Contractors and California Lumber Products Assessment

Purchases from Non-California Retailers

Purchasers, including construction contractors, who purchase lumber products or engineered wood products for use in California who do not pay the one percent lumber products assessment to a California retailer are required to report and pay the assessment directly to the CDTFA.

This includes purchases of lumber products or engineered wood products from outside of California for use in this state. In general, purchasers responsible for paying the one percent assessment directly to the CDTFA will also be responsible for reporting and paying the use tax. Use tax is a companion to California's sales tax, and is due whenever you purchase taxable items without payment of California sales tax from an out-of-state vendor for use in California. You also owe use tax on items that you remove from your resale inventory and use in California. To pay use tax, report the purchase price of the taxable items under Purchases Subject to Use Tax on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

Purchases from California Retailers Who Are No Longer Collecting the Assessment

A “low-volume retailer” is a retailer whose sales of qualified lumber products or engineered wood products are less than $25,000 during the previous calendar year. For purposes of meeting the threshold, retailers that have more than one location must include sales of qualified lumber products and engineered wood products from all locations when determining if the threshold is met.

Effective January 1, 2015, low-volume retailers are not required to collect the lumber products assessment. If you purchase these products for use in California from a California retailer who does not charge and collect the lumber products assessment, you must pay the 1% assessment directly to the CDTFA.

If you have a seller's permit you can file and pay the lumber products assessment on your purchase along with your sales and use tax return online as long as your account has been updated to include the lumber schedule (see Updating Your Account below).

If you are not required to hold a seller's permit or a use tax account, see How to Report and Pay a One-Time Purchase below.

Remember, a California retailer who does not collect the 1% lumber products assessment will still charge and collect the sales tax from you on your retail purchase of lumber products. Therefore, you are only responsible for paying the 1% lumber products assessment directly to the CDTFA, not the sales tax.

Retail Sales of Lumber Products or Engineered Wood Products by Contractors

Construction contractors that make retail sales of lumber products or engineered wood products are generally required to charge and collect the lumber products assessment from their customers on their retail sales in this state.

However, effective January 1, 2015, low-volume retailers are not required to collect the lumber products assessment from their customers on their retail sales. See the Retailer section, under the heading, Certain Retailers No Longer Required To Collect Lumber Assessment.

How the Lumber Products Assessment Affects Construction Contractors

Construction contractors are either retailers or consumers of lumber products or engineered wood products.

If you are a construction contractor that is:

a consumer of lumber products or engineered wood products, you are required to pay the assessment to California vendors. Note, effective January 1, 2015, you are required to pay the assessment directly to the CDTFA if you purchase qualifying lumber products from California vendors who do not charge and collect the 1% lumber products assessment.
a consumer of lumber products or engineered wood products, you are required to pay the assessment directly to the CDTFA on purchases made from outside of California for use in this state.
a retailer of lumber products, you are required to charge and collect the assessment from your customers and report and pay the assessment to the CDTFA on your sales and use tax return. Note, effective January 1, 2015, if you are a low-volume retailer, you are not required to collect the lumber products assessment from your customers on your retail sales of these products. See the Retailer section, under the heading, Certain Retailers No Longer Required To Collect Lumber Assessment.
a retailer of items that you manufacture, assemble, process, or produce from lumber products or engineered wood products (for example, prefabricated cabinets), you are not required to pay the assessment on either your purchase or your subsequent sale of these items.

Construction contractors that are retailers of merchandise (including lumber products or engineered wood products) are required to register with CDTFA.

Construction contractors that make purchases of items from outside of California for use in this state (for example, items purchased without tax that are consumed in the performance of a construction contract) are also required to register with the CDTFA.

For more information about construction contractors, see CDTFA's publication 9, Construction and Building Contractors.

Fixed Price Contracts

The lumber products assessment law does not contain an exemption for fixed price contracts.

Therefore, lumber products or engineered wood products sold or purchased on or after January 1, 2013 are subject to the one percent lumber products assessment, even if they are sold as part of a fixed price contract entered into prior to January 1, 2013.

How to Register

To register, visit our Registration page and follow the instructions. The law requires that you file the lumber products assessment electronically.

When registering online, you will be asked if you sell or purchase lumber or engineered wood products. If you answer yes to either question, your return will automatically include a lumber schedule so you may report and pay the lumber products assessment.

If you need to update your existing account to include the lumber schedule to report and pay the lumber products assessment, please notify the CDTFA (see below).

Updating Your Account

If you need to add or remove the lumber schedule from your electronic sales and use tax return, please call our Customer Service Center at 1-800-400-7115 or your local CDTFA office to update your account.

How to Report and Pay a One-Time Purchase

Purchasers that do not have a seller's permit and are not required to register for a use tax account as a qualified purchaser, can report and pay the lumber products assessment and any applicable use tax on by visiting our Registration page. Select the option to Pay use tax and/or the lumber products assessment on one time purchase.