Do You Need a California Seller's Permit? (Publication 107)

Do You Need a California Seller's Permit?

Making sales of merchandise, goods, or other items in California without first getting a seller's permit violates the law and subjects you to fines and penalties.

Sometimes people incorrectly refer to a seller's permit as a resale number or resale permit. A seller's permit is a state license that allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers. Issuing a resale certificate allows you to buy items you will sell in your business operations without paying amounts for tax to your suppliers.

You should not obtain a seller's permit just to take advantage of the opportunity to issue resale certificates to your suppliers. Issuing a resale certificate to avoid paying tax on items you will use rather than sell is against the law and may result in fines and penalties. It is a misdemeanor to issue a resale certificate if, at the time of purchase, you do not intend to resell the merchandise.

Generally, if you make sales of tangible personal property in California, you are required to hold a seller's permit to report and pay tax on those sales, unless the sale qualifies for a specific exemption or exclusion. This applies even if your sales are made through Internet auction houses or websites that offer online classified advertisements (online advertisers). For additional information, please see publication 109, Internet Sales.

Generally, if you make occasional sales,* you are not required to hold a seller’s permit. An occasional sale occurs when you are not required to hold a seller’s permit and you make no more than two sales in a 12-month period. For example, when you have a garage sale and sell used items, you are generally not required to hold a seller's permit unless you have more than two garage sales in a 12-month period or are required to hold a seller's permit for being engaged in the business of selling merchandise, goods, or items (tangible personal property) due to the number, scope, and character of your selling activities.

A retailer with a computer server located in California on which a website resides may not be required to have a seller's permit unless the retailer has a proprietary interest in the server and the activities at that location otherwise qualify for a seller's permit. You may need to obtain other licenses, permits, or documents to operate your business (see Additional Requirements for Your Business), or you may be required to register for a use tax account with us if you are a "qualified purchaser," (see Required Registration to Report Use Tax).

California law requires a seller's permit be held for warehouse locations when the retailer has one or more sales offices in this state, the sale is negotiated out of state, and the order is fulfilled from the retailer's in-state stock of goods at the warehouse. You are not required to hold a seller's permit if all your sales are made exclusively in interstate or foreign commerce, and you make no sales in this state. However, your business may be required to register for a use tax account as discussed in the Required Registration to Report Use Tax webpage.

*See Regulation 1595, Occasional Sales—Sale of a Business—Business Reorganization.

Obligations of Seller's Permit Holders

When you hold a seller's permit, you must file sales and use tax returns and pay any sales or use tax due on your sales and purchases. You must report and pay sales tax on each taxable sale. At the time you make the sale, you may collect from your customer an amount equal to the tax you will owe. You also must keep adequate records that document your sales and purchases. As a registered seller, you will need to take the time to learn how to properly apply the sales and use tax law in your business operations. Our publications, classes, and online seminars can help you learn to meet your obligations and help ensure that you don't pay more or less tax than you owe.

You must notify us if you intend to sell or close your business. If you are not making sales, we may cancel your permit. For more information, please see Regulation 1699, Permits, and publication 74, Closing Out Your Account.

Please note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted by the revision date of this publication. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this publication.