California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) Sales and Use Tax Exclusion Program?

Claiming the full STE Program tax benefit can be a complex process due to several factors:

  • Determining eligible equipment and construction purchases. One of the challenges lies in identifying all the equipment and construction purchases that qualify for the STE Program. The guidelines provided by CAEATFA can sometimes be vague or subject to interpretation, making it difficult for businesses to pinpoint every eligible expense accurately. As a result, many companies may inadvertently miss out on potential tax benefits.
  • Vendor Education. Another hurdle is the need to education vendors, including both prime contractors and their subcontractors, about the specific purchases that qualify for the STE Program. This educational effort is crucial to ensure that vendors correctly categorize their sales, making it possible for businesses to claim the relevant tax benefits. However, disseminating this information to a wide range of vendors can be a time-consuming and challenging endeavor.
  • Tax Overpayments and Vendor Refunds. Complicating matters further, the California tax system requires that all sales tax refunds be initiated by the vendor. This means that if an error or overpayment occurs, businesses must rely on their vendors to file for the refund. In practice, this reliance on vendors can lead to delays in the recovery of overpaid taxes, as vendors may not always prioritize or promptly address refund requests, potentially causing companies to miss out on their rightful tax benefits.

Ensuring the full STE Program tax benefit is claimed involves addressing challenges related to identifying eligible purchases, educating vendors, and navigating the vendor-driven refund process. These hurdles can make it difficult for businesses to access the tax benefits to which they are entitled under the program.



Delivering High Value Tax Insights

In our experience with our contract compliance suite of services, we've made a significant discovery regarding companies that receive invoices from service providers. It's been revealed that, on average, approximately 1 in every 15 invoices contains errors or inaccuracies. These errors span various areas within the capital expense and MRO processes, encompassing labor, equipment, materials, third-party services and more. If these erroneous invoices aren't scrutinized and corrected, they can lead to substantial overpayments, amounting to as much as 4% of the total paid invoices. Moreover, it's essential to recognize that these errors can also affect your overall tax liability.

At CPRS, we offer tailored solutions to address the challenges outlined above, ensuring that our clients can maximize the benefits derived from the STE Program and California's partial manufacturing exemption. We take a proactive approach to these issues, leveraging our expertise to navigate the complexities of state and local sales and use tax regulations.

What sets CPRS apart is our team of former state sales tax auditors, who possess the insight and knowledge needed to craft strategic plans for identifying and collecting the necessary evidence to substantiate sales and use tax refunds. We've developed a proprietary blend of expertise, custom data mining strategies, and innovative information gathering techniques. This unique combination allows us to achieve unprecedented, yet defensible, recoveries and cost savings for our clients. Notably, we've successfully recovered tens of millions of dollars for numerous Fortune 500 companies. The most favorable aspect of our services is that we operate on a contingency basis, meaning we only receive compensation when we recover money for you, ensuring a risk-free and mutually beneficial partnership.

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