rather than as a complete failure to file.

The earlier recommendation had treated the partnership as having filed no returns, asserted tax from the start of business, and imposed a failure-to-file penalty. The modified recommendation changed that result because the partnership had filed returns, although under the predecessor's permit number.

Staff recommended limiting the audit to section 6487's three-year period, deleting sales outside that period from the taxable measure, and removing the failure-to-file penalty.

Common questions

Did using the predecessor's permit make the partnership a nonfiler?

No, under the Board policy described.

How far back could the modified audit reach?

Three years under the statute applied by the recommendation.

What happened to the failure-to-file penalty?

Staff recommended deleting it.

Citations and references

• California Revenue and Taxation Code section 6487 — three-year assessment limitation applied

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/465-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/465-1542.pdf

Original ruling text

STATE OF CALIFORNIA
BOARD OF EQUALIZATION

In the Matter of the Petition
for Redetermination of State
and Local Sales and Use Taxes
R. J. W--and
V. N---, a partnership
dba B--- W--- S--Petitioner

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465.1542

MODIFIED
DECISION AND RECOMMENDATION

No. SR -- XX XXXXXX-010

Summary of Prior Recommendation
Petitioner had conducted business using the seller’s permit of a predecessor in the business and had filed returns under the predecessor’s account number. Petitioner had been regarded as having failed to file returns and tax had been asserted from the time that petitioner began in business. In addition, a penalty for failure to file returns had been imposed. Basis for Modification Petitioner filed returns under the seller’s permit number of its predecessor. It is the policy of the Board to regard returns filed under a predecessor’s permit number as returns filed by the actual seller. Therefore, the audit should be limited to the three-year statute of limitations of Section 6487, and the penalty for failure to file returns does not apply. An appropriate adjustment should be made. Recommendation Delete from the amount subject to tax all sales outside the three-year period. Delete the penalty for failure to file returns. Petitions Unit to make adjustments.

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H. L. Cohen, Hearing Officer

3-10-82
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Date

Reviewed for Audit:
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Principal Tax Auditor

March 12, 1982
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Date