We would like to make you aware of a little known or publicized fee potentially due each year by California businesses to the California State Board of Equalization SBOE .  Some may refer to it as a tax while others may rightly refer to it as a fee, either way its proper name is the Environmental Fee and it was established back in 1989.  The fee is administered by the Department of Toxic Substances Control (DTSC) and provides revenue for site remediation, technology programs, administration, and implementation of cleanup programs.  It is to be collected from businesses and organizations in industry groups that use, generate, or store hazardous materials, or that conduct activities related to those materials.  As a result, it is not a fee that most businesses and accountants tend to think about.  The problem is that the DTSC has decided to use a broad legal definition of hazardous materials such that effective January 1, 2007 most businesses operating in California must register with the SBOE, file environmental fee returns, and pay the fee. The fee currently ranges from $309 to $14,678 for businesses with from 50 to over 1,000 employees.

The fee potentially applies to all:

  • General partnerships,
  • Limited partnerships,
  • Limited liability partnerships,
  • Limited liability companies,
  • Sole proprietorships,
  • All corporate entity types,
  • Professional Employer and
    Organizations (PEO’s).

All of these organizations must file returns if they they have 50 or more employees who were employed more than 500 hours in California during the prior calendar year.  They are not required to register if they have fewer than 50 employees unless they receive an environmental fee return from the SBOE.  Only the following organizations are exempt from the fee:

  • Private households (SIC code 88),
  • Nonprofit residential care facilities (SIC code 8361 or NAICS codes 623312, 62322, and 62399),
  • Insurance companies that pay tax on gross premiums in lieu of all other California taxes and licenses,
  • Banks that pay a tax on net income in lieu of all other California taxes and licenses,
  • U.S. Government agencies and instrumentalities and
  • Nonprofit credit unions, as defined in Financial Code section 14002.

If you think this applies to you, you may register at www.boe.ca.gov.

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