Unlicensed Locksmiths May Be Evading Taxes & Pocketing Your Money
Investigative reporting may sound glamorous to news viewers, but much of what we do is often tedious and time consuming.
Earlier this year, our researchers looked up 2,300 hundred listings of San Francisco locksmiths in AT&T's yellowpages.com. We then checked each listing to determine how many of those companies had licenses. The process took well over a month. We found out only about three percent had the proper license to legally operate as locksmiths in California.
Last month, we then sent off the same list of locksmiths to the disclosure office of the California State Board of Equalization. We submitted a public records act request and asked them to determine if the locksmiths had proper seller's permit. The permits allow the company to collect sales tax on behalf of the state.
After weeks of time consuming research by the staff of the Board of Equalization, we compiled the information they gave us into a spread sheet. We found out that only 7 percent of the San Francisco locksmiths listed in yellowpages.com definitely had permits. Another 17 and a half percent did not have seller's permits under their name, but businesses with different names at their address did.
The supervisor in the Disclosure Office told us it was unclear to her whether those permits also applied to the locksmiths we submitted.
But as we reported back in February, many of the addresses listed in the phone books for unlicensed locksmiths either don't exist, or are occupied by other unrelated businesses. Therefore it appears that any permits at those addresses would not belong to the locksmith.
Neither the State Board of Equalization nor the State Controller's office accepted our request for an interview for reaction to our findings. But the Board of Equalization did issue this written statement.
It's very important for businesses to register with the state, so they can lawfully collect and report sales taxes. For that reason, we do outreach to business communities, and offer workshops for new business owners to explain their tax responsibilities.
We also have a new team of staff going door to door throughout San Mateo and San Francisco Counties, making sure each business they visit is properly registered. We also maintain a hotline for people to anonymously report a business suspected of tax evasion.
There are penalties for knowingly operating without a permit. The basic penalty for late payment of taxes is 10%, but operating without a permit can land an even bigger fine: equal to 50% of the tax owed. So a business owner who operates for six months without a seller's permit, and collects $3,000 in sales tax, will not only owe the back tax, but another penalty of $1,500.
In some cases of tax evasion, there's a lack of education and awareness.in others, people are actively evading their responsibilities. An estimated five percent of all businesses in the state operate without necessary sellers permits. We do not have an estimate for sales tax figures related specifically to locksmiths.
Generally speaking, locksmiths should register for seller's permits, given that many repairs include materials that are taxable under California law. If a locksmith is found to be operating without a permit, the appropriate penalties will be levied.
Left unanswered by the Board of Equalization is what if anything will they do to go after the locksmiths without proper seller's permits. Another issue, how do you go after these businesses if their address is unknown?
Meantime, the locksmith license given by A1 San Bruno Locksmith, License number 658701, does belong to A-1 San Bruno Locksmith. But here's the problem. The Department of Consumer Affairs tells us the license was cancelled following the recent death of the contractor. The Department says anyone using anyone else's license is committing fraud, which is a criminal offense. It will be up to the San Mateo County District Attorney's office to determine whether any charges will be filed against A-1 San Bruno Locksmith.
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