Retailers pay the excise tax to distributors who remit it to the state. The tax collected by distributors is 15% of the wholesale price plus 80% on the average mark-up. The total charged to retailers is 27% on each wholesale transfer.
The accounting for this should hit your balance sheet as a sort of differed tax asset, and reconciled periodically against what you collected.
Retailers collect this from customers at 15% of the retail price. Difference between what you paid to what was collected can arise due to several factors:
- Inventory not sold
- Sales discounts
- Sales promotions – buy one, get one
These factors will result in a difference in your CDTFA account and an overpayment which you should request a refund for.
Follow the CDTFA’s instructions on how to file a claim for a refund
How to File a Claim for Refund (ca.gov)
Probably the main difference will be due to inventory not sold. You should periodically complete a physical inventory count. Any ensuing write-off in your books should prompt a need to request a refund for overpayment.
However, it is not as simple as taking your total vendor invoices excise tax charge less your total excise tax collected.
You would need to show what products were not sold. My firm reconciles this by taking detail POS system or metric sales reports to the transfer price and inventory on hand. Matching up products purchased to the products sold can be a complicated analysis.
Schedule a consultation if you need assistance or some tips on how to complete.