California Use Tax Information
Sample Use Tax Scenarios
I purchased merchandise from a catalog company based in Illinois. The seller charged me California tax. Why was I charged tax? Should I report these purchases?
If the catalog company charged you California tax, it is because the company has a presence in California requiring it to collect tax, or has voluntarily registered to collect tax on behalf of its customers. Assuming the catalog company charged you the correct tax rate, you do not need to report these purchases because you already paid the appropriate tax directly to the catalog company who will then remit the tax to the Board of Equalization (BOE).
I purchased a backpacking tent over the Internet from a company in Wyoming. The seller shipped the tent to my home and did not charge me any tax. Should I report these purchases?
Yes. This is an example in which you would owe use tax.
I purchased a digital camera by mail order from a company in New York. They did not charge me California tax. I purchased the camera as a gift for a friend. Should I report this purchase?
Yes. The purchase is subject to use tax regardless of whether you use the camera or give it as a gift to a friend.
I purchased lumber from a Pennsylvania mill. The seller ships the lumber to my business and does not charge me any tax. I use the lumber only in making furniture to sell. Should I report these purchases?
No. Since you will resell the lumber as part of the furniture, your lumber purchase is not subject to use tax.
I ordered a large novelty basket filled with assorted specialty luncheon meats, cheeses, and crackers from a company based in Wisconsin. Will California use tax apply to this purchase?
No. Assuming the value of the novelty basket itself is merely incidental to the total value of the product (less than 10 percent of the retail value of the complete package), you would not report the purchase of this item. Luncheon meats, cheeses, and crackers are food products and are exempt from sales and use tax.
Last week, while visiting relatives in Maine, I purchased $200 in stereo equipment for use with my system at home in Sacramento, California. When I purchased the equipment, I was charged five percent Maine sales tax. Do I owe California use tax on this purchase?
Yes, however, Revenue and Taxation Code section 6406 allows you to take a credit for sales or use tax paid to another state. Therefore, a portion of the California use tax you owe on the purchase is offset by the sales tax you paid to the retailer in Maine. Since the sales and use tax rate in Sacramento at the time of purchase is 8.00%, use tax of $16.00 would be due on your purchase. However, after deducting the $10 in Maine sales tax you paid when you purchased the equipment, you would only owe $6.00 in California use tax on the purchase.
Note: For each purchase, you can only take a credit for sales tax paid to another state up to the amount of California use tax you owe on that purchase. If you paid an amount in excess of the California use tax due on a purchase, you cannot use this additional tax paid to offset the tax due on another transaction. Using the example above, if the tax rate in Maine were 10% and you paid $20 in Maine sales tax, and only owed $16.00 in California tax, you could not apply the $4.00 in additional tax you paid to offset California use tax you may owe on another purchase or be entitled to a refund of $4.00.
I ordered a stove and refrigerator from a company based in New Hampshire. I had them ship the items directly to my cabin in Idaho. I plan to install these items in the cabin when I visit there later this year. Do I owe California use tax on this purchase?
No. The California use tax only applies to property used, consumed, given away or stored in this state. Since the stove and refrigerator were never stored or used within California, you are not required to report or pay California use tax on this purchase.
My company assigned me to work in Portland, Oregon, for nine months. When I first arrived in Portland, I purchased a personal computer and software from a local retailer. Oregon does not have a sales or use tax and I was not charged tax. Do I owe California use tax on the personal computer and software when I return to California?
No. You would not owe use tax on this purchase since the personal computer was used in Oregon for nine months. Tangible personal property (excluding vehicles, vessels, and aircraft) is not considered to have been purchased for use in this state when:
- A person uses the item outside of California for more than 90 days after the purchase, exclusive of any shipping or storage time; or
- A person first uses the item outside of California, brings it back into California within 90 days of purchase, and then uses the item outside of California for more than half the time during the next six months.