California Use Tax Information

Many smart shoppers can find bargains online, but don't realize they can incur a tax bill in the process. California law requires tax on in-state purchases, and also requires tax on items purchased out-of-state for use in California.

Recent legislation now requires a “qualified purchaser” under Revenue and Taxation Code section 6225 to be registered with BOE to report and pay use tax owed. Under this new legislation, a "qualified purchaser" means a person that meets all of the following conditions:

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The person receives at least $100,000 in gross receipts from business operations per calendar year. Note: Gross receipts are the total of all receipts from both in-state and out-of-state business operations
The person is not required to hold a seller's permit or certificate of registration for use tax (under section 6226 of the Revenue and Taxation Code)
The person is not a holder of a use tax direct payment permit as described in section 7051.3 of the Revenue and Taxation Code
The person is not otherwise registered with the BOE to report use tax
Sales Tax vs. Use Tax: What’s the Difference?
Tax collected by the retailer here in California is called sales tax, and the retailer is responsible for reporting and paying the tax to the state. When an out-of-state or online retailer doesn't collect the tax for an item delivered to California, the purchaser may owe "use tax," which is simply a tax on the use, storage, or consumption of personal property in California.

Exempt Items
Items that are exempt from sales tax are exempt from use tax as well. Use tax liabilities are often created by internet or mail order purchases with out-of-state retailers not required to collect the tax. Be sure to review your receipts for internet and other out-of-state purchases to determine if tax was charged.

Why Is There a Use Tax?
The use tax, which was created in July 1935, is a companion to California's sales tax that is designed to level the playing field between in-state retailers who are required to collect tax, and some out-of-state retailers who are not. Use tax, just like sales tax, goes to fund state and local services throughout California.

How to Report Use Tax
If you have a California seller's permit, you must pay the use tax due on business related purchases with your sales and use tax return in the period when you first used, stored, or consumed the item in California. Report the amount of your purchase under "Purchases subject to use tax," (line 2) on the return.

If you are a “qualified purchaser,” you must pay your use tax due by efiling your return for the previous calendar year by April 15. For the year ending 2008 and prior years, the use tax due date is January 31 of the following year.

If you are not required to have a seller’s permit or a use tax account and you have not already paid all use tax due to the Board of Equalization, you may report use tax in the following ways.

The easiest way to report and pay the use tax is on your California state income tax return. Follow the instructions included with your income tax return. Complete the worksheet included in those instructions to determine the amount of your use tax liability.
Download a copy of Publication 79-B, California Use Tax, or request that a copy be mailed to you by calling our Information Center. Simply complete the use tax return included in the publication and mail it along with your payment to the Board of Equalization address shown on the return. This tax return is due by the end of the month following the calendar quarter in which the use tax liability was incurred. It is not necessary to complete this tax return to report zero use tax.
What Kinds of Purchases Are Taxable?
For questions on whether a purchase is taxable read the Use Tax FAQ, or call our Information Center at 800-400-7115 or TTY/TDD 800-735-2929.

How Do I Find My Local Tax Rate?
You can look up your local sales and use tax rate. For other questions, a Use Tax FAQ is available online.

Vehicles, Vessels, And Aircraft
If you have questions on how to report and pay use tax on the purchase of vehicles, vessels, and aircraft, see the FAQ available online or refer to Publication 79, Documented Vessels and California Tax, or Publication 79-A, Aircraft and California Tax. The use tax due on these purchases cannot be reported on your California state income tax return.

Cigarette and Tobacco Products
If you are registered with the Board of Equalization as a cigarette and/or tobacco products consumer, your purchases of cigarette and tobacco products may not be reported on your California state income tax return. If you need additional information, contact the Excise Taxes Division at 916-327-4208.

Foreign Purchases
Generally, use tax also applies to foreign purchases of tangible personal property brought into California for storage, use, or other consumption. More information about items brought into California through U. S. Customs is available online.