REPORTING SALES AND USE TAX - 8485

(Renumbered: 01/2021)

(Revised and renumbered from 8730, 8734.1, 8734.3, 8734.5, 8735, 8735.1, 8735.2, 8735.3, 8735.4)

 

What is Use Tax?

Use tax is a tax on purchases made from outside of the State of California for taxable items that will be used, stored, or consumed in California and on which no state sales tax was collected.  For a detailed description of use tax, see CDTFA’s California Use Tax Information webpage.

 

When to Report Use Tax

Agencies/departments will report and pay California use tax due on purchases from a retailer outside of California whether made by telephone, over the Internet, by mail, or in person if the following criteria apply:

• The seller does not collect California sales or use tax. To determine if sales or use tax is to be reported and remitted to CDTFA, agencies/departments must review the purchase invoice or receipt to verify if the seller added the tax.
• The agency/department uses, gives away, stores, or consumes the item in California. Report purchases of goods that would have been taxable if purchased from a California retailer.

Generally, if sales tax would apply to physical merchandise purchased in California, use tax applies when a similar purchase is made without tax from a business located outside the state.

 

Use tax would be included on purchases of equipment, supplies, and books.

 

Purchases not subject to use tax include food for human consumption. Also, electronically downloaded software, music, digital books (e-books), mobile applications, and games are not subject to use tax if no tangible storage media (e.g., USB flash drive, DVD, CD-ROM, Secure Digital Card) is obtained. See the California Department of Tax and Fee Administration (CDTFA) California Use Tax Information website for more information.

Preparing Use Tax Return

Agencies/departments can file returns online by going to the CDTFA Taxpayer Online Service Portal and selecting File a Return. When permissible, online taxpayer returns

can be paid by credit card, paper check, or electronic check (ACH Debit).

 

When is the Use Tax due?

The CDTFA requires agencies/departments to file their sales and use tax return on either a quarterly, calendar year, or fiscal year basis, depending upon the volume of transactions per month generated by the agency/department. CDTFA may apply a late payment penalty charge if an agency/department is late in paying use tax.

Foreign Purchases

Use tax is applicable to tangible personal property purchases made outside the United States and brought or shipped into California for storage, use, or other consumption. Examples of items purchased by individuals that are brought or shipped into California for use include artwork, antiques, furniture, jewelry, and clothing. However, there are certain exceptions. Refer to the CDTFA California Use Tax-Foreign Purchases website for additional information. 

Local Sales and Use Taxes

Agencies/departments making sales of tangible personal property are required to report and pay to the CDFTA a one percent uniform local sales tax on sales. If a purchase is made without sales tax from a business located outside the state, the agency/department must report and pay use tax.

Agency District Use Tax

Numerous counties have enacted ordinances establishing special taxing districts that impose sales and use taxes on the sales or purchases of tangible personal property in or for use within the district. Various laws authorize counties to establish districts for transportation, jails, and for other governmental services. See SAM Section 3574.3.

 

District sales and use taxes do not apply to fixed price sales contracts executed before the ordinance’s effective date if neither party has the unconditional right to terminate the contract.

 

Agencies/departments pay the district use tax applicable to purchases in the same manner as prescribed for reporting the state use tax to CDTFA.  The district use tax applies to purchases of tangible personal property utilized within the district, but purchased from vendors located outside the district who do not hold certificates of authority to collect use tax.

District Use Tax on Temporary Storage

Transit district use tax does not apply to storing, keeping, retaining, processing, fabricating or manufacturing of tangible personal property for later use solely outside the state or for later use solely outside the district imposing a use tax. The tax does apply when purchases are removed from storage for use within the transit district.

Agency/Department Collection of District Sales Tax

Agencies/departments selling tangible personal property within a district for use within the district will collect the appropriate sales and use taxes from the consumers. Agencies/departments selling and delivering personal property from locations in one county to counties with district taxes are required to report and pay to the CDTFA the transactions and use taxes applicable in the county of delivery.

Delivery charges subject to the state sales tax are also subject to the district transactions tax.

The tax on tangible personal property sold within the district will consist of the appropriate district transactions tax, the 1 percent uniform local tax, the 1/4 percent county transportation tax, and the state sales tax.

Procedures for Reporting and Remitting Sales and Use Taxes

Agencies/departments reporting and paying the state sales and use taxes to the state-administered uniform local sales, use, and district taxes will apply the procedures in SAM sections 8481-8486.  Agencies/departments reporting local tax on sales or property used at multiple locations will allocate the local tax to the places of sales or places of use on the State, Local, and District Consumer Use Tax Return form, CDFTA 401-A For detailed information relating to district taxes, see CDTFA Publication 44.

 

Agencies/departments filing invoices for the local use tax due in the same claim as the vendor's invoice to which the tax applies will use Consumer Use Tax Form as prescribed in SAM section 8486.