Consignment Sales (Publication 114)
Placing Items on Consignment

I place items with retailers on consignment. Do I need a seller's permit?

Yes. You generally need to obtain a seller's permit even if you make all your sales by placing items with consignment shops, auction houses, art galleries, antique dealers, or similar businesses that make sales on your behalf.

Will I owe sales tax when someone sells an item for me on consignment?

No, unless the sale is made through a broker (see Broker Sales). To report your sales correctly, you must include your receipts from consignment sales in the Total Sales box (Line 1) on your sales and use tax return for the period in which the sales are made. Next, you will then deduct those consignment receipts from your total sales by listing them on the return line(s) for either:

  • Sales to Other Retailers for Resale, if the retailer has issued you a resale certificate, or
  • Other Nontaxable Sales, if the retailer has not issued you a resale certificate.

If you take the deduction on the Other Nontaxable Sales deductions line, you will be required to state what the deduction represents. You will simply write Consignment Sales.

What happens if the shop rents or leases my item to someone?

When you place an item with a shop on consignment and the item is subsequently rented or leased, you may be required to obtain a seller’s permit and collect and pay use tax on the full rent or lease receipts. However, you do not owe tax on the lease receipts you receive if you paid California sales or use tax when purchasing the item and the consignee rents or leases it in substantially the same form as acquired. You cannot take a use tax deduction for any commission you may pay to the shop.

For additional information on leasing, please see Regulation 1660, Leases of Tangible Personal Property—in General, and publication 46, Leasing Tangible Personal Property, or call our Customer Service Center.

Example—typical consignment transaction

An antique bottle collector (the consignor) places five bottles on consignment with an antique store (the consignee), which issues the bottle collector a resale certificate. The store sells the bottles for $1,500 and pays the collector $750 when the sales are final. The consignor’s $750 in proceeds are nontaxable sales for resale. The consignee must pay sales tax on the full $1,500 it received for the bottles.

Revision 1-24