Retailers and California Lumber Products Assessment

Who is a Retailer?

If you sell lumber or engineered wood products to a consumer in California, you are considered the retailer of the lumber or engineered wood products.
A marketplace facilitator is considered the seller and retailer for each sale facilitated through its marketplace. Beginning January 1, 2022, a marketplace facilitator must collect the one percent assessment on sales of lumber products or engineered wood products. This is based on the passage of Assembly bill No. (AB) 1402 (Stats. 2021, ch. 421). For more information, please see our Tax Guide to Marketplace facilitator Act.

Retailers Of Lumber Products Or Engineered Wood Products Are Required To:

Charge and collect the one percent assessment on sales of lumber products or engineered wood products. Note: The amount of the assessment is not subject to sales or use tax.
Separately state the amount of the lumber products assessment on the sales receipt given to the customer. The separately stated amount may be designated as lumber products assessment, LPA, lumber assessment, lumber fee or lumber.
Report and pay the lumber products assessment to the California Department of Tax and Fee Administration (CDTFA) on their sales and use tax return.
Notify us if your sales and use tax return does not include the lumber products assessment schedule.

Certain Retailers No Longer Required To Collect Lumber 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 for the subsequent calendar year. If you are not required to collect the lumber products assessment, you must notify your customers that they are responsible for paying the lumber products assessment directly to the CDTFA. You may inform your customers by printing publication L-403, Lumber Products Assessment Flyer, and handing it to each customer that purchases qualifying lumber products.

However, as a convenience for your customers, you may continue to charge and collect the lumber products assessment on your retail sales of qualifying lumber products sales and report and pay it to the CDTFA. CDTFA will continue to provide the lumber schedule on your return and no action will be required from you.

If you are not required to charge and collect the lumber products assessment on your retail sales and you do not want to continue to voluntarily collect the assessment from your customer, please contact us so that we can remove the lumber schedule from your account (see Updating Your Account below).

Please note, any amounts you collected as lumber products assessment must be reported and paid to the CDTFA whether you were required to collect the assessment at that time or not. If you collect an amount greater than the actual amount of lumber products assessment due, you must either return the excess amount to the customer or pay the excess amount to CDTFA.

How To Determine If You Are Required To Collect Assessment

Each year you will be responsible for determining if you are required to collect the lumber products assessment based on your sales of qualifying lumber products in the prior calendar year. If your sales in the prior calendar year are less than $25,000, you are not required to collect the lumber products assessment in the current calendar year. For example, if your annual sales of qualifying lumber products were less than $25,000 in 2014, you will not be required to collect the lumber products assessment in 2015. However, if your annual sales of lumber are greater than or equal to $25,000 in 2015, you will again be required to collect the lumber products starting January 1, 2016, even if you were not required to collect the assessment in 2015.

Therefore, you should maintain records of your annual lumber sales. This will help you determine whether or not you will be required to collect the lumber products assessment in the following year. Keeping a record of your annual sales of lumber is especially important if your annual sales are consistently close to the $25,000 threshold. If you are required to collect the lumber products assessment, and did not collect it from your customers, you are still responsible for the payment of the assessment to CDTFA. We may issue a bill to you for any unpaid lumber products assessment; less any amounts you can show have been reported directly to CDTFA by your customers.

Filing Returns

The law requires that retailers of lumber products or engineered wood products must file the lumber products assessment electronically. If you are a lumber retailer that charges and collects the lumber products assessment, your electronic sales and use tax return must include a lumber schedule to report your sales of qualifying lumber products. If you need the lumber schedule added to your electronic return, please contact us (see Updating Your Account below).

If you do not currently file online and you are a retailer of lumber products or engineered wood products, follow the instructions under online services to begin filing your sales and use tax return online.

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.

Reimbursement for Startup Costs

Retailers established in business selling lumber products and engineered wood products prior to January 1, 2013, may offset their reported lumber products assessment amounts for one-time start-up costs of $250 per business location.

A business location means a location registered under your seller's permit as of January 1, 2013, where retail sales of lumber products or engineered wood products are made.

Beginning January 1, 2014 lumber retailers that were in business selling lumber products or engineered wood products before January 1, 2013, may retain an additional $485 per business location as reimbursement for their start-up costs.

To claim the additional start-up cost, beginning with returns due on or after January 1, 2014, enter your allowable additional reimbursement cost ($485 per business location) on your lumber schedule in the Reimbursement Cost Offset box. Remember, you may only enter a reimbursement amount up to your total reported lumber products assessment per each return. Any remaining allowable reimbursement cost must be taken on subsequent returns as an offset to reported lumber products assessment amounts, including any allowable start-ups costs you may have remaining from 2013 ($250 per business location).

If you are eligible for the additional $485 in start-up costs but closed out your business or no longer sell lumber products or engineered wood products subject to the 1% assessment, you may file a claim for refund for lumber products assessment amounts paid in 2013 up to $485 per business location. You may only claim a refund up to the lumber products assessment amounts paid in 2013. You may use form CDTFA-101, Claim for Refund or Credit, to file a claim for refund (see also Publication 117, Filing a Claim for Refund).

Sales Not Subject to the Lumber Products Assessment

In general, the lumber products assessment is not due on the following sales:

Sales for resale. In a sale for resale, the purchaser is not regarded as purchasing the lumber product or engineered wood product for their own use in this state.
Sales in interstate commerce. Sales made by a retailer in California but shipped directly to customers outside of California.
Sales to the U.S. Government.

Sales involving Native Americans follow the same rules as the sales and use tax law. See Sales and Use Tax Regulation 1616, Federal Areas, and publication 146, Sales to American Indians and Sales in Indian Country.