Basic Sales and Use Tax Seminar

The State Board of Equalization
(BOE) Welcomes You to the
Basic Sales and Use Tax Seminar
1
Presentation Objectives
 Provide a basic understanding of the
Sales and Use Tax Law
 Teach business owners how to avoid
common mistakes
 Publicize services available to business
owners
2

Illustrates general tax concepts, but does not
address every situation

Please contact BOE staff for a comprehensive
response to your specific questions

The contents of these slides do not constitute
written tax advice under RTC, Section 6596
(Written tax under RTC, Section 6596 is
discussed in the following slide

The Revenue and Taxation Code (RTC),
regulations, court decisions, and other
applicable laws generally control the
decision-making process
3
Revenue and Taxation Code Section 6596 Excusable Delay-Reliance on Advice, States:
“If the Board finds that a person’s failure to
make a timely return or payment is due to the
person’s reasonable reliance on written
advice from the Board, the person may be
relieved of taxes imposed by §6051 and §6201
and any penalty or interest added thereto...”
§6596
4
Citations to the Revenue and Taxation
Code Sections (§) and BOE Regulations
 In the bottom of the slides, find reference cites for
laws and regulations, which can be found in BOE’s
Business Taxes Law Guide, Volume I
 You may access sales and use tax information, such
as laws and regulations, publications, special
notices, frequently asked questions, and industry
tax guides on the BOE website located at
www.boe.ca.gov
5
Registering with the BOE
6
Facts About a Seller’s Permit

It allows a person to make sales in California

It allows a person to issue a resale certificate for
inventory resale items without paying tax

It must be issued in the owner’s name for each
business address

It must be posted in the business location visible
to the public

It’s convenient and easy to register online for a
seller’s permit, as well as a use tax account or
other tax and fee programs

Rather than registering online, you may choose to
apply for a seller’s permit at your local BOE office
Publication 107, Do You Need a California Seller’s Permit?
7
“Every person, firm, partnership, corporation, etc., engaging
in the business of selling or leasing tangible personal
property of a kind the gross receipts from the retail sale of
which are required to be included in the measure of the
sales tax, must apply to the State Board of Equalization for
a permit on a form prescribed by the Board. Wholesalers,
as well as retailers, must secure such permit. No permit fee
is required.”
Analysis of the California Sales and Use Tax Law
Publication 107, Do You Need a California Seller’s Permit?
8
Who Else May Need to Register?
You may need to register for a Qualified Purchaser use tax account if you
have use tax to report and meet the qualifications:

You receive at least $100,000 in gross receipts from business
operations per calendar year

You are not required to hold a seller’s permit or certificate of
registration for use tax (under section 6226 of the Revenue and
Taxation Code)

You do not hold a use tax direct payment permit as described in
section 7051.3 of the Revenue and Taxation Code

You are not otherwise registered with the BOE to report use tax
§ 6225
9
Go To New Registration at
www.boe.ca.gov
10
The system identifies
the permits, licenses,
and accounts you are
required to hold and
submits one
application.
https://efile.boe.ca.gov/ereg/index.boe
11
Convenient
No Waiting
Information
is secure
Benefits of
registering
online
Publication 214, Doing Business Just Got Easier with eReg
12
Tax Return Filing Requirements
When you are issued a seller’s permit, the Board will assign you a
reporting basis, based on the information you furnished:
Yearly (Calendar
Year)
Fiscal Yearly
(July 1 - June 30)
Quarterly
Prepayment
Quarterly
(Calendar
Quarters)
Quarterly
Prepayment with
EFT (Electronic
Funds Transfer)
 A tax return (with payment, if applicable) is due for each period
 If no sales are made, you must file a “0” tax return
 Electronic filing is the BOE preferred method for filing tax
returns, but paper returns may still be filed
Publication 159, eFiling
13
Tax Return Filing Requirements
File your tax return timely, as well as pay any tax
due timely – know your due dates!

Go to http://www.boe.ca.gov/File_a_Return.htm
for information about filing your tax return
14
Penalties
Penalties may be assessed for:
Not filing a return
(10%) or prepayment
(6%)
Late filing of returns
(10%) or prepayments
(6%)
Late payments (10%)
Payment by other
than Electronic Funds
Transfer (EFT) on
accounts required to
pay by EFT (10%)
Penalties are based on tax
due
Regulation 1703
Publication 75, Interest and Penalties
15
Sales and Use Taxes Basics
16
Any transfer of title or possession, of tangible
personal property for consideration, regardless of
when payment is received.
§ 6006, § 6012
17
Tangible Personal Property (TPP) is any item which may be seen, weighed,
measured, felt, or touched, or which is in any other manner perceptible to the
senses. To assist in differentiating between what is TPP and what is not TPP,
some examples are provided below.
These example are not meant to be all inclusive:
Tangible Personal Property
Not Tangible Personal Property
 Art, Bicycle, Toys, and Clothing
 Transfer of artwork by remote
 Tapes, disks, or any other storage media
 Real Property
 Food Products
 Securities
 Furniture and giftware
 Sale of a gift certificate by a retailer to one
telecommunications
who will redeem it
§6016
18

Retail sales of TPP are generally subject to sales tax unless
specifically exempted or excluded by law

Some service and labor costs are subject to sales tax if they are
part of the sale of TPP

In some instances, the retailer must collect and remit use tax
rather than pay sales tax on sales of TPP to consumers
19
What Are Total Gross Receipts?
 Total amount received for the sale whether
received in money or other consideration, e.g.
barter, cash, credit, etc.
 Valued in money
 Generally includes charges related to your
sales, such as fabrication or assembly labor,
service, etc.
 Includes any credit allowed for trade-ins
§ 6006, § 6012
20
Sales tax is imposed upon the retailer (seller) on the
sale of tangible personal property at retail in the State
of California

•
Even though the consumer bears the financial burden of the sales
tax when a retailer collects it from him or her, ultimately the
retailer is liable for paying sales tax to the BOE on their sales
transactions

The retailer may collect reimbursement for the sales
tax from their customers

Tax is due based upon the gross receipts from retail
sales
Analysis of the California Sales and Use Tax Law
21

California purchasers owe and must pay
the use tax due on items purchased and
used, stored, consumed, or given away
in California (without payment of tax)

Out-of-state retailers “engaged in
business” in California must collect
and pay use tax on items sold to
California consumers. For more use tax
scenarios, visit the following webpage:
http://www.boe.ca.gov/taxprograms/us
etax/index.html
Analysis of the California Sales and Use Tax Law
22
Components of the Tax
Example Below is Using a 6.50% State Tax Rate:
State Tax - 6.50%
Local Tax -1.00%
(Bradley Burns)
District Tax(es) - .10% to 1.00% per district
 The state, county, and local tax are applicable
throughout the state
 This example provides that the Standard or Basic
Statewide Tax Rate is 7.50% (7.50% = 6.50% state tax
rate plus Bradley Burns tax rate of 1.0%)
 In this example, any city or county with applicable
district taxes will have a sales and use tax rate
more than 7.50%
 More than one district tax rate may apply to a
transaction and tax rates vary in different locations
 There may be more than one district tax for a given
area
Publication 44, District Taxes
23
District Taxes
What is a district tax?
• District tax is also called a
transactions (sales) tax or use tax on
taxable sales and leases
• Voter-approved special taxes that
increase the total sales and use tax
rate
• Applies to sales made or tangible
personal property used in certain
areas or “districts”
For a list of cities and counties with district taxes, please visit
the BOE website at http://www.boe.ca.gov/pdf/boe105.pdf
Publication 44, District Taxes
24
District Taxes
The retailer (seller) has a
location in a district that
imposes district taxes
The retailer (seller)
physically enters a district
that imposes district tax
with their own truck to
deliver an item
The retailer’s (seller) sales
staff physically enters and
solicits sales in a district
that imposes district tax
Examples of
when a
retailer is
engaged in
business in a
district
The retailer (seller)
receives rental income
from leases of tangible
personal property located
in the district
25
 For in depth tax rate information for both
retailers and consumers, go to the BOE
webpage titled,
“Know Your Sales and Use Tax Rate” located at:
http://www.boe.ca.gov/knowyourrate/#page=
Business
 To find the tax rate by address, use the BOE
online mapping tool which can be found at the
following address:
https://maps.gis.ca.gov/boe/TaxRates/
26
Sales for Resale
Food Products
Labor – other than Fabrication
Labor
Sales to the U.S. Government
Sales in Interstate and Foreign
Commerce
Sales Tax Included in Gross
Receipts
http://www.boe.ca.gov/sutax/staxregs.htm
27
Sales for Resale
Food Products
Labor – other than Fabrication Labor
Sales to the U.S. Government
Sales in Interstate and Foreign Commerce
Sales Tax Included in Gross Receipts
 The burden of proving that a sale of tangible personal
property is not at retail is upon the seller unless the seller
timely takes in good faith a certificate from the purchaser
that the property is purchased for resale
 Common ways to document sales for resale:
• A Resale Certificate
• A Purchase Order containing all the essential elements
of a resale certificate
Regulation 1668
28
 If you sell tangible personal property for resale,
the transaction is not subject to sales or use tax
provided the transaction is properly
documented
 Purchased items for resale that are withdrawn
from inventory for use other than reselling the
items are subject to use tax
Publication 73, Your California Seller’s
Permit (includes a copy of a resale certificate)
Publication 42, Resale Certificate Tips
Publication 103, Sales for Resale
Regulation 1668
29
Essential Elements of a
Resale Certificate
Name and address of the purchaser's business
Purchaser's seller's permit number – if applicable
Description of the property to be purchased
A statement that the described property is being purchased
for resale
Date of the document
Signature of the purchaser, purchaser's employee, or
authorized representative
Regulation 1668
30
Essential Elements of a
Resale Certificate
Good Faith
In the absence of evidence to the
contrary, the seller will be presumed to
have taken a resale certificate in good
faith if it contains the essential
elements and otherwise appears to be
valid on its face.
Regulation 1668
31
Sample Resale Certificate
Regulation 1668
32
Purchase Order Used as a
Resale Certificate
 Must specifically state “For Resale” or other
similar language
 Purchase Orders that state “For Resale” must
contain all the same information required for
a resale certificate
Regulation 1668
33
Available in Regulation
1668, Publication 73,
and the BOE website,
Form BOE-230
Must be filled out
completely
Must be given timely
by the purchaser, as
well as taken timely
and in good faith by
the seller
Form BOE-230
Publication 103 – Sales for Resale
Regulation 1668
34
Resale/Exemption Certificate
•
If the purchaser is not required to hold a permit because
the purchaser sells only property of a kind the retail sale
of which is not taxable, e.g., food products for human
consumption, or because the purchaser makes no sales
in this State, an appropriate notation to that effect should
be entered in lieu of a seller’s permit number on the
resale/exemption certificate.
•
See Regulation 1667 for exemption certificate
requirements.
The following slide provides an example of an
exemption certificate…
35
Sample Exemption Certificate
California Sales Tax Exemption Certificate
NATIONAL PRODUCE DISTRIBUTING
(Name of Purchaser)
6150 VAN NUYS BOULEVARD, VAN NUYS, CA
(Address of Purchaser)
I HEREBY CERTIFY: That I hold valid seller’s permit No. NOT REQUIRED (sales of produce are not subject to tax)
issued pursuant to the Sales and Use Tax Law; that I am engaged in the business of selling FRESH PRODUCE
that
the tangible property described herein which I shall purchase from CANOGA FARMS will be used as PACKAGING
FOOD FOR HUMAN CONSUMPTION. I understand that if the property is used for some other manner or some other
purpose, I am required by the Sales and Use Tax Law to report and pay any applicable sales or use tax.
Description of the property to be purchased: BASKETS & BOXES FOR FOOD ITEMS
Date: Jan. 30, 2012
Farmer Bob Jones
(Signature of Purchaser or Authorized Agent)
______PRESIDENT________
(Title)
 Similar to a resale certificate
 Issued when property will be used in a manner or purpose qualifying the sale
to be exempt from sales tax
 If the purchaser does not have a seller’s permit, the reason why the purchaser
is not required to hold a Seller’s Permit must be written on the certificate
Regulation 1667
36
Penalties for Misuse of
Resale Certificates
Misuse of a
resale
certificate is a
misdemeanor.
The penalty is
$500 or 10% of
the amount of
tax per
transaction,
whichever is
greater.
Business
owners can be
held
responsible
for the actions
of their
employees.
§6094.5
Regulation 1668
Publication 42, Resale Certificate Tips
37
Verify a Seller’s Permit
Call 1-888-225-5263
Access our permit, license, or account
verification feature
located on our website at
https://efile.boe.ca.gov/boewebservices/
verification.jsp?action=SALES
Free BOE app on smart phones
and tablets (iPhones/iPads)
38
Sales for Resale
Food Products
The taxability of food and beverage sales
is divided into two categories for discussion:
Labor – other than Fabrication Labor
Sales to the U.S. Government
Sales in Interstate and Foreign Commerce
Sales Tax Included in Gross Receipts
Hot or cold food and
beverages sold for
consumption at your
place of business are
generally taxable
Cold prepared food
items sold “to go”
are generally
nontaxable
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
You can find the
Tax Guide for
Restaurant
Owners, as well as
other industry tax
guides at the
following address:
http://www.boe.ca.
gov/industry/
Regulation 1602
Regulation 1603
39
Non-alcoholic
&
Non-carbonated
beverages
Most food items
sold in grocery
stores
Snack foods
Most cold
prepared food
items sold
“to go”
Nontaxable Sales of Food Items
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Restaurant Owners
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Regulation 1602
Regulation 1603
40
Food and beverages sold
for consumption at your
place of business
Hot prepared food items
sold for consumption on or
off the premises of your
place of business
Taxable Sales of Food Items
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Restaurant Owners
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Regulation 1602
Regulation 1603
41
80/80 Rule
The "80/80 rule" applies when more than
80 percent of your sales are food and more
than 80 percent of the food you sell is
taxable. If the 80/80 rule applies and you
do not separately track sales of cold food
products sold to-go, you are responsible
for tax on 100 percent of your sales.
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Restaurant Owners
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Regulation 1602
Regulation 1603
42
80/80 Rule
Although both criteria of the 80/80 rule may be met, you may elect to
separately account for the sale of to-go orders of cold food products. You must
report and pay tax on all food and beverages sold to go unless:
• The sale is nontaxable (see nontaxable sales on the following slide), or.
• You make a special election not to report tax on to-go sales even though your
sales may meet both criteria of the 80-80 rule. Such sales include:
• Cold food products, and
• Hot bakery goods and hot beverages that are sold for a separate price.
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Restaurant Owners
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Taxable and nontaxable sales must be
separately accounted for and
supported by documents, such as
guest checks and cash register tapes
Regulation 1602
Regulation 1603
43
Nontaxable sales
80/80 Rule
Do not report tax on:
• Sales of cold food products sold in a form that is not suitable for consumption on the
premises and not eaten on the premises. A cold food product is not “suitable for
consumption on the premises” if it requires further processing by the customer, or is
sold in a size not ordinarily consumed by one person. For example, the sale of a
frozen pizza is not taxable because it requires further processing by the customer.
The sale of a quart of potato salad, a quart of ice cream, or a whole pie would not be
taxable because those amounts would not ordinarily be consumed by one person
when sold without eating utensils or dishes for consumption on the premises.
See Regulation 1603, Taxable Sales of Food Products, for more examples of food not
suitable for consumption on the premises.
• Sales that are not subject to tax, such as sales to the U.S. government and sales for
resale.
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Restaurant Owners
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Regulation 1602
Regulation 1603
44
80/80 Rule
If you choose to separately account
for nontaxable sales of cold food
products to-go, the cash register
should have a separate key for cold
food sold to-go or some other way of
denoting such sales.
Without adequate documentation, 100
percent of your sales are subject to tax
under the 80/80 rule.
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Restaurant Owners
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Regulation 1602
Regulation 1603
45
Examples of Items That Are Not Food Products
Carbonated or
effervescent
water
Cigarettes
Carbonated
beverages
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Liquor Stores
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Animal foods
See Publication 31 and
Regulation 1602
for more examples of items that
are not considered food products
Regulation 1602
Regulation 1603
46
More Examples of Items That Are Not Food Products
Dietary
Supplements
Ice
Alcoholic
beverages
Publication 22, Dining & Beverage Industry
Publication 24, Liquor Stores
Publication 31, Grocery Stores
Tax Guide for Liquor Stores
Tax Guide for Grocery Stores
Tax Guide for Nonprofit Organizations
Coloring
extract
See Publication 31 and
Regulation 1602
for more examples of items that
are not considered food products
Regulation 1602
Regulation 1603
47
Sales for Resale
Labor or service charges related to
a nontaxable sale are NOT taxable
Food Products
Labor – other than Fabrication Labor
Sales to the U.S. Government
Nontaxable Labor:
Taxable Labor:
 Repair Labor
 Installation Labor
 Fabrication Labor
 Assembly Labor
 Fabrication is considered to be work done
in creating, producing, processing, or
assembling a product
Publication 108, Labor Charges
Publication 9, Construction and Building
Contractors
Publication 25, Auto Repair Garages
and Service Stations
Publication 34, Motor Vehicle Dealers
Sales in Interstate and Foreign Commerce
Sales Tax Included in Gross Receipts
Regulation 1546
Publication 35, Interior Designers and
Decorators
Publication 37, Graphic Design,
Printing, and Publishing
Publication 62, Locksmiths
Publication 125, Dry Cleaners
48
 Sales to the U.S. (federal) government
or its instrumentalities (e.g. the Army)
are typically not taxable
 Sales to the State of California, to
counties and to cities are normally
subject to tax
Sales for Resale
 Government purchase order or
documents demonstrating direct
payment by the United States are
required to support any claimed
exemption
Food Products
Labor – other than Fabrication Labor
Sales to the U.S. Government
Sales in Interstate and Foreign Commerce
Sales Tax Included in Gross Receipts
Regulation 1614
Publication 102, Sales to the U.S. Government
Publication 9, Construction and Building Contractors
49
 Title or possession must pass outside of California’s borders
 Must be shipped out of state by common carrier or retailer’s facilities
 If change of possession or title occurs in California, the sale is taxable unless
otherwise exempt
 Must maintain shipping or export documents
 Item must be purchased for use outside of California
Sales for Resale
Food Products
Labor – other than Fabrication Labor
Sales to the U.S. Government
Sales in Interstate and Foreign Commerce
Sales Tax Included in Gross Receipts
Regulation 1620
Publication 101, Sales Delivered Outside California
50

When sales tax is included in the gross receipts, the tax amount needs to be
deducted in order to reach the taxable measure

To find the correct taxable measure when tax is included in gross receipts,
divide sales by 1+ the tax rate
• Example using a 8.25% tax rate and $10.00 in gross receipts:
1 + .0825 = 1.0825
10.00 ÷ 1.0825 = $9.24 in taxable measure
10.00 – 9.24 = $.76 tax
 If the amount you reported as gross
receipts includes sales tax, you must
deduct “sales tax included” on your tax
return or report the gross receipts without
tax and take no deduction
Sales for Resale
Food Products
Labor – other than Fabrication Labor
Sales to the U.S. Government
Sales in Interstate and Foreign Commerce
Sales Tax Included in Gross Receipts
51
Delivery Charges - “Handling” charges typically are taxable if the sale is
taxable. There are limits to how much of shipping charges are exempt.
(Publication 100 & Regulation 1628)
Bad Debts - Deductible only for previously reported taxable sales that have
been written off on the business owner’s books and records. (Regulation 1642)
Tax-paid Purchases Resold Prior to Use - If a vendor charged tax for your
inventory items. This deduction is valid in the period that the item was resold.
(Regulation 1701)
Returned Taxable Merchandise – Retailer must refund the customer’s entire
sales amount including sales tax. (Regulation 1655)
Numerous Other Exemptions - See Publication 61, Sales and Use Taxes:
Exemptions and Exclusions.
http://www.boe.ca.gov/sutax/staxregs.htm
52
Charitable or Nonprofit Organizations
In general, sales to and sales by, charitable or
non-profit organizations are subject to tax.
A limited number of narrow exemptions are
specified by statutes and regulations.
You may find out more about non-profit
organizations by checking our website.
Regulation 1570
Regulation 1590
Regulation 1597
Publication 18, Tax Tips for Nonprofit Organizations
Tax Guide for Nonprofit Organizations
53
REDUCED
TAX RATE
Qualified persons
will pay 3.3125
percent sales or use
tax plus any applicable
district imposed taxes
until June 30, 2022 on
qualifying purchases
and leases.
Note:
Qualifying
purchases are
limited to $200
million in a
calendar year.
54
Manufacturing and Research & Development Exemption
Eligibility
ELIGIBILITY FOR
EXEMPTION
1. You must be primarily
engaged in certain types of
business, also known as a
“qualified person,”
2. You must purchase
“qualified tangible
personal property,”
and
In general, to be eligible for
this partial exemption, you
must meet all three of these
conditions:
3. You must use the
property in a qualified
manner.
55
Manufacturing and Research & Development Exemption
Qualifications
QUALIFIED
PERSONS
Qualified persons are
generally persons or
establishments that
are primarily engaged
in:
> Manufacturing
> Research and
Development
QUALIFIED
PROPERTY
generally includes:
1. Equipment used in
manufacturing or
research and
development, with a
useful life of one or
more years.
2.Materials, fixtures,
machinery and
equipment furnished
and installed in the
construction of
special purpose
buildings specially
designed and
constructed for use
in manufacturing or
research and
development.
QUALIFIED USES
Qualified property that
is used at least 50
percent of the time in:
Manufacturing,
Processing,
Refining,
Fabricating,
Recycling, or
Research and
development in
biotechnology, physical,
engineering, and life
sciences.
For more information, please visit the Manufacturing and R&D Industry Guide Webpage
at : http://www.boe.ca.gov/sutax/manufacturing_exemptions.htm#Overview
56
Inventory items
purchased with a resale
certificate without
payment of tax
Items withdrawn from
inventory for use other
than resale (including
use as gifts and free
samples or for personal
use)
=
Use Tax
Due
Resale Inventory
Billy’s Bikes
Analysis of the California Sales and Use Tax Law
57
Items purchased without payment of
California sales or use tax:
Purchases from
out-of-state
businesses such
as purchases of
office furniture
or laptops from a
vendor through
the internet
Use
Tax
Due
Analysis of the California Sales and Use Tax Law
58

If you have a Seller’s Permit or are otherwise registered to
collect use tax, you must report your purchases subject to use
tax on your Sales & Use Tax Return

If you do not have a Seller’s Permit or a Consumer Use Tax
account, you may report purchases subject to use tax on:
 Your California Individual Income Tax Return filed with the
Franchise Tax Board (FTB), or
 Our website using online registration as a one-time tax return filer

You may opt to use the BOE ePay app which is a streamlined
way to manage electronic payments sales and use taxes, as
well as user account details on your mobile device. See BOE
ePay in action at: http://www.boe.ca.gov/mobile/
Form BOE-401-A2
59
California Lumber Products Assessment
In general, lumber or engineered wood products are building products
used in construction that contain at least 10% wood, such as solid wood
products and engineered products like plywood and particleboard.
The Board of Forestry and Fire Protection is responsible for determining
the products that are subject to the lumber products assessment. See the
Board of Forestry's Regulation, "Lumber Products Assessment 2013". The
Board of Forestry is required to annually update their regulation.
60
California Lumber Products Assessment
- Retailers
Retailers of
lumber or
engineered
wood products
must:
Beginning
January 1, 2015,
retailers that sell
less than $25,000
in lumber or
engineered wood
products in the
prior calendar
year are:
• Charge and collect the 1% lumber
assessment on retail sales
• Separately state the 1% lumber
assessment on the sales receipt
• Report and pay the 1% lumber
assessment to the BOE
• No longer required to charge and collect the assessment from
their customers and,
• Must notify their customers that the customer is responsible for
reporting and paying the assessment directly to the BOE (The
retailer may supply the customer with or refer them to publication
L-403 located at http://www.boe.ca.gov/pdf/l403.pdf)
Retailers should contact the BOE to have the lumber
schedule removed from their account if they are not
collecting the amount because they are below the
threshold.
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California Lumber Products Assessment
- Purchasers
Purchasers of
lumber or
engineered
wood
products
The 1% lumber products assessment is
imposed on the purchaser of qualified
lumber products and engineered wood
products for use in this state (Public
Resources Code § 4629.5).
As the purchaser, you generally pay
the 1% lumber assessment on
purchases of lumber products and
engineered wood products to the
retailer.
If the retailer did not collect
the 1% lumber products
assessment from you on
purchases of lumber products
or engineered wood products
that you will use in this state,
then as the purchaser, you
must directly report and pay
the lumber products
assessment to the BOE.
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How to File and Pay The California Lumber
Products Assessment On Purchases
If you have a seller’s permit or use tax account, you can file and pay the
lumber products assessment along with your sales and use tax return online
as long as your account has been updated to include the lumber schedule.
To update your account to include
the lumber schedule, please call our
Customer Service Center at 1-800400-7115.
If you do not have a seller’s permit or use tax account, you can file and pay
the lumber products assessment online by visiting our Registration – Main
Menu page and selecting the option to Pay use tax and/or the lumber
products assessment on one time purchase.
If you have a small number of lumber purchases, you can wait until net
combined lumber purchases are $50 or more, before reporting and paying
the assessment to the BOE.
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California Lumber Products Assessment
Construction contractors are either
retailers or consumers of lumber or
engineered wood products
Construction Contractors Acting as The Retailer
•
•
•
Are required to charge and collect the lumber
assessment from their customers on sales of lumber
products,
Are required to report and pay the assessment to the BOE
when they file their sales and use tax return
The lumber assessment does not apply to purchases of
lumber products to produce items to sell at retail (for
example, lumber products to make prefabricated
cabinets); and therefore, the construction contractor may
purchase the products for resale.
Construction
Contractors Acting as
The Consumer
•
Are required to pay
the assessment to
the retailer or
directly to the BOE
upon purchase when
they act as the
consumer
For more information please visit the Lumber Assessment
webpage located at:
http://www.boe.ca.gov/industry/lumber_products.html
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Sellers of prepaid wireless services and
products must register with the BOE as a
prepaid MTS seller.
See our Prepaid Mobile Telephony Services
(MTS) Surcharge Guide for additional
information.
(http://www.boe.ca.gov/mts)
65

All sales of tangible personal property in California are taxable unless
otherwise specifically exempted or excluded

Claimed exemptions or exclusions must be supported by documentation

Taxpayer is responsible for providing documentation for potential
examination

Regulation 1698, Records, requires taxpayers to maintain adequate records
§ 6091
66
Required Records Are to Be
Maintained For at Least Four Years
Records of sales including sales
invoices, cash register tapes, sales
journals, etc.
Documentation to support
claimed exemptions or
exclusions such as resale
certificates, exemption
certificates, purchase orders,
shipping documents, etc.
Records of purchases including
purchase invoices, cancelled checks,
purchase journals, etc.
Normal books of
account
Schedules or
working papers
used in preparing
tax returns
Publication 116, Sales and Use Tax Records & Regulation 1698
67
Advise the BOE
of ownership
changes. This
may affect your
liability for
future taxes
Advise the BOE
of changes in
business,
mailing,
and email
addresses
Retailers must
report sales in the
return period
when the sale is
made even though
payment may be
received in a later
return period
Retailers are
responsible for
payment of sales
tax even when the
customer does not
pay tax
reimbursement
Publication 73, Your California Seller’s Permit
Publication 74, Closing Out Your Seller’s Permit
68
BOE Resources and Services
69
www.boe.ca.gov
You may access the BOE website for all of the
following:
 Filing and Paying Your Taxes
 Industry Guides to Your Type of Business
 Enhanced Video Tutorials
 Class & Seminar Schedules & Registrations
 Directory of BOE Offices
 Publications Specific to Your Type of Business
 Frequently Asked Questions (FAQ’s)
 Tax News, Special Notices
 Email Notifications for BOE Updates
 Online Verification of Seller’s Permit Numbers
 Credit Card Payments
 Useful Links to Other Websites
70
Customer Service Center (Staff is available
to walk you through your tax return or the
registration process, as well as answer your
general tax questions)
1-800-400-7115
Mon – Fri, 8:00 a.m. to 5:00 p.m.
24 hr. fax-back service: you may call
the Customer Service Center to
request that any common form or
publication be faxed to you
> 24 hr voice recordings on
specific topics
> For the hearing impaired
TTY: 711
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 Visit your local BOE office for assistance
 Use one of BOE’s self-service kiosks to access
online services for various items such as filing
and paying your taxes online
For BOE office locations & addresses go to:
http://www.boe.ca.gov/info/phone.htm
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Taxpayer Education
Consultation Program

The consultation is FREE

A trained staff member will review your
business operation and record keeping
system

Call your local BOE office to make an
appointment for one-on-one assistance
 Find contact information for your local BOE
office at the following address:
http://www.boe.ca.gov/info/phone.htm
Publication 51, Resource Guide
73
Connect with BOE on the following
social media outlets:
74
1-888-324-2798
If you are unable to resolve a disagreement
with the BOE and you would like to know more
about your rights under the law.
www.boe.ca.gov/tra/tra.htm
Publication 70, Understanding Your Rights as a California Taxpayer
75
We wish you success
in your business venture
We welcome your comments and suggestions
76