Use Tax Collection Requirements for Out-of-State Retailers Operative September 15, 2012

Reatailer FAQ

Assembly Bill 155 (AB 155), operative September 15, 2012, expands the types of out-of-state retailers that are required to register with the Board of Equalization (BOE) to collect and remit use tax on sales of tangible personal property to California. As a result of the expanded definition of who is engaged in business in California, more online retailers must register with BOE to collect tax.

When out-of-state retailers do not collect tax, California consumers are still required to report and pay the equivalent of sales tax, known as "use tax." Consumers can pay directly to the BOE using eReg or pay on their California income tax returns with the option of using BOE's Use Tax Lookup Table.

Consumer-Purchaser Information

What changed for consumers as a result of the new law?

This means consumers will see tax collected with their internet purchases as they as complete the sale online, in the same way tax is collected when they visit a local store.

Consumers will see more tax collected with their Internet purchases as they complete the sales online, in the same way tax is collected when they visit a local store. This will reduce the number of sales consumers need to keep track of and report themselves.

If purchases are made from an out-of-state retailer that is not registered to collect the tax, the purchaser is still required to report and pay the use tax.

How Do I Report Use Tax?

The purchaser may report and pay use tax:

  • Directly to the State Board of Equalization by using BOE's electronic registration system (eReg); or
  • Report and pay to the Franchise Tax Board (FTB) when filing an annual State Income Tax Return. Follow the instructions provided in the FTB return instructions for the calendar year 2012 for forms 540 and 540A, and 540EZ. As part of reporting use tax on the State Income Tax Return, the purchaser may also choose to use the Use Tax Lookup Table.

Additional Resources