State Tax Board Ends Business Deposit Program



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(Sacramento, CA)
Tuesday, December 17, 2013

Say you’re starting a new business. As part of the state’s permitting process, California has required most new businesses to place a security deposit with the Board of Equalization.  Depending on the size of your new business, the deposit could range from $2,000 to $50,000. 

The goal was to protect the state in case your business didn’t pay sales tax. But business and taxpayer groups have called it yet another economic barrier in California – and the Board of Equalization says the program has been losing its cost-effectiveness.

So board members have voted unanimously to eliminate the requirement. From now on, new businesses won’t need to submit a deposit.  And the state will begin returning deposits to existing businesses in February. The cash and other assets currently held by board as part of this program total nearly $300 million.

Ed. Note: This story has been updated to reflect the fact that the state previously required most new businesses - not all - to place security deposits. We regret the error.

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