Cupertino spared from paying state thousands and thousands in Apple gross sales tax income

The California Division of Tax and Payment Administration (CDTFA) audited town final yr and decided Cupertino had improperly entered a decades-long gross sales tax settlement with the tech large. The $56.5 million is the quantity of disputed gross sales tax {dollars} Cupertino acquired by Apple between April 1, 2021 — which is when the CDTFA selected to analyze the settlement — and June 30, 2023.

A current settlement reached with the CDTFA permits Cupertino to maintain the funds, “previously allocated and anticipated for receipt through August 2024,” in accordance with town.

However the particulars of the settlement, together with the precise quantity town can preserve, are confidential, in accordance with Deputy Metropolis Supervisor Tina Kapoor.

“I want to commend our incredible city staff for their dedication and perseverance throughout the long and challenging negotiations,” Mohan mentioned in an announcement. “This process took time, but thanks to the efforts of our city administration, our City Attorney and our prudent financial management, the settlement puts us in a much better financial position going forward.”

Since 1998, Apple, which is headquartered within the metropolis, has handled all on-line purchases of merchandise inside California as in the event that they have been made within the metropolis. The deal allowed Cupertino to gather 1% of Apple’s 7.25% gross sales tax, and a 3rd of the income was returned to the corporate. The CDTFA, nonetheless, decided that the state ought to obtain that income as an alternative.

Apple isn’t recognized in metropolis stories because the audited taxpayer, however metropolis leaders in public conferences have indicated the tech titan was the goal of the audit.

However the metropolis isn’t out of the woods financially but. Starting in 2025, CDTFA ‘s decision will take effect and Cupertino will no longer receive Apple sales tax. The city will need to identify other revenue sources or expenditure reductions to make up for the loss of dollars.

Cupertino already reduced funding for next fiscal year’s operations and upkeep, infrastructure tasks and city-sponsored occasions to fulfill roughly half of a $30 million shortfall. Final yr, town had eradicated greater than a dozen vacant employees positions and decreased its contract companies and particular tasks to fulfill the opposite half.