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St a t e Bo a r d of eq u a l i z a t i o n Sa l e S a n d uS e ta x Pr o c e d u r e S

Cl o s i n g ou t Yo u r se l l e r ’s Pe r m i t

Failure to close out your

permit can result in a tax

liability even though you no

longer own or operate the

business.

you

As a retailer, you knew the importance of obtaining a seller’s permit when

started a business. It is equally important to know that you must inform the

Board of Equalization (BOE) to close out your permit when any one of the fol-

lowing occurs:

 • Youarenolongeractivelyengagedinbusiness;

 • Yousellyourbusinessorstockofgoodstosomeoneelse;

 • Youchangethetypeofownershipforyourbusiness(e.g.,fromasole

proprietorship to a corporation or partnership)

 • Whenyourpartnershipagreementcallsfordissolutionofthepartnership

and the formation of a new partnership when a change in partners occurs.

If you fail to notify the BOE of these changes, you could be held liable for tax,

interest and penalties which are incurred after you no longer own or operate the

business.

Thispamphletcoversthefollowingtopicsrelatedtoclosingoutyourpermit:

 • NotifyingtheBOE

 • Filingyournaltaxreturn

 • Taxablesalesafterclosingoutyourpermit

 • Successor’sliabilityandtaxclearances

 • Changesinownership(Seepage3forexamplesofsuchchanges)

If you want more information about any of these topics, please contact the

BOE’s Taxpayer Information Section at 800-400-7115. Staff will be happy to

answer your questions.

Notifying the BOE

If you sell, change partners, or close out your business, you must let us know.

The following information may be needed before we can close out your seller’s

permit:

 • Thedateyoustoppedbeingactivelyengagedinbusiness.

 • Yourreasonfornotbeingactivelyengagedinbusiness.

 • Thename(s)ofanypartner(s)whohavedissociatedfromorbeenaddedto

the partnership.

 • Themeansyouusedtodisposeofyourresaleinventory,xtures,and

equipment. If you sold any of these items, you will need to disclose the

sellingprice.Ifyousoldyourentirebusinessorresaleinventory,youneed

togiveboththesellingpriceandthenameofthebuyer.

Board website and Member contact information: www.boe.ca.gov

April 2008

Publication 74

BOARD MEMBERS

RAMON J. HIRSIG BETTY T. YEE BILL LEONARD MICHELLE STEEL JUDY CHU, Ph.D. JOHN CHIANG

Executive Director First District Second District, Third District Fourth District

•

State Controller

San Francisco Ontario/Sacramento Rolling Hills Estates Los Angeles

ClosingOutYourSeller’sPermit•April2008

 • Thepurchasepriceofretained

inventory.

 • Yourcurrentaddressanddaytime

telephone number.

 • Yourcopyoftheseller’spermit,if

available.

You can use the enclosed form, Notice of

Close Out for Seller’s Permit, to notify us

(see page 5). The form will be reviewed

by staff, who will contact you if addi-

tional information is required. If no

additional information is needed, staff

will close out your account and cancel

your seller’s permit.

You also need to le your nal sales

and use tax return and any prior returns

(includingprepayments)whichyouhave

not yet led. To expedite your closeout,

you should le these returns with the

localofceandpayanytax, penaltyand

interest with certied funds. If you pay

by personal check and cannot provide

a copy of the cancelled check, it could

take eight or more weeks to close your

account.

After you have paid your entire liabil-

ity (including liabilities resulting from

an audit), staff will return any security

you have on deposit. It is important to

remember that, even after providing all

information and having your permit

closed out, you must still keep your busi-

ness records for four years.

Filing Your Final Tax Return

Even though you have closed out your

seller’s permit, you must still report

your sales up to the closeout date.

This includes any sales of xtures or

equipment that occurred as part of the

closure or sale of your business. You

must also report any inventory you

intend to retain for your own use if that

inventory was purchased without pay-

ment of sales tax.

Page 2

To help expedite the closeout you should

separately report and identify the sale of

“xtures and equipment” and “retained

inventory” on line 2 of your nal sales

and use tax return.

Sales of inventory to another retailer or

to the purchaser of your business are not

taxable,butshouldbereportedas“Sales

for Resale” on line 4 of your return. A

resalecerticateshouldbeobtainedfrom

thebuyerandsavedwithyourrecords.

Normally, you may le your nalreturn

on its regular monthly or quarterly due

date. However, taxpayers who report

annuallymustlethenalreturnbythe

due date of the quarter in which they

close out their permit.

Closing out your permit and ling your

nal return does not relieve you of a

liability for unpaid tax whether reported

or unreported. You are required to pay

all tax incurred for the period you were

activelyengagedinbusiness.

If the business is a corporation or LLC

which has added or included tax as part

of the price of the property sold, or owes

use tax, corporate ofcers or other per-

sons will be held personally liable for

unpaid tax if they willfully failed to pay

or caused not to be paid the tax that was

due and were:

 • Responsibleforlingreturnsorpay-

ing tax, or

 • Underadutytoactforthecorpora-

tionincomplyingwiththeSalesand

UseTaxLaw

Ifyouthinkyoumayhavedifcultypay-

ing tax that is due, you should contact the

localofcehandlingyourpermit.

Taxable Sales After Closing

Out Your Permit

Before requesting the close out of your

permit, you should be sure that you

will make no more sales. You qualify as

ClosingOutYourSeller’sPermit•April2008

a seller if you make three or more sales

of tangible personal property (including

retained inventory, xtures, or equip-

ment) in any 12-month period. As a

seller, you are required to register with

the BOE and to report and pay any sales

tax due.

In certain cases, a single sale of xtures

and equipment which occurs after the

close out can also be taxable. A sale

whichoccurswithin60daysisnormally

considered taxable unless you can prove

that the sale was not planned at the

closeout date.A sale that occurs after 60

days, but within one year, is taxable if:

 • Therewasacontractofsaleatthe

closeout date, or

 • Aleasewithanoptiontobuyexisted

at the closeout date, or

 • Thereisevidencethataplanexisted

tosellthexturesandequipmentin

due course

You are liable for use tax if you make

personal or business use of property

purchased without tax, for example,

resale inventory. You are required to

report and pay use tax on the cost of

such property.

Successor’s Liability and

Tax Clearance

If you are selling your business, you

need to be aware of successor’s liability.

Underthelaw,thebuyerofabusinessor

stock of goods must withhold from the

purchase price an amount sufcient to

covertheseller’sliabilityfortax,interest,

and penalties. If a sufcient amount is

not withheld, the buyer becomes person-

ally liable for the amount that should

have been withheld. This is called

“ successor’s liability” and is limited to

an amount equal to the purchase price of

the business or stock of goods.

To be released from this liability, the

buyer may request a certicate of tax

clearance from the BOE.

If a tax clearance is needed to complete

the sale of your business, you need to

rememberthat it can take up to 60 days

or more to obtain a clearance, especially

if an audit is required and your books

and records are not available for review.

You can help the clearance process by

ensuring that the escrow company or

buyerpromptlyles a written request for

aclearancewiththelocalBOEofce.

Youshouldalsorememberthat:

• The liability of a successor does not

replace your primary liability for

unpaid tax, interest, or penalties. The

BOE will generally only try to collect

from a successor if unable to do so

from the seller of the business.

 • Theamountofmoneyyouactually

receiveonthesaleofyourbusiness

may be reduced by the amount you

owe for sales and use tax. If you owe

tax, the BOE generally will not issue

ataxclearanceuntilitreceivesfull

payment of your liability or until an

amount equal to your liability is put

into escrow.

Changes in Ownership

If you are planning or have already

made changes, you should contact the

BOE’s Taxpayer Information Section (see

page4). Failure to notify the BOE of a

change in ownership can make you liable

for the taxes owed by the new owner(s).

If you continue to operate your business

but change its form of ownership, you

are required to obtain a new seller’s

permit. A permit is valid only for the

business entity (such as a sole proprietor-

ship, partnership, corp oration, limited

liability company, or joint venture) in

NOTE

The statements in this

pamphlet are general

and are current as of

the date on the cover.

The Sales and Use

Tax Law (Revenue and

Taxation Code, section

6001 and following) is

complex and subject to

change. If there is a

conict between the law

and this pamphlet, any

decisions will be based

on the law and not this

pamphlet.

Page 3

ClosingOutYourSeller’sPermit•April2008

whose name it was issued and certain

changes in ownership will invalidate it.

For example, a new permit is required

when:

 • Apartnershipaddsordrops

a partner and the partnership

agreement requires that a new

partnership be formed.

 • Thereisachangeinmaritalstatus

for a husband/wife co-ownership.

 • Thereisachangeinthestatusofa

registered domestic partnership.

• Yourbusinessconvertsfromone

type of organization (such as those

namedabove)toanothertypeof

organization.

 • Acorporationreorganizationor

merger results in a new corporation.

Since some changes in ownership might

also include taxable transfers of tangible

personal property, it is recommended

to contact the BOE before making the

change.Thestaffcanreviewtheplanned

change and tell you if it would be subject

to tax and if you will need a new seller’s

permit.

For More Information

Taxpayer Information Section

Please call the Section if you have gen-

eral questions or need to learn more

about closing out your permit.

800-400-7115

Tospeaktoarepresentative,callbetween

8:00 a.m. and 5:00 p.m., Pacic Time,

Monday through Friday, excluding State

holidays. Automated services, including

afax-back service,areavailable24 hours

a day.

Personswithhearingdisabilitiescancon-

tact the Center at the following number:

TDD/TTY,800-735-2929.

Page 4

Regulations

These following Sales and Use Tax

Regulations apply to close-outs:

 • Regulation1595—Occasional

Sales—SaleofaBusiness—Busi-

ness Reorganization

 • Regulation1596—Buildingsand

OtherPropertyAfxedtoRealty

 • Regulation1699—Permits

 • Regulation1702—Successor’s

Liability

Please call the Taxpayer Information

Section to order copies of these regula-

tions.Copies can also be downloaded or

viewedfromourwebsite.

www.boe.ca.gov

Your Taxpayers’ Rights

Advocate

We want to make dealing with us as

easy as possible. As a result, we have

appointed a Taxpayers’ Rights Advo-

catetohelpyouwithproblemsyouhave

not been able to resolve through normal

channels.

Youcanwritetothemat:

Taxpayers’RightsAdvocate,

MIC:70

StateBoardofEqualization

450NStreet

POBox942879

Sacramento,CA94279-0070

Or call:

916-324-2798

(tollfree)888-324-2798

(fax)916-323-3319

BOE-65 (FRONT) REV. 25 (7-05) STATE OF CALIFORNIA

NOTICE OF CLOSEOUT FOR SELLER’S PERMIT BOARD OF EQUALIZATION

INSTRUCTIONS: Please provide the following information to assist us in closing your account, releasing security, or issuing an escrow

clearance. Before completing this form, you should refer to a copy of the Board of Equalization publication 74, Closing Out Your

Seller’s Permit. Publication 74 contains important information about closing out your permit. If you have any questions, please call our

Information Center at 800-400-7115.

SECTION I: ACCOUNT INFORMATION

NAME SELLER’S PERMIT NUMBER

CURRENT ADDRESS (street address) DAYTIME TELEPHONE NUMBER

( )

(city, state, zip code)

SECTION II: CLOSEOUT INFORMATION

1. Did you make any purchases for your own use using your seller’s permit?

If YES, did you pay sales tax on those purchases to: a. your vendor

2. Date the business was closed/or sold

YES NO

b. the Board of Equalization

3. Was the business sold? YES NO (If NO, go to Section III of this form.)

If YES, complete the following information:

a. Date the business was sold

b. Name, address and telephone number of the purchaser

c. Name, address and telephone number of escrow company

d. Escrow number

e. Selling price of fixtures and equipment $

f. Total sales price $

g. Your forwarding address and telephone number

SECTION III: CHECKLIST FOR CLOSEOUTS WITH ESCROW CLEARANCE OR SECURITY DEPOSIT INVOLVED

(see back for instructions)

The following items may be needed to finalize the closing of your account, the releasing of any posted security, or issuing of an

escrow clearance.

ALL CLOSEOUTS:

Your seller’s permit, if available.

Location of your books and records.

Final tax return with payment (if a return is not available, call 800-400-7115). If you are required to make payments by EFT, you

must also make your final payment through the EFT process.

NOTE: If you sold your fixtures and equipment, even if you did not sell your business, you must include the selling price of

these items on line 2 of your final return.

CLOSEOUT BECAUSE BUSINESS SOLD AND/OR SECURITY DEPOSIT IS BEING REFUNDED

All of the above, and

A copy of your escrow instructions or bill of sale showing the value of inventory, fixtures and equipment sold.

Duplicate copies of your last two tax returns, including your final reporting period with canceled checks (photocopies of front and

back) as proof of payment.

Payment of any amounts due must be made in certified funds in order to expedite finalizing your transaction). If you are required

to make payments by EFT, you must also make your final payment through the EFT process.

SEND TO:

Mail this completed form and your supporting documents to:

Board of Equalization Information Center

P.O. Box 942879

Sacramento, CA 94279-0090

SECTION IV: SIGNATURE

SIGNATURE AND TITLE

DATE

CLEAR

BOE-65 (BACK) REV. 25 (7-05)

NOTICE OF CLOSEOUT FOR SELLER’S PERMIT

SECTION III: CHECKLIST INSTRUCTIONS

ALL CLOSEOUTS

Return your seller’s permit, if available –Your seller’s permit is the goldenrod document you received when you initially applied for

your Sales Tax Permit. If you are currently unable to locate this document but do so in the future, please destroy the permit.

Location of your books and records – The location of your books and records is important for audit purposes. Audits are important

because they protect the state against an underpayment of the sales tax and protect the taxpayer against an overpayment of the

sales tax.

Final Tax Return with Payment – If you do not have a copy of your final sales tax return(s) available, please call 800-400-7115

between the hours of 8:00 a.m. and 5:00 p.m. Pacific Time to request a sales tax return, or contact your local Board office for a final

return. If you are required to make payments by EFT, you must also make your final payment through the EFT process.

CLOSEOUT BECAUSE BUSINESS SOLD and/or SECURITY DEPOSIT IS BEING REFUNDED

Copy of your escrow instructions or bill of sale – These documents show the value of inventory, fixtures and equipment sold. The

sales price of your fixtures and equipment must be included on line 2 of your final return. If a sale of fixtures and equipment is not

considered at the date of closeout, a subsequent single sale of the fixtures may be treated as an occasional sale. The single sale of

fixtures and equipment subsequent to the date of closeout is taxable if either:

a. The sale occurs within 60 days of the date of closeout and the taxpayer cannot establish that the sale was not considered at the time

of closeout; or

b. The sale takes place after 60 days and within one year of the closeout date, and:

1. A contract of sale existed at the date of closeout, or

2. A lease with an option to buy exists, or

3. Arrangements have been made for a plan to sell the fixtures and equipment in due course.

Duplicate copies of your last two tax returns, including your final reporting period and canceled checks (photocopies of

front and back) as proof of payment – This requirement ensures that payments for all amounts due have cleared your bank. If

these items are not provided, the Board must wait 30 days to process the finalizing of your permit and/or return any security that is to

be returned.

Final payments – Payment of any amounts due must be made in certified funds in order to expedite finalizing your closeout

transaction. Accounts required to make their tax payments by EFT must also make their final payments through the EFT process.

If you need assistance in providing any of the items listed above,

contact your nearest Board office for detailed instructions. If the

items listed above do not pertain to your closeout and you have completed Sections I, II and signed in Section IV, forward this

document to the appropriate Board office. See publication 74 for a list of district office locations.

FOR BOARD USE ONLY

Is registration information current? YES NO F & E? YES NO

Is a final return filed? YES NO Inventory? YES NO

Was a final return mailed to taxpayer? YES NO Is the documentation attached? YES NO

Are there any delinquencies? YES NO

Page 8

ClosingOutYourSeller’sPermit•April2008

FIELD OFFICE LOCATIONS AND ADDRESSES

c a l i f o r n i a c i t i e S o f f i c e a d d r e S S c o d e n u m B e r

Bakerseld 180030thStreet,Suite380,93301-1922 661 395-2880

ChulaVista 5903rdAvenue,Suite202,ChulaVista,91910-5657Note:closed12noonto1p.m.M-F 619 409-7440

CulverCity 5901GreenValleyCircle,Suite200,90230-6948(POBox3652,90231-3652) 310 342-1000

ElCentro 1550W.MainStreet,92243-2832Note:closed12noonto1p.m.M-F 760 352-3431

Eureka*  707 576-2100

Fresno 5070N.SixthStreet,Suite110,93710-7504 559 248-4219

LagunaHills 23141MoultonParkway,Suite100,92653-1242 949 461-5711

Norwalk 12440E.ImperialHighway,Suite200,90650-8397(POBox409,90651-0409) 562 466-1694

Oakland 1515ClayStreet,Suite303,94612-1432 510 622-4100

RanchoMirage 35-900BobHopeDrive,Suite280,92270-1768 760 770-4828

Redding 2881ChurnCreekRoad,SuiteB,96002-1146(POBox280529,96049-2529) 530 224-4729

Riverside 3737MainStreet,Suite1000,92501-3395 951 680-6400

Sacramento 3321PowerInnRoad,Suite210,95826-3889 916 227-6700

Salinas 111EastNavajoDrive,Suite100,93906-2452 831 443-3003

SanDiego 1350FrontStreet,Room5047,92101-3698 619 525-4526

SanFrancisco 121SpearStreet,Suite460,94105-1584 415 356-6600

SanJose 250SouthSecondStreet,95113-2706 408 277-1231

SanMarcos 334ViaVeraCruz,Suite107,92078-2637 760 510-5850

SantaAna 28CivicCenterPlaza,Room239,92701-4011 714 558-4059

SantaRosa 50DStreet,Room230,95404-4791(POBox730,95402-0730) 707 576-2100

SuisunCity 333SunsetAvenue,Suite330,94585-2003 707 428-2041

VanNuys 15350ShermanWay,Suite250,91406-4203(POBox7735,91409-7735) 818 904-2300

Ventura 4820McGrathStreet,Suite260,93003-7778 805 677-2700

WestCovina 1521WestCameronAvenue,Suite300,91790-2738(POBox1500,91793-1500) 626 480-7200

OUT-OF-STATE FIELD OFFICES

Sacramento 3321PowerInnRoad,Suite130,95826-3893(POBox188268,95818-8268) 916 227-6600

Chicago,Illinois 120N.LaSalle,Suite1600,60602-2412 312 201-5300

NewYork,N.Y. 205East42ndStreet,Suite1100,10017-5706 212 697-4680

Houston,Texas 1155DairyAshford,Suite550,77079-3007 281 531-3450

*LimitedservicesareavailableinEureka.Seewww.boe.ca.gov/info/eurekaofce.htmorcallthenumberlistedabove(SantaRosaofce).

HEADQUARTERS

Sacramento POBox942879, 94279-0090 800 400-7115

Addresses and telephone numbers are current as of February 13, 2007, but are

subject to change. We recommend you call the ofce before visiting.

Unless otherwise noted all offices are open from 8 a.m. to 5 p.m. Monday-Friday, excluding state holidays.

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