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CDTFA California Department of Tax and Fee Administration
Formerly known as BOE California State Board of Equalization
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California Personal Income, Sales and Use Taxes: Tax Imposed on Support Service Providers
Legislation is enacted that imposes California sales tax on providers of support services and excludes from gross income, for purposes of personal income tax, any supplementary payment received by a provider of in-home supportive services, as provided.
Providers of Support Services
California sales tax is imposed on providers of support services at retail measured by the gross receipts from the sale of those services. The tax is operative provided specified federal approval requests for matching funds are granted. The tax is imposed at the rate of 7.25% (6.25% on and after July 1, 2011), according to the Bill Analysis. Sellers that are actively engaged in arranging for the retail sale of support services are required to register with the California State Board of Equalization (BOE), collect tax from the provider, and report and pay the tax to the BOE, CDTFA. Sales tax prepayments are inapplicable to sellers until no later than three months after the date that federal approval is obtained.
“Support services,” for purposes of the tax, are:
— domestic services and services related to domestic services;
— heavy cleaning;
— personal care services, as defined;
— accompaniment when needed during necessary travel to health-related appointments or to alternative resource sites;
— yard hazard abatement;
— protective supervision;
— teaching and demonstration directed at reducing the need for other supportive services; and
— paramedical services that make it possible for the recipient to establish and maintain an independent living arrangement, including necessary paramedical services ordered by a licensed health care professional, as provided.
“Provider” is defined as a natural person who is authorized by law to provide all such support services and who makes a retail sale. Moreover, the term includes nongovernmental persons that arrange for the retail sale of all support services.
“Seller” is defined to include:
— the California Department of Social Services in its capacity as the state agency that oversees the In-Home Supportive Services (IHSS) program;
— a county in which county staff serve as homemakers, as provided;
— a county that contracts with a nongovernmental contractor to arrange for the retail sale of support services; or
— any other nongovernmental person that arranges for the retail sale of support services.
In addition, the Director of the Department of Health Care Services is required to seek federal approval from the federal Centers for Medicare and Medicaid Services to implement these provisions and to notify the BOE within 10 days of receipt of that approval.
Supplementary Payment Excluded From Gross Income
Gross income, for California personal income tax purposes, does not include any supplementary payment received by a provider of in-home supportive services, as specified. That supplementary payment must be equal to a percentage of the gross receipts of the provider for the sale of the services, plus an amount that is equal to any additional payroll withholding required for federal income tax purposes and for purposes of taxation for the Social Security and Medicare programs, as provided, due to the supplementary payment.
CDTFA California Department of Tax and Fee Administration formerly California State Board of Equalization sales and use tax audits, sales and use tax settlements, sales and use tax installment agreements, Los Angeles CDTFA BOE audit, Orange County BOE audit, San Bernardino BOE Audit, Riverside BOE Audit, Wholesale CDTFA BOE sales tax audit problem.
The CA Sales & Use tax audit help line 877-788-2937
