Who Must Pay California Use Taxes?

Published: January 2, 2015 at 20:16 by Renate Harrison

Sales Tax vs. Use Tax: Sales tax generally applies to transactions within California. If a sale originates in California, and possession of the item is taken in California, then sales tax applies. Use tax is to be paid by any purchaser who purchases tangible personal property from an out-of-state seller (unless the vendor charges sales tax).

If engaged in business in California, Canadian online retailers may be required collect and report use tax to the California Board of Equalization. Although the purchaser pays the tax, the seller is responsible for collecting and remitting the tax. The tax rate varies statewide; however, the statewide tax rate base is 7.50 percent. The rate is higher in locations where voters have approved additional “district taxes.” The tax rate for sales tax and use tax is the same.

Circumstances where a retailer is considered to be engaged in business in California, commonly referred to as “nexus,” for sales and use tax purposes include (but are not limited to) the following:

  • Maintaining, occupying or using any type of office, sales room, warehouse or other place of business in California. This includes use that is temporary, indirect or through an agent or other representative.
  • Having any kind of representative operating in the state for the purpose of taking orders, making sales or deliveries, installing, or assembling tangible personal property.
  • Making repairs or providing maintenance or service to property sold, whether by employees, agents or other representatives.
  • Deriving rentals from a lease of tangible personal property located in California.

If you suspect these conditions apply to your operations, please contact harrison@harrison.pro to discuss.


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