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Business Taxes Law Guide—Revision 2024

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Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 3. The Use Tax

Article 1. Imposition of Tax

California Constitutional Provision

SEC. 35. Imposition and rate of additional sales and use tax: public safety services. (a) The people of the State of California find and declare all of the following:

(1) Public safety services are critically important to the security and wellbeing of the State's citizens and to the growth and revitalization of the State's economic base.

(2) The protection of the public safety is the first responsibility of local government and local officials have an obligation to give priority to the provision of adequate public safety services.

(3) In order to assist local government in maintaining a sufficient level of public safety services, the proceeds of the tax enacted pursuant to this section shall be designated exclusively for public safety.

(b) In addition to any sales and use taxes imposed by the Legislature, the following sales and use taxes are hereby imposed:

(1) For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of ½ percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this State on and after January 1, 1994.

(2) An excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer on and after January 1, 1994, for storage, use, or other consumption in this State at the rate of ½ percent of the sales price of the property.

(c) The Sales and Use Tax Law, including any amendments made thereto on or after the effective date of this section, shall be applicable to the taxes imposed by subdivision (b).

(d) (1) All revenues, less refunds, derived from the taxes imposed pursuant to subdivision (b) shall be transferred to the Local Public Safety Fund for allocation by the Legislature, as prescribed by statute, to counties in which either of the following occurs:

(A) The board of supervisors, by a majority vote of its membership, requests an allocation from the Local Public Safety Fund in a manner prescribed by statute.

(B) A majority of the county's voters voting thereon approve the addition of this section.

(2) Moneys in the Local Public Safety Fund shall be allocated for use exclusively for public safety services of local agencies.

(e) Revenues derived from the taxes imposed pursuant to subdivision (b) shall not be considered proceeds of taxes for purposes of Article XIII B or state General Fund proceeds of taxes within the meaning of Article XVI.

(f) Except for the provisions of Section 34, this section shall supersede any other provisions of this Constitution that are in conflict with the provisions of this section, including, but not limited to, Section 9 of Article II.

History—Adopted by voters, Proposition 172, in effect November 3, 1993.

SEC. 36. Imposition and rate of additional sales and use tax: education; Local Revenue Fund 2011. (a) For purposes of this section:

(1) "Public Safety Services" includes the following:

(A) Employing and training public safety officials, including law enforcement personnel, attorneys assigned to criminal proceedings, and court security staff.

(B) Managing local jails and providing housing, treatment, and services for, and supervision of, juvenile and adult offenders.

(C) Preventing child abuse, neglect, or exploitation; providing services to children and youth who are abused, neglected, or exploited, or who are at risk of abuse, neglect, or exploitation, and the families of those children; providing adoption services; and providing adult protective services.

(D) Providing mental health services to children and adults to reduce failure in school, harm to self or others, homelessness, and preventable incarceration or institutionalization.

(E) Preventing, treating, and providing recovery services for substance abuse.

(2) "2011 Realignment Legislation" means legislation enacted on or before September 30, 2012, to implement the state budget plan, that is entitled 2011 Realignment and provides for the assignment of Public Safety Services responsibilities to local agencies, including related reporting responsibilities. The legislation shall provide local agencies with maximum flexibility and control over the design, administration, and delivery of Public Safety Services consistent with federal law and funding requirements, as determined by the Legislature. However, 2011 Realignment Legislation shall include no new programs assigned to local agencies after January 1, 2012, except for the early periodic screening, diagnosis, and treatment (EPSDT) program and mental health managed care.

(b) (1) Except as provided in subdivision (d), commencing in the 2011-12 fiscal year and continuing thereafter, the following amounts shall be deposited into the Local Revenue Fund 2011, as established by Section 30025 of the Government Code, as follows:

(A) All revenues, less refunds, derived from the taxes described in Sections 6051.15 and 6201.15 of the Revenue and Taxation Code, as those sections read on July 1, 2011.

(B) All revenues, less refunds, derived from the vehicle license fees described in Section 11005 of the Revenue and Taxation Code, as that section read on July 1, 2011.

(2) On and after July 1, 2011, the revenues deposited pursuant to paragraph (1) shall not be considered General Fund revenues or proceeds of taxes for purposes of Section 8 of Article XVI of the California Constitution.

(c) (1) Funds deposited in the Local Revenue Fund 2011 are continuously appropriated exclusively to fund the provision of Public Safety Services by local agencies. Pending full implementation of the 2011 Realignment Legislation, funds may also be used to reimburse the State for program costs incurred in providing Public Safety Services on behalf of local agencies. The methodology for allocating funds shall be as specified in the 2011 Realignment Legislation.

(2) The county treasurer, city and county treasurer, or other appropriate official shall create a County Local Revenue Fund 2011 within the treasury of each county or city and county. The money in each County Local Revenue Fund 2011 shall be exclusively used to fund the provision of Public Safety Services by local agencies as specified by the 2011 Realignment Legislation.

(3) Notwithstanding Section 6 of Article XIII B, or any other constitutional provision, a mandate of a new program or higher level of service on a local agency imposed by the 2011 Realignment Legislation, or by any regulation adopted or any executive order or administrative directive issued to implement that legislation, shall not constitute a mandate requiring the State to provide a subvention of funds within the meaning of that section. Any requirement that a local agency comply with Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code, with respect to performing its Public Safety Services responsibilities, or any other matter, shall not be a reimbursable mandate under Section 6 of Article XIII B.

(4) (A) Legislation enacted after September 30, 2012, that has an overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation shall apply to local agencies only to the extent that the State provides annual funding for the cost increase. Local agencies shall not be obligated to provide programs or levels of service required by legislation, described in this subparagraph, above the level for which funding has been provided.

(B) Regulations, executive orders, or administrative directives, implemented after October 9, 2011, that are not necessary to implement the 2011 Realignment Legislation, and that have an overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, shall apply to local agencies only to the extent that the State provides annual funding for the cost increase. Local agencies shall not be obligated to provide programs or levels of service pursuant to new regulations, executive orders, or administrative directives, described in this subparagraph, above the level for which funding has been provided.

(C) Any new program or higher level of service provided by local agencies, as described in subparagraphs (A) and (B), above the level for which funding has been provided, shall not require a subvention of funds by the State nor otherwise be subject to Section 6 of Article XIII B. This paragraph shall not apply to legislation currently exempt from subvention under paragraph (2) of subdivision (a) of Section 6 of Article XIII B as that paragraph read on January 2, 2011.

(D) The State shall not submit to the federal government any plans or waivers, or amendments to those plans or waivers, that have an overall effect of increasing the cost borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, except to the extent that the plans, waivers, or amendments are required by federal law, or the State provides annual funding for the cost increase.

(E) The State shall not be required to provide a subvention of funds pursuant to this paragraph for a mandate that is imposed by the State at the request of a local agency or to comply with federal law. State funds required by this paragraph shall be from a source other than those described in subdivisions (b) and (d), ad valorem property taxes, or the Social Services Subaccount of the Sales Tax Account of the Local Revenue Fund.

(5) (A) For programs described in subparagraphs (C) to (E), inclusive, of paragraph (1) of subdivision (a) and included in the 2011 Realignment Legislation, if there are subsequent changes in federal statutes or regulations that alter the conditions under which federal matching funds as described in the 2011 Realignment Legislation are obtained, and have the overall effect of increasing the costs incurred by a local agency, the State shall annually provide at least 50 percent of the nonfederal share of those costs as determined by the State.

(B) When the State is a party to any complaint brought in a federal judicial or administrative proceeding that involves one or more of the programs described in subparagraphs (C) to (E), inclusive, of paragraph (1) of subdivision (a) and included in the 2011 Realignment Legislation, and there is a settlement or judicial or administrative order that imposes a cost in the form of a monetary penalty or has the overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, the State shall annually provide at least 50 percent of the nonfederal share of those costs as determined by the State. Payment by the State is not required if the State determines that the settlement or order relates to one or more local agencies failing to perform a ministerial duty, failing to perform a legal obligation in good faith, or acting in a negligent or reckless manner.

(C) The state funds provided in this paragraph shall be from funding sources other than those described in subdivisions (b) and (d), ad valorem property taxes, or the Social Services Subaccount of the Sales Tax Account of the Local Revenue Fund.

(6) If the State or a local agency fails to perform a duty or obligation under this section or under the 2011 Realignment Legislation, an appropriate party may seek judicial relief. These proceedings shall have priority over all other civil matters.

(7) The funds deposited into a County Local Revenue Fund 2011 shall be spent in a manner designed to maintain the State's eligibility for federal matching funds, and to ensure compliance by the State with applicable federal standards governing the State's provision of Public Safety Services.

(8) The funds deposited into a County Local Revenue Fund 2011 shall not be used by local agencies to supplant other funding for Public Safety Services.

(d) If the taxes described in subdivision (b) are reduced or cease to be operative, the State shall annually provide moneys to the Local Revenue Fund 2011 in an amount equal to or greater than the aggregate amount that otherwise would have been provided by the taxes described in subdivision (b). The method for determining that amount shall be described in the 2011 Realignment Legislation, and the State shall be obligated to provide that amount for so long as the local agencies are required to perform the Public Safety Services responsibilities assigned by the 2011 Realignment Legislation. If the State fails to annually appropriate that amount, the Controller shall transfer that amount from the General Fund in pro rata monthly shares to the Local Revenue Fund 2011. Thereafter, the Controller shall disburse these amounts to local agencies in the manner directed by the 2011 Realignment Legislation. The state obligations under this subdivision shall have a lower priority claim to General Fund money than the first priority for money to be set apart under Section 8 of Article XVI and the second priority to pay voter-approved debts and liabilities described in Section 1 of Article XVI.

(e) (1) To ensure that public education is not harmed in the process of providing critical protection to local Public Safety Services, the Education Protection Account is hereby created in the General Fund to receive and disburse the revenues derived from the incremental increases in taxes imposed by this section, as specified in subdivision (f).

(2) (A) Before June 30, 2013, and before June 30 of each year from 2014 to 2018, inclusive, the Director of Finance shall estimate the total amount of additional revenues, less refunds, that will be derived from the incremental increases in tax rates made in subdivision (f) that will be available for transfer into the Education Protection Account during the next fiscal year. The Director of Finance shall make the same estimate by January 10, 2013, for additional revenues, less refunds, that will be received by the end of the 2012-13 fiscal year.

(B) During the last 10 days of the quarter of each of the first three quarters of each fiscal year from 2013-14 to 2018-19, inclusive, the Controller shall transfer into the Education Protection Account one-fourth of the total amount estimated pursuant to subparagraph (A) for that fiscal year, except as this amount may be adjusted pursuant to subparagraph (D).

(C) In each of the fiscal years from 2012-13 to 2020-21, inclusive, the Director of Finance shall calculate an adjustment to the Education Protection Account, as specified by subparagraph (D), by adding together the following amounts, as applicable:

(i) In the last quarter of each fiscal year from 2012-13 to 2018-19, inclusive, the Director of Finance shall recalculate the estimate made for the fiscal year pursuant to subparagraph (A), and shall subtract from this updated estimate the amounts previously transferred to the Education Protecion Account for that fiscal year.

(ii) In June 2015 and in every June from 2016 to 2021, inclusive, the Director of Finance shall make a final determination of the amount of additional revenues, less refunds, derived from the incremental increases in tax rates made in subdivision (f) for the fiscal year ending two years prior. The amount of the updated estimate calculated in clause (i) for the fiscal year ending two years prior shall be subtracted from the amount of this final determination.

(D) If the sum determined pursuant to subparagraph (C) is positive, the Controller shall transfer an amount equal to that sum into the Education Protection Account within 10 days preceding the end of the fiscal year. If that amount is negative, the Controller shall suspend or reduce subsequent quarterly transfers, if any, to the Education Protection Account until the total reduction equals the negative amount herein described. For purposes of any calculation made pursuant to clause (i) of subparagraph (C), the amount of a quarterly transfer shall not be modified to reflect any suspension or reduction made pursuant to this subparagraph.

(3) All moneys in the Education Protection Account are hereby continuously appropriated for the support of school districts, county offices of education, charter schools, and community college districts as set forth in this paragraph.

(A) Eleven percent of the moneys appropriated pursuant to this paragraph shall be allocated quarterly by the Board of Governors of the California Community Colleges to community college districts to provide general purpose funding to community college districts in proportion to the amounts determined pursuant to Section 84750.5 of the Education Code, as that code section read upon voter approval of this section. The allocations calculated pursuant to this subparagraph shall be offset by the amounts specified in subdivisions (a), (c), and (d) of Section 84751 of the Education Code, as that section read upon voter approval of this section, that are in excess of the amounts calculated pursuant to Section 84750.5 of the Education Code, as that section read upon voter approval of this section, provided that no community college district shall receive less than one hundred dollars ($100) per full time equivalent student.

(B) Eighty-nine percent of the moneys appropriated pursuant to this paragraph shall be allocated quarterly by the Superintendent of Public Instruction to provide general purpose funding to school districts, county offices of education, and state general-purpose funding to charter schools in proportion to the revenue limits calculated pursuant to Sections 2558 and 42238 of the Education Code and the amounts calculated pursuant to Section 47633 of the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section. The amounts so calculated shall be offset by the amounts specified in subdivision (c) of Section 2558 of, paragraphs (1) through (7) of subdivision (h) of Section 42238 of, and Section 47635 of, the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section, that are in excess of the amounts calculated pursuant to Sections 2558, 42238, and 47633 of the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section, provided that no school district, county office of education, or charter school shall receive less than two hundred dollars ($200) per unit of average daily attendance.

(4) This subdivision is self-executing and requires no legislative action to take effect. Distribution of the moneys in the Education Protection Account by the Board of Governors of the California Community Colleges and the Superintendent of Public Instruction shall not be delayed or otherwise affected by failure of the Legislature and Governor to enact an annual budget bill pursuant to Section 12 of Article IV, by invocation of paragraph (h) of Section 8 of Article XVI, or by any other action or failure to act by the Legislature or Governor.

(5) Notwithstanding any other provision of law, the moneys deposited in the Education Protection Account shall not be used to pay any costs incurred by the Legislature, the Governor, or any agency of state government.

(6) A community college district, county office of education, school district, or charter school shall have sole authority to determine how the moneys received from the Education Protection Account are spent in the school or schools within its jurisdiction, provided, however, that the appropriate governing board or body shall make these spending determinations in open session of a public meeting of the governing board or body and shall not use any of the funds from the Education Protection Account for salaries or benefits of administrators or any other administrative costs. Each community college district, county office of education, school district, and charter school shall annually publish on its Internet Web site an accounting of how much money was received from the Education Protection Account and how that money was spent.

(7) The annual independent financial and compliance audit required of community college districts, county offices of education, school districts, and charter schools shall, in addition to all other requirements of law, ascertain and verify whether the funds provided from the Education Protection Account have been properly disbursed and expended as required by this section. Expenses incurred by those entities to comply with the additional audit requirement of this section may be paid with funding from the Education Protection Account, and shall not be considered administrative costs for purposes of this section.

(8) Revenues, less refunds, derived pursuant to subdivision (f) for deposit in the Education Protection Account pursuant to this section shall be deemed "General Fund revenues," "General Fund proceeds of taxes," and "moneys to be applied by the State for the support of school districts and community college districts" for purposes of Section 8 of Article XVI.

(f) (1) (A) In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code, for the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of 1/4 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this State on and after January 1, 2013, and before January 1, 2017.

(B) In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code, an excise tax is hereby imposed on the storage, use, or other consumption in this State of tangible personal property purchased from any retailer on and after January 1, 2013, and before January 1, 2017, for storage, use, or other consumption in this state at the rate of 1/4 percent of the sales price of the property.

(C) The Sales and Use Tax Law, including any amendments enacted on or after the effective date of this section, shall apply to the taxes imposed pursuant to this paragraph.

(D) This paragraph shall become inoperative on January 1, 2017.

(2) For any taxable year beginning on or after January 1, 2012, and before January 1, 2019, with respect to the tax imposed pursuant to Section 17041 of the Revenue and Taxation Code, the income tax bracket and the rate of 9.3 percent set forth in paragraph (1) of subdivision (a) of Section 17041 of the Revenue and Taxation Code shall be modified by each of the following:

(A) (i) For that portion of taxable income that is over two hundred fifty thousand dollars ($250,000) but not over three hundred thousand dollars ($300,000), the tax rate is 10.3 percent of the excess over two hundred fifty thousand dollars ($250,000).

(ii) For that portion of taxable income that is over three hundred thousand dollars ($300,000) but not over five hundred thousand dollars ($500,000), the tax rate is 11.3 percent of the excess over three hundred thousand dollars ($300,000).

(iii) For that portion of taxable income that is over five hundred thousand dollars ($500,000), the tax rate is 12.3 percent of the excess over five hundred thousand dollars ($500,000).

(B) The income tax brackets specified in clauses (i), (ii), and (iii) of subparagraph (A) shall be recomputed, as otherwise provided in subdivision (h) of Section 17041 of the Revenue and Taxation Code, only for taxable years beginning on and after January 1, 2013.

(C) (i) For purposes of subdivision (g) of Section 19136 of the Revenue and Taxation Code, this paragraph shall be considered to be chaptered on the date it becomes effective.

(ii) For purposes of Part 10 (commencing with Section 17001) of, and Part 10.2 (commencing with Section 18401) of, Division 2 of the Revenue and Taxation Code, the modified tax brackets and tax rates established and imposed by this paragraph shall be deemed to be established and imposed under Section 17041 of the Revenue and Taxation Code.

(D) This paragraph shall become inoperative on December 1, 2019.

(3) For any taxable year beginning on or after January 1, 2012, and before January 1, 2019, with respect to the tax imposed pursuant to Section 17041 of the Revenue and Taxation Code, the income tax bracket and the rate of 9.3 percent set forth in paragraph (1) of subdivision (c) of Section 17041 of the Revenue and Taxation Code shall be modified by each of the following:

(A) (i) For that portion of taxable income that is over three hundred forty thousand dollars ($340,000) but not over four hundred eight thousand dollars ($408,000), the tax rate is 10.3 percent of the excess over three hundred forty thousand dollars ($340,000).

(ii) For that portion of taxable income that is over four hundred eight thousand dollars ($408,000) but not over six hundred eighty thousand dollars ($680,000), the tax rate is 11.3 percent of the excess over four hundred eight thousand dollars ($408,000).

(iii) For that portion of taxable income that is over six hundred eighty thousand dollars ($680,000), the tax rate is 12.3 percent of the excess over six hundred eighty thousand dollars ($680,000).

(C) (i) For purposes of subdivision (g) of Section 19136 of the Revenue and Taxation Code, this paragraph shall be considered to be chaptered on the date it becomes effective.

(D) This paragraph shall become inoperative on December 1, 2019.

(g) (1) The Controller, pursuant to his or her statutory authority, may perform audits of expenditures from the Local Revenue Fund 2011 and any County Local Revenue Fund 2011, and shall audit the Education Protection Account to ensure that those funds are used and accounted for in a manner consistent with this section.

(2) The Attorney General or local district attorney shall expeditiously investigate, and may seek civil or criminal penalties for, any misuse of moneys from the County Local Revenue Fund 2011 or the Education Protection Account.

History—Adopted by voters, Proposition 30, at the November 6, 2012 election, subdivision (b), operative as of July 1, 2011; paragraphs (2) and (3) of subdivision (f), operative as of January 1, 2012; all other provisions operative November 7, 2012.

6201. Imposition and rate of use tax. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6201. Imposition and rate of use tax. An excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer on or after July 1, 1935, for storage, use, or other consumption in this state at the rate of 3 percent of the sales price of the property, and at the rate of 2½ percent on and after July 1, 1943, and to and including June 30, 1949, and at the rate of 3 percent on and after July 1, 1949, and to and including July 31, 1967, and at the rate of 4 percent on and after August 1, 1967, and to and including June 30, 1972, and at the rate of 3¾ percent on and after July 1, 1972, and to and including June 30, 1973, and at the rate of 4¾ percent on and after July 1, 1973, and to and including September 30, 1973, and at the rate of 3¾ percent on and after October 1, 1973, and to and including March 31, 1974, and at the rate of 4¾ percent thereafter.

History—Stats. 1943, p. 2919, in effect June 1, 1943, added provision for temporary 2½ percent rate and added provisions for postwar reserve. Temporary reduction and postwar reserve were also provided for by Stats. 1943, p. 1581, in effect May 7, 1943. Stats. 1945, p. 1292, in effect June 5, 1945, continued temporary 2½ percent rate. Stats. 1947, p. 1866, in effect June 17, 1947, continued temporary 2½ percent rate, and deleted provisions for postwar reserve. Stats. 1948, p. 16, in effect April 9, 1948, continued temporary 2½ percent rate. Stats. 1967, p. 2474, operative August 1, 1967, increased the rate to 4 percent. Stats. 1971, p. 2784, operative July 1, 1972, decreased tax rate to 3¾ percent. Stats. 1972, Ch. 1406, effective December 26, 1972, repealed and reenacted the section operative June 1, 1973, increasing the rate to 4¾ percent after May 31, 1973, and repeals this section if the Legislative Analyst does not make the certification described in subdivision (c) of section 316.2 of Ch. 1 of the 1971 First Extraordinary Session. Stats. 1973, Ch. 67, effective May 29, 1973, delayed to July 1, 1973, the rate increase to 4¾ percent; Ch. 296, effective August 23, 1973, decreased the rate to 3¾ percent on October 1, 1973, and raised it to 4¾ percent on March 1, 1974, operative October 1, 1973. Stats. 1991, Ch. 85, in effect June 30, 1991, operative July 1, 1991, added "on and after April 1, 1974, and to and including June 30, 1991, and at the rate of 5 percent" after "March 31, 1974, and at the rate of 4¾ percent". Stats. 1991, Ch. 88, in effect June 30, 1991". Stats. 1991, Ch. 117, in effect July 16, 1991, deleted "on and after April 1, 1974, and to and including July 14,1991, and at the rate of 5 percent" after "March 31, 1974, and at the rate of 4¾ percent."

Constitutionality.—The imposition of the tax upon the use of property after it has been brought into the state does not violate either the Commerce Clause or the Fourteenth Amendment of the Federal Constitution. Felt and Tarrant Manufacturing Co. v. Gallagher (1939) 306 U.S. 62.

Nature of the tax.—The use tax is an excise tax and not a property tax, and therefore the provisions of Article XIII of the State Constitution have no application with respect to it. Douglas Aircraft Co., Inc. v. Johnson (1939) 13 Cal.2d 545.

Temporary use outside the State.—Switch engines purchased outside of California and brought into California within six months of purchase for permanent use therein are subject to use tax even though they were temporarily used outside of California prior to their being brought into the state. Atchison, Topeka and Santa Fe Railway Co. v. State Board of Equalization (1956) 139 Cal.App.2d 411.

Bankruptcy liquidation sale.—Purchaser of tangible personal property from trustee in bankruptcy at liquidation sale is not subject to tax under this section. California State Board of Equalization v. Goggin (1957) 245 F.2d 44, cert. den. (1957) 353 U.S. 961. But see Debtor Reorganizers, Inc. v. State Board of Equalization (1976) 58 Cal.App.3d 691, below.

Contemplated use in California.—Parts and materials are purchased for use in California if at the time of purchase it is contemplated that they might be used anywhere, including California, as the needs of the purchaser might require, and they are in fact used in California. Western Contracting Corp. v. State Board of Equalization (1968) 265 Cal.App.2d 568.

Lease of Property Purchased Ex-Tax from Trustee in Bankruptcy.—The collection of use tax on receipts from leases of property purchased by the lessor from a trustee in bankruptcy does not unlawfully interfere with the process of the bankruptcy court. Debtor Reorganizers, Inc. v. State Board of Equalization (1976) 58 Cal.App.3d 691.

Use tax on railroad passenger cars discriminated against rail carrier.—Federal act prohibited assessment of California use tax on rail passenger cars, where the use tax was not imposed on passenger aircraft and watercraft used by other common carriers in interstate commerce. National Railroad Passenger Corp. v. State Board of Equalization (1986) 652 F.Supp. 923.

Gifts used when delivered to common carrier.—A gift occurs, and California use tax applies, when property is delivered to a common carrier in California for shipment to a donee, whether the donee is inside or outside California. Yamaha Corp. of America v. State Board of Equalization (1999) 73 Cal.App.4th 338.

6201.1. Temporary use tax increase. [Repealed by Stats. 1991, Ch. 1091, in effect January 1, 1992.]

6201.15. Local Revenue Fund 2011. (a) Notwithstanding Section 7101 or any other law, the amount of revenues, net of refunds, collected pursuant to Section 6201 and attributable to a rate of 1.0625 percent shall, subject to subdivision (b), be deposited in the State Treasury to the credit of the Local Revenue Fund 2011, as established pursuant to Section 30025 of the Government Code, and shall be used exclusively for the public safety purposes for which that fund is created.

(b) The amount of revenues derived from any tax or tax increase enacted after July 1, 2011, that is deposited in the Local Revenue Fund 2011 shall be applied to reduce the amount otherwise required to be deposited in that fund pursuant to subdivision (a).

(c) Notwithstanding subdivisions (a) and (b), if the Director of Finance determines that the State Board of Equalization has allocated more revenue to the Local Revenue Fund 2011 than required by subdivisions (a) and (b) for taxable sales that occurred during the period of July 1, 2011, to June 30, 2016, inclusive, the total amount of revenues credited to the Local Revenue Fund 2011 for this period shall be considered to have fulfilled the requirements of subdivisions (a) and (b), and no allocation adjustment for this period shall be made.

History—Added by Stats. 2011, Ch. 40 (AB 118), in effect June 30, 2011. Stats. 2017, Ch. 25 (SB 90), in effect June 27, 2017, added subdivision (c).

6201.2. Imposition and rate of additional use tax. (a) In addition to the taxes imposed by Section 6201 and any other provision of this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer on or after July 15, 1991, for storage, use, or other consumption in this state at the rate of ½ percent of the sales price of the property.

(b) All revenues received pursuant to this section shall be deposited in the State Treasury to the credit of the Local Revenue Fund, as established pursuant to Section 17600 of the Welfare and Institutions Code.

(c) This section shall cease to be operative on the first day of the first month of the calendar quarter following notification to the board by the Department of Finance of a final judicial determination by the California Supreme Court or any California court of appeal that the revenues collected pursuant to this section and Section 6051.2 and deposited in the Local Revenue Fund are either of the following:

(1) "General Fund proceeds of taxes appropriated pursuant to Article XIII B of the California Constitution," as used in subdivision (b) of Section 8 of Article XVI of the California Constitution.

(2) "Allocated local proceeds of taxes," as used in subdivision (b) of Section 8 of Article XVI of the California Constitution.

(d) Notwithstanding subdivisions (a) and (b), if the Director of Finance determines that the State Board of Equalization has allocated more revenue to the Local Revenue Fund than required by subdivisions (a) and (b) for taxable sales that occurred during the period of July 1, 2011, to June 30, 2016, inclusive, the total amount of revenues credited to the Local Revenue Fund for this period shall be considered to have fulfilled the requirements of subdivisions (a) and (b), and no allocation adjustment for this period shall be made.

History—Added by Stats. 1991, Ch. 85 (AB 2181), in effect June 30, 1991, operative July 1, 1991. Stats. 1991, Ch. 88 (SB 179), in effect June 30, 1991, operative July 15, 1991, substituted "July 15" for "July 1" in subdivision (a). Stats. 1993, Ch. 100 (SB 463), in effect July 13, 1993, added subdivision (b) and relettered former subdivision (b) as (c). Stats. 2006, Ch. 538 (SB 1852), in effect January 1, 2007, substituted "received" for "receive" after "All revenues" in subdivision (b); and substituted "6051.2" for "6201.2" after "section and Section" in subdivision (c). Stats. 2017, Ch. 25 (SB 90), in effect June 27, 2017, added subdivision (d).

6201.3. Imposition and rate of additional use tax. In addition to the taxes imposed by Sections 6201, 6201.2, 6201.5, and any other provision of this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased fromany retailer on and after July 15, 1991, and purchased during any period in which this section is operative pursuant to Section 6201.4 at the rate of ¼ percent of the sales price of the property.

History—Added by Stats. 1991, Ch. 117, in effect July 16, 1991. Stats. 1993, Ch. 589, in effect January 1, 1994, substituted "and" for "an" after "retailer on".

6201.4. Operative date of rate increase. (a) Section 6201.3 shall be operative with respect to the storage, use, or other consumption in this state of tangible personal property purchased from any retailer on and after July 15, 1991, but shall cease to be operative during any period described in subdivision (c) or (d).

(b) On or before November 1, 1993, and on or before every November 1 thereafter, the Director of Finance shall determine and certify to the Governor, the Legislature, and the board both of the following:

(1) Whether the amount in the Special Fund for Economic Uncertainties, as established pursuant to Section 16418 of the Government Code, as of June 30 of the prior fiscal year exceeded 4 percent of General Fund revenues for that prior fiscal year.

(2) Whether the estimated amount in the Special Fund for Economic Uncertainties as of June 30 of the current fiscal year (without inclusion of any revenue derived pursuant to Section 6201.3 on and after January 1 of the current fiscal year) exceeds 4 percent of General Fund revenues for the current fiscal year.

(c) Section 6201.3 shall cease to be operative on and after January 1, 1994, if on or before November 1, 1993, the Director of Finance certifies pursuant to subdivision (b) that both amounts certified pursuant to paragraphs (1) and (2) of that subdivision exceed 4 percent of General Fund revenues for the respective fiscal year for which each amount is determined and certified.

(d) Section 6201.3 shall cease to be operative on and after January 1 following any November 1 in which Section 6201.3 is operative and the Director of Finance certifies pursuant to subdivision (b) that both amounts certified pursuant to paragraphs (1) and (2) of that subdivision exceed 4 percent of General Fund revenues for the respective fiscal year for which each amount is determined and certified.

(e) Section 6201.3 shall become operative on and after January 1 following any November 1 in which Section 6201.3 is inoperative and the Director of Finance certifies pursuant to paragraph (2) of subdivision (b) that the estimated amount does not exceed 4 percent of the General Fund revenues as of June 30 of the current fiscal year.

History—Added by Stats. 1991, Ch. 117, in effect July 16, 1991.

6201.45. Operative date of tax. Notwithstanding 6201.4 or any other provision of law, the state use tax rate in Section 6201.3 shall not be operative in any calendar year beginning on or after January 1, 2002, if the Director of Finance determines both of the following:

(a) The General Fund reserve is 3 percent of revenues excluding the revenues derived from the ¼ cent sales and use tax rate.

(b) Actual General Fund revenues for the period May 1 through September 30 equal or exceed the May Revision forecast, prior to the November 1 determination.

The Director of Finance shall make the determination on or before November 1 of each year.

The ¼ cent reduction shall be operative for each calendar year commencing on the next January 1 after the determination is made.

History—Added by Stats. 2001, Ch. 156 (AB 426), in effect August 7, 2001, operative September 1, 2001.

6201.5. Imposition and rate of use tax. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6201.5. Imposition and rate of additional use tax; Fiscal Recovery Fund. (a) In addition to the taxes imposed by Section 6201 and any other provision of this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer at the rate of one-quarter of 1 percent of the sales price of the property.

(b) All revenues, net of refunds, received pursuant to this section shall be deposited in the State Treasury to the credit of the Fiscal Recovery Fund, as established pursuant to Section 99008 of the Government Code.

(c) Revenues received pursuant to this section accruing to the Fiscal Recovery Fund shall not be considered to be "State General Fund proceeds of taxes appropriated pursuant to Article XIII B" within the meaning of either Section 8 of Article XVI of the California Constitution or Section 41202 of the Education Code.

(d) This section shall become operative on July 1, 2004, and shall cease to be operative on the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code.

History—Added by Stats. 2003, Ch. 13X (AB 7X), in effect August 2, 2003, but operative July 1, 2004. Stats. 2003, Ch. 2 (AB X5 9), in effect December 12, 2003, but operative July 1, 2004, substituted "quarter" for "half" after "at the rate of one-" in subdivision (a).

6201.6. Comparison of estimated receipts with actual receipts by Controller. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6201.6. Exemption from tax; aircraft common carriers. There are exempted from the taxes imposed by Section 6201.5 the storage, use, or other consumption in this state of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government.

History—Added by Stats. 2003, Ch. 13X (AB 7X), in effect August 2, 2003, but operative July 1, 2004.

6201.7. Imposition and rate of use tax. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6201.7. Imposition and rate of additional use tax. (a) In addition to the taxes imposed by Section 6201 and any other provision of this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer for storage, use, or other consumption in this state, at the rate of 1 percent of the sales price of the property, on and after April 1, 2009.

(b) This section shall cease to be operative on July 1, 2011, unless the Director of Finance makes the notification pursuant to Section 99040 of the Government Code, in which case this section shall cease to be operative on July 1, 2012.

History—Added by Stats. 2009, Ch. 18XXX (AB 3XXX), in effect February 20, 2009.

6201.8. Conditions for activation of Section 6201.7. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6201.8. Diesel fuel: use tax rate increase. [Repealed by Stats. 2011, Ch. 6 (AB 105), effective March 24, 2011.]

6201.8. Diesel fuel: use tax rate increase. (a) Except as provided by Section 6357.3, in addition to the taxes imposed by this part, an excise tax is hereby imposed on the storage, use, or other consumption in this state of diesel fuel, as defined in Section 60022, at the rate of 1.75 percent of the sales price of the diesel fuel.

(b) Except as provided by Section 6357.3, in addition to the taxes imposed by this part and by subdivision (a), commencing November 1, 2017, an excise tax is hereby imposed on the storage, use, or other consumption in this state of diesel fuel, as defined in Section 60022, at the rate of 4 percent of the sales price of the diesel fuel.

(c)(1) Notwithstanding subdivision (b) of Section 7102, except as otherwise provided in paragraph (2), all of the revenues, less refunds, collected pursuant to this section shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and transferred quarterly to the Public Transportation Account in the State Transportation Fund for allocation pursuant to Section 99312.1 of the Public Utilities Code.

(2)The revenues, less refunds, attributable to a rate of 0.5 percent of the 4-percent increase in the rate pursuant to subdivision (b), amounting to one-eighth of revenues from the increase in the rate under that subdivision, shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and transferred quarterly to the Public Transportation Account in the State Transportation Fund for allocation by the Transportation Agency to intercity rail and commuter rail purposes pursuant to Section 99312.3 of the Public Utilities Code.

History—Added by Stats. 2011, Ch. 6 (AB 105), in effect March 24, 2011, but operative July 1, 2011. Stats. 2017, Ch. 5 (SB 1), deleted "on or after the operative date of this subdivision" after "of the diesel fuel" of subdivision (a);and deleted the former subdivision (b) which stated "Notwithstanding subdivision (a), for the 2011-12 fiscal year only, the rate referenced of subdivision (a) shall be 1.87 percent.", and added subdivision (b) ; and deleted the former subdivision (c) which stated "Notwithstanding subdivision (a), for the 2012-13 fiscal year only, the rate referenced of subdivision (a) shall be 2.17 percent."; and deleted the former subdivision (d) which stated "Notwithstanding subdivision (a), for the 2013-14 fiscal year only, the rate referenced of subdivision (a) shall be 1.94 percent."; and relettered former subdivision (e) as subdivision (c), added "(1)" before "Notwithstanding subdivision (b)" to subdivision (c), added "except as otherwise provided in paragraph (2)" after "Section 7102" to subdivision (c); added paragraph (2) to subdivision (c); deleted subdivision "(f)" which stated "Subdivisions (a) to (e), inclusive, shall become operative on July 1, 2011.". Former § 6015.8, similar to the present section, was added by Stats. 2010, Ch. 11, Eighth Extraordinary Session (ABx8 6), in effect March 22, 2010; amended by Stats. 2010, Ch. 9 (SB 70), in effect March 23, 2010; and by repealed Stats. 2011, Ch. 6 (AB 105), in effect March 24, 2011.

6202. Liability for tax. (a) Every person storing, using, or otherwise consuming in this state tangible personal property purchased from a retailer is liable for the tax. His or her liability is not extinguished until the tax has been paid to this state except that a receipt from a retailer engaged in business in this state or from a retailer who is authorized by the board, under the rules and regulations as it may prescribe, to collect the tax and who is, for the purposes of this part relating to the use tax, regarded as a retailer engaged in business in this state, given to the purchaser pursuant to Section 6203, is sufficient to relieve the purchaser from further liability for the tax to which the receipt refers.

(b) Notwithstanding any other provision, when a person purchases a vessel or aircraft from another person through a broker, the purchaser's liability for use tax is relieved if the purchaser has paid an amount as sales or use tax to the broker, and the purchaser obtains and retains a receipt from the broker showing the payment of that tax to the broker.

(c) Notwithstanding any other provision, when a person purchases a vessel or aircraft from another person through a broker, if the broker collects from the purchaser an amount as sales or use tax, the broker shall be liable for that amount under Section 6204 as if the broker were a retailer engaged in business in this state required to collect that amount as use tax from the purchaser, and that amount constitutes a debt owed by the broker to this state.

History—Stats. 1957, p. 2019, in effect September 11, 1957, substituted "engaged in" for "maintaining a place of" in second sentence. Stats. 1995, Ch. 555, in effect January 1, 1996, added subdivision letter designation (a) before first paragraph, substituted "state" for "State" throughout the first paragraph, added "or her" after "His" and substituted "the" for "such" after "under" in the second sentence of the first paragraph; and added subdivisions (b) and (c).

Liability of county for tax.—A county purchasing property consisting mostly of books for the county library must pay the use tax thereon when the circumstances would call for payment of the tax had the purchases been made by a private individual or organization, where, by the express terms of the statute, its provisions are made applicable to a county. People v. Imperial County, (1946) 76 Cal.App.2d 572.

6202.5. Acquisitions of endangered or threatened animals and plants. Any retailer, other than a nonprofit zoological society as defined in subdivision (c) of Section 6010.50, that stores, uses, or otherwise consumes in this state endangered or threatened animal or plant species, as defined in subdivision (b) of Section 6010.50, acquired through a trade or exchange with a nonprofit zoological society, shall be liable for the use tax.

History—Added by Stats. 1994, Ch. 771, in effect September 26, 1994, but operative January 1, 1995. Stats. 1996, Ch. 124, in effect January 1, 1997, substituted "or" for "and" after "threatened animal".

6202.7. Loans of automobiles to university officials. Any retailer who loans any motor vehicle to any employee of the University of California or the California State University shall be liable for the use tax on the loan of that vehicle equal to the amount of tax that would have applied if the vehicle had been leased at fair rental value for a time period equal to the period the vehicle is loaned to the university or state university employee, provided that all of the following conditions are met:

(a) The vehicle is for the employee's exclusive use.

(b) The loan of the vehicle has been approved by the chancellor of the university or the president of the state university.

(c) It is demonstrated that the loan of the vehicle is not dependent upon the retailer receiving any automotive-related business from the university or the state university.

History—Added by Stats. 1996, Ch. 366, in effect August 19, 1996, but operative January 1, 1997.

6203. Collection by retailer. (a) Except as provided by Sections 6292 and 6293, every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state, not exempted under Chapter 3.5 (commencing with Section 6271) or Chapter 4 (commencing with Section 6351), shall, at the time of making the sales or, if the storage, use, or other consumption of the tangible personal property is not then taxable hereunder, at the time the storage, use, or other consumption becomes taxable, collect the tax from the purchaser and give to the purchaser a receipt therefor in the manner and form prescribed by the department.

(b) As respects leases constituting sales of tangible personal property, the tax shall be collected from the lessee at the time amounts are paid by the lessee under the lease.

(c) "Retailer engaged in business in this state" as used in this section and Section 6202 means any retailer that has substantial nexus with this state for purposes of the commerce clause of the United States Constitution and any retailer upon whom federal law permits this state to impose a use tax collection duty. "Retailer engaged in business in this state" specifically includes, but is not limited to, any of the following:

(1) Any retailer maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business.

(2) Any retailer having any representative, agent, salesperson, canvasser, independent contractor, or solicitor operating in this state under the authority of the retailer or its subsidiary for the purpose of selling, delivering, installing, assembling, or the taking of orders for any tangible personal property.

(3) As respects a lease, any retailer deriving rentals from a lease of tangible personal property situated in this state.

(4) (A) Any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property for delivery in this state by the retailer and all persons related to the retailer that exceed five hundred thousand dollars ($500,000).

(B) For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of the Internal Revenue Code and the regulations thereunder.

(d) Except as provided in this subdivision, a retailer is not a "retailer engaged in business in this state" under paragraph (2) of subdivision (c) if that retailer's sole physical presence in this state is to engage in convention and trade show activities as described in Section 513(d)(3)(A) of the Internal Revenue Code, and if the retailer, including any of the retailer's representatives, agents, salespersons, canvassers, independent contractors, or solicitors, does not engage in those convention and trade show activities for more than 15 days, in whole or in part, in this state during any 12-month period and did not derive more than one hundred thousand dollars ($100,000) of net income from those activities in this state during the prior calendar year. Notwithstanding the preceding sentence, a retailer engaging in convention and trade show activities, as described in Section 513(d)(3)(A) of the Internal Revenue Code, is a "retailer engaged in business in this state," and is liable for collection of the applicable use tax, with respect to any sale of tangible personal property occurring at the convention and trade show activities and with respect to any sale of tangible personal property made pursuant to an order taken at or during those convention and trade show activities.

(e) Any limitations created by this section upon the definition of "retailer engaged in business in this state" shall only apply for purposes of tax liability under this code. Nothing in this section is intended to affect or limit, in any way, civil liability or jurisdiction under Section 410.10 of the Code of Civil Procedure.

(f) (1) The amendments made to this section by Chapter 5 of the Statutes of 2019 shall become operative on April 1, 2019.

(2) If the amendments made to this section by Chapter 5 of the Statutes of 2019 are held in a final decision of a court of competent jurisdiction to violate the substantial nexus standard of the commerce clause of the United States Constitution, this section shall become inoperative and shall be repealed on the date of that final decision.

History—Added by Stats. 2011, Ch. 313 (AB 155), in effect September 23, 2011, but operative September 15, 2012. Stats. 2019, Ch. 5 (AB 147), in effect April 25, 2019, but operative April 1, 2019, in subdivision (a) substituted "department" for "board"; deleted former subdivision (c)(4), which provided, "Any retailer that is a member of a commonly controlled group, as defined in Section 25105, and is a member of a combined reporting group, as defined in paragraph (3) of subdivision (b) of Section 25106.5 of Title 18 of the California Code of Regulations, that includes another member of the retailer's commonly controlled group that, pursuant to an agreement with or in cooperation with the retailer, performs services in this state in connection with tangible personal property to be sold by the retailer, including, but not limited to, design and development of tangible personal property sold by the retailer, or the solicitation of sales of tangible personal property on behalf of the retailer"; added new subdivision (c)(4); deleted former subdivision (c)(5), which provided "(A) Any retailer entering into an agreement or agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers of tangible personal property to the retailer, whether by an Internet-based link or an Internet Web site, or otherwise, provided that both of the following conditions are met: (i) The total cumulative sales price from all of the retailer's sales, within the preceding 12 months, of tangible personal property to purchasers in this state that are referred pursuant to all of those agreements with a person or persons in this state, is in excess of ten thousand dollars ($10,000). (ii) The retailer, within the preceding 12 months, has total cumulative sales of tangible personal property to purchasers in this state in excess of one million dollars ($1,000,000). (B) An agreement under which a retailer purchases advertisements from a person or persons in this state, to be delivered on television, radio, in print, on the Internet, or by any other medium, is not an agreement described in subparagraph (A), unless the advertisement revenue paid to the person or persons in this state consists of commissions or other consideration that is based upon sales of tangible personal property. (C) Notwithstanding subparagraph (B), an agreement under which a retailer engages a person in this state to place an advertisement on an Internet Web site operated by that person, or operated by another person in this state, is not an agreement described in subparagraph (A), unless the person entering the agreement with the retailer also directly or indirectly solicits potential customers in this state through use of flyers, newsletters, telephone calls, electronic mail, blogs, microblogs, social networking sites, or other means of direct or indirect solicitation specifically targeted at potential customers in this state. (D) For purposes of this paragraph, 'retailer' includes an entity affiliated with a retailer within the meaning of Section 1504 of the Internal Revenue Code. (E) This paragraph shall not apply if the retailer can demonstrate that the person in this state with whom the retailer has an agreement did not engage in referrals in the state on behalf of the retailer that would satisfy the requirements of the commerce clause of the United States Constitution"; in subdivision (d), in the first sentence, substituted "the retailer's" for "his or her" before "representatives"; and added subdivision (f). Stats. 2019, Ch. 34 (SB 92), in effective June 27, 2019, in subdivision (c)(4)(B) deleted "Title 26 of" before "the Internal Revenue Code"; and in subdivisions (f)(1) and (2) substituted "Chapter 5 of the Statutes of 2019" for "the act adding this subdivision."

Historical Derivation.—Added by Stats. 1941, Ch. 36, operative July 1, 1943. Stats. 1957, Ch. 807, p. 2019, effective September 11, 1957, substituted "engaged in" for "maintaining a place of" in first paragraph and added second paragraph. Stats. 1965, 1st Ex. Sess., Ch. 2, p. 5448, operative August 1, 1965, added in the first paragraph "Except as provided by Section 6292 every" and "Chapters 3.5 or," and added new second paragraph and subdivision (c) to third paragraph. Stats. 1972, Ch. 973, effective August 16, 1972, inserted "and 6293" in the first sentence. Stats. 1984, Ch. 144, effective January 1, 1985, added "(commencing with Section 6271)" after "Chapter 3.5" and "(commencing with Section 6351)" after "Chapter 4" and deleted "of this part" after "Chapter 4" in first paragraph. Stats. 1987, Ch. 1145, effective January 1, 1988, added subdivisions (d), (e), (f), (g), (h), and (i) to third paragraph. Stats. 1988, Ch. 60, in effective March 30, 1988, added subdivision (j) to third paragraph. Stats. 1992, Ch. 902, in effect September 25, 1992, operative January 1, 1993, substituted "salesperson" for "salesman" after "agent", added "independent contractor," after "canvasser," and added "installing, assembling," after "delivering," in subdivision (b). Stats. 1994, Ch. 851, in effect September 27, 1994, but operative January 1, 1995, added subdivision (k). Stats. 1995, Ch. 555, in effect January 1, 1996, substituted "section and Section 6202" for "and the preceding section" after "in this" in the third paragraph; substituted "that" for "which" after "advertising" in subdivision (e); reformatted subdivision (f) as subdivision (f)(1) and added subdivision (f)(2); deleted former subdivision (g) which provided, "Any retailer owned or controlled by the same interests which own or control any retailer engaged in business in the same or similar line of business in this state"; reformatted former subdivisions (h), (i), (j), and (k) as (g), (h), (i), and (j), respectively; added "or" after "(g)," and deleted ", or (i)" after "(h)" in reformatted subdivision (i); deleted "either (i)" after "date of", substituted "a congressional act" for "S. 1825 of the 103rd Congress of the United States" after "provisions of,", and deleted "or (ii) substantially similar provisions of another Congressional act" after " retailers" in reformatted subdivision (j)(1)(A). Stats. 1997, Ch. 620 (SB 1102), in effective January 1, 1998, deleted former subdivision (e) which provided, "Any retailer who, pursuant to a contract with a broadcaster or publisher located in this state, solicits orders for tangible personal property by means of advertising that is disseminated primarily to consumers located in this state and only secondarily to bordering jurisdictions,"; deleted former subdivision (h) which provided, "Any retailer who, pursuant to a contract with a cable television operator located in this state, solicits orders for tangible personal property by means of advertising which is transmitted or distributed over a cable television system in this state,"; reformatted former subdivisions (f), (g), (i), and (j), as (e), (f), (g), and (h), respectively; and substituted "or (f)" for "(f), (g), or (h)" in reformatted subdivision (g). Stats. 1997, Ch. 621 (AB 258), in effective October 3, 1997, operative April 1, 1998, reformatted the first, second and third paragraphs as subdivisions (a), (b), and (c), respectively; reformatted former subdivisions (a), (b), (c), (d), (e)(1) and (2), (f), and (g) in the third paragraph as subdivision (c)(1), (2), (3), (4), (6)(A) and (B), (7), (8), and (9), respectively; added subdivision (c)(5) and (8), substituted "paragraph" for "subdivision" after "This" in reformatted subdivision (c)(6)(B), substituted "paragraph (4), (5), (6), (7), or (8)" for "subdivision (d), (e), or (f)" after "specified in" in reformatted subdivision (c)(9), and substituted "paragraph (1), (2), or (3)" for "subdivision (a), (b), or (c)" after "not specified in" in reformatted subdivision (c)(9); reformatted subdivision (h)(1) and (2) in the third paragraph as subdivision (d)(1) and (2); and added subdivision (e). Stats. 1998, Ch. 351, in effect January 1, 1999, deleted former subdivision (c)(5) which provided, "Any retailer who, pursuant to a contract with a broadcaster or publisher located in this state, solicits orders for tangible personal property by means of advertising that is disseminated primarily to consumers located in this state and only secondarily to bordering jurisdictions", deleted former subdivision (c)(8) which provided, "Any retailer, who pursuant to a contract with a cable television operator located in this state, solicits orders for tangible personal property by means of advertising that is transmitted or distributed over a cable television system in this state", renumbered former subdivision (c) (6), (7), and (9) as subdivision (c)(5), (6), and (7), respectively, and substituted "paragraph (4), (5), or (6)" for "paragraph (4), (5), (6), (7), or (8) " after "specified in" in reformatted subdivision (c)(7); deleted "earlier of the following dates: (A) The" after "inoperative upon the" in subdivision (d)(2) and deleted former subdivision (d)(2)(B) which provided, "The date five years from the effective date of the act adding this subdivision"; and added subdivision (f). Stats. 1999, Ch. 865, (SB 1302), in effect January 1, 2000, deleted former subdivision (c)(4) which provided, "Any retailer soliciting orders for tangible personal property by means of a telecommunication or television shopping system (which utilizes toll free numbers) which is intended by the retailer to be broadcast by cable television or other means of broadcasting, to consumers located in this state"; deleted former subdivision (c)(6) which provided, "Any retailer having a franchisee or licensee operating under its trade name if the franchisee or licensee is required to collect the tax under this section"; deleted ", (5), or (6)" after "paragraph (4)" in former subdivision (c)(7); and renumbered former subdivision (c)(5) and (7) as subdivision (c)(4) and (5). Stats. 2000, Ch. 617 (AB 330), in effect September 24, 2000, operative January 1, 2001, substituted "15" for "seven" after "for more than", and substituted "one hundred thousand dollars ($100,000) of net" for "ten thousand ($10,000) of gross" after "derive more than" in subdivision (e); and substituted "Any limitations … Civil Procedure" for "The Legislature finds and declares that the deletion of language by the act adding this subdivision that was contained in paragraphs (5) and (8) of subdivision (c) is intended to codify the holdings of recent court cases" in subdivision (f). Stats. 2011, 1st Ex. Sess., Ch. 7 (AB 28x), effective June 29, 2011, deleted former subdivision (c)(4), which provided, "(A) Any retailer soliciting orders for tangible personal property by mail if the solicitations are substantial and recurring and if the retailer benefits from any banking, financing, debt collection, telecommunication, or marketing activities occurring in this state or benefits from the location in this state of authorized installation, servicing, or repair facilities. (B) This paragraph shall become operative upon the enactment of any congressional act that authorizes states to compel the collection of state sales and use taxes by out-of-state retailers"; deleted former subdivision (c)(5), which provided "Notwithstanding Section 7262, a retailer specified in paragraph (4) above, and not specified in paragraph (1), (2), or (3) above, is a 'retailer engaged in business in this state' for the purposes of this part and Part 1.5 (commencing with Section 7200) only"; added new subdivision (c)(4) and (5); deleted former subdivision (d), which provided "(1) For purposes of this section, 'engaged in business in this state' does not include the taking of orders from customers in this state through a computer telecommunications network located in this state which is not directly or indirectly owned by the retailer when the orders result from the electronic display of products on that same network. The exclusion provided by this subdivision shall apply only to a computer telecommunications network that consists substantially of online communications services other than the displaying and taking of orders for products. (2) This subdivision shall become inoperative upon the operative date of provisions of a congressional act that authorize states to compel the collection of state sales and use taxes by out-of-state retailers"; and renumbered former subdivisions (e) and (f) as subdivisions (d) and (e), respectively. Stats. 2011, Ch. 313 (AB 155), in effect September 23, 2011, repealed Section 6203 as amended by Stats. 2011, 1st Ex. Sess., Ch. 7 (AB 28x); reenacted Section 6203 as amended by Stats. 2000, Ch. 617 (AB 330) operative September 23, 2011, and deleted "above" after "paragraph (4)" and after "(2), or (3)" in subdivision (c)(5), substituted "its" for "his or her" before "representatives" in subdivision (e), and substituted "apply only" for "only apply" after " shall" in subdivision (f); and reenacted Section 6203 as amended by Stats. 2011, 1st Ex. Sess., Ch. 7 (AB 28x), operative September 15, 2012, and substituted "one million dollars ($1,000,000)" for "five hundred thousand dollars ($500,000)" after "of" in subdivision (c)(5)(A)(ii).

Note.—Section 8 of Stats. 2019, Ch. 5 (AB 147) specifies that the amendments made to Revenue and Taxation Code Section 6203 by this act shall not have any retroactive effect.

Constitutionality, construction.—The requirement that retailers collect the tax is valid. A foreign corporation not qualified to do intrastate business in California, but represented in this state by two general agents, each of whom occupies an office leased by the corporation and used exclusively for the furtherance of its business, maintains a place of business in this state and may be required to collect the tax. Felt & Tarrant Manufacturing Co. v. Gallagher (1939) 306 U.S. 62.

Constitutionality.— The U.S. Supreme Court ruled that an out-of-state seller's physical presence in a taxing state was not necessary for the state to require a seller to collect and remit the state's sales and use tax, overruling the "physical presence rule" of its earlier decisions. The U.S. Supreme Court held the South Dakota statute satisfied the substantial nexus requirement because it only applied to sellers who engage in a significant quantity of business in the State, and thus, the retailers could be required to collect and remit the state's sales and use tax. South Dakota v. Wayfair, Inc., et al. (2018) 585 U.S. ___, 138 S.Ct. 2080.

Purchaser's liability to retailer.—The primary liability for the tax is upon the purchaser. Consequently, when a retailer pays an amount of tax to the state in satisfaction of the liability imposed on him by this section, the law implies an obligation on the part of the purchaser to reimburse the retailer for the amount so paid. Brandtjen & Kluge v. Fincher (1941) 44 Cal.App.2d Supp. 939.

What constitutes maintaining place of business.—A foreign law book publishing company is maintaining a place of business and making sales in this state and, therefore, required to collect the use tax from its customers, where it maintains large libraries in law offices in the state, in return for the use of which its salesmen are allotted office space, which it advertises as its local addresses, where in response to continuous solicitation of orders there is a regular flow of books into this state, and where its salesmen receive initial installment payments, exercise a limited discretion in respect of collections on delinquent accounts, and frequently consummate sales to customers to whom unordered books are sent. West Publishing Co. v. Superior Court, San Francisco (1942) 20 Cal.2d 720.

Requiring the law book publishing company described in the preceding paragraph to collect the use tax with respect to mail order sales to customers in this state as well as with respect to sales resulting from solicitation by its employees here does not violate either the Commerce Clause or the Fourteenth Amendment of the Federal Constitution. People v. West Publishing Co. (1950) 35 Cal.2d 80.

Insurance company not exempted.—An insurance company is not relieved from the responsibility of collecting a use tax by the constitutional provision exempting it from state sales taxes, when it sells automobiles belonging to it to private individuals, since the use tax is paid by the ultimate purchaser, not the insurance company. Beneficial Standard Life Ins. Co. v. State Board of Equalization (1962) 199 Cal.App.2d 18.

Liability of retailer.—National bank which retailed checks to depositors and failed to collect the use tax due must pay the same from its own funds. Bank of America v. State Board of Equalization (1962) 209 Cal.App.2d 780.

Sale outside state and leased back instate.—Where a California retailer sold two oil tankers with title and possession passing out of state and where the vessels were immediately leased back to the retailer and were used in California in intrastate commerce, the court held that the retailer was liable for the collection of the use tax. Union Oil Co. v. State Board of Equalization (1963) 60 Cal.2d 441, appeal dismissed, 377 U.S. 404.

Out-of-state border stores do not have to collect use tax on over-the-counter credit sales.—A retailer otherwise engaged in business in California does not have to collect California use tax on over-the-counter credit sales at the retailer's stores in Klamath Falls, Oregon, and Reno, Nevada, to customers with charge accounts bearing a California address. Montgomery Ward & Co. v. State Board of Equalization (1969) 272 Cal.App.2d 728, cert. denied (1970) 396 U.S. 1040.

Seller's in-state offices not related to mail order sales.—An out-of-state seller must collect use tax on its mail order sales, even though the seller's in-state offices only solicited advertising which was unrelated to the mail order sales. The seller's offices gained advantages of municipal services, and satisfied commerce clause and due process requirement of some definite link, or minimum connection, between the state and the retailer. National Geographic Society v. California Board of Equalization (1977) 430 U.S. 551.

Tax Injunction Act No Bar to Federal Jurisdiction.—A direct mail advertising and trade association brought an action, based on the Commerce Clause and the Due Process Clause of the U.S. Constitution, challenging the requirement that interstate mail order retailers collect use tax from their California customers. The court held that the Tax Injunction Act did not apply to bar federal jurisdiction over the matter. It rejected the Board's argument that the association members had a plain, speedy, and efficient remedy under state law since they could pay the contested taxes and file for a refund. Direct Marketing Association, Inc. v. Bennett (9th Cir., 1990) 916 F.2d 1451.

Retailer's use of teachers to solicit orders from students.—The taxpayer's use of teachers and school librarians to solicit sales from students constituted sufficient nexus to require the taxpayer to collect use taxes imposed on the students' purchases. Once the teachers and librarians undertook to solicit orders, they were acting under the taxpayer's authority as its agents and taxpayer owed tax measured by the selling price to the students. Scholastic Book Clubs, Inc. v. State Board of Equalization (1989) 207 Cal.App.3d 734.

Related corporation's liability for use tax collection.—A corporation who had no physical presence in California was not required to collect use tax under former subdivision (g) based on the physical presence of a related corporation in California. Current, Inc. v. State Board of Equalization (1994) 24 Cal.App.4th 382.

Online retailer had sufficient presence in state through representative accepting purchaser's returns.—An out-of-state retailer must collect use tax arising from its sales, where its in-state representative accepts returns from the retailer's purchasers. The in-state representative was authorized to take the returns, and the taking of returns is part of the selling process. Borders Online, LLC v. State Board of Equalization (2005) 129 Cal.App.4th 1179."

Text of Inactive Section

(b) As respects leases constituting sales of tangible personal property, the tax shall be collected from the lessee at the time amounts are paid by the lessee under the lease.

(3) As respects a lease, any retailer deriving rentals from a lease of tangible personal property situated in this state.

(4) Any retailer that is a member of a commonly controlled group, as defined in Section 25105, and is a member of a combined reporting group, as defined in paragraph (3) of subdivision (b) of Section 25106.5 of Title 18 of the California Code of Regulations, that includes another member of the retailer's commonly controlled group that, pursuant to an agreement with or in cooperation with the retailer, performs services in this state in connection with tangible personal property to be sold by the retailer, including, but not limited to, design and development of tangible personal property sold by the retailer, or the solicitation of sales of tangible personal property on behalf of the retailer.

(5) (A) Any retailer entering into an agreement or agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers of tangible personal property to the retailer, whether by an internet-based link or an internet website, or otherwise, provided that both of the following conditions are met:

(i) The total cumulative sales price from all of the retailer's sales, within the preceding 12 months, of tangible personal property to purchasers in this state that are referred pursuant to all of those agreements with a person or persons in this state, is in excess of ten thousand dollars ($10,000).

(ii) The retailer, within the preceding 12 months, has total cumulative sales of tangible personal property to purchasers in this state in excess of one million dollars ($1,000,000).

(B) An agreement under which a retailer purchases advertisements from a person or persons in this state, to be delivered on television, radio, in print, on the internet, or by any other medium, is not an agreement described in subparagraph (A), unless the advertisement revenue paid to the person or persons in this state consists of commissions or other consideration that is based upon sales of tangible personal property.

(C) Notwithstanding subparagraph (B), an agreement under which a retailer engages a person in this state to place an advertisement on an internet website operated by that person, or operated by another person in this state, is not an agreement described in subparagraph (A), unless the person entering the agreement with the retailer also directly or indirectly solicits potential customers in this state through use of flyers, newsletters, telephone calls, electronic mail, blogs, microblogs, social networking sites, or other means of direct or indirect solicitation specifically targeted at potential customers in this state.

(D) For purposes of this paragraph, "retailer" includes an entity affiliated with a retailer within the meaning of Section 1504 of the Internal Revenue Code.

(E) This paragraph shall not apply if the retailer can demonstrate that the person in this state with whom the retailer has an agreement did not engage in referrals in the state on behalf of the retailer that would satisfy the requirements of the commerce clause of the United States Constitution.

(f) If the amendments to Section 6203, as added by Section 3 of Chapter 313 of the Statutes of 2011, made by the act adding this section are held in a final decision of a court of competent jurisdiction to violate the substantial nexus standard of the commerce clause of the United States Constitution, this section shall become operative on the date of that final decision.

History—Stats. 2019, Ch. 5 (AB 147), Sec. 4 reenacted Section 6203, as added by Stats. 2011, Ch. 313 (AB 155), Sec. 3, effective April 25, 2019, substituted "department" for "board" in subdivision (a), and added subdivision (f) so the section only becomes operative if the amendments to Section 6203 made by Stats. 2019, Ch. 5 (AB 147), Sec. 3, operative April 1, 2019, are held in a final decision of a court of competent jurisdiction to violate the substantial nexus standard of the commerce clause of the United States Constitution.

6203.1. Relief from penalties; conditions. (a) The department, in its discretion, may relieve a retailer engaged in business in this state that meets the requirements of subdivision (b) of the following:

(1) The penalties provided by Sections 6484, 6511, and 6591.

(2) All or any part of the interest imposed on the person by this part.

(b) This section shall apply to any retailer engaged in business in this state that meets all of the following conditions:

(1) The retailer registered under Article 2 (commencing with Section 6225) on or after April 1, 2019, as a retailer engaged in business pursuant to paragraph (4) of subdivision (c) of Section 6203.

(2) The total combined sales from the retailer and all persons related to the retailer, within the preceding 12 months, of tangible personal property in this state or for delivery in this state does not exceed one million dollars ($1,000,000).

(3) The retailer was not previously registered, or required to be registered, with the department under Chapter 2 (commencing with Section 6051) or Chapter 3 (commencing with Section 6201).

(4) The retailer’s failure to collect and remit use tax was due to a good faith error and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect.

(5) The retailer is not a marketplace facilitator as defined in Section 6041.

(6) Any other factors as deemed necessary by the department.

(c) For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of the Internal Revenue Code and the regulations thereunder.

(d) The department may grant relief only for interest or penalties imposed on use tax liabilities due and payable for tax reporting periods beginning April 1, 2019, and ending December 31, 2022.

History—Added by Stats. 2019, Ch. 5 (AB 147), in effect April 25, 2019, operative October 1, 2019. Stats. 2019, Ch. 34 (SB 92), in effect June 27, 2019., operative October 1, 2019, deleted "Title 26 of" and substituted "Internal Revenue" for "United States" in subdivision (c).

6203.5. Worthless accounts. (a) A retailer is relieved from liability to collect use tax that became due and payable, insofar as the measure of the tax is represented by accounts that have been found to be worthless and charged off for income tax purposes by the retailer or, if the retailer is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A retailer that has previously paid the amount of the tax may, under rules and regulations prescribed by the board, take as a deduction the amount found worthless and charged off by the retailer. If these accounts are thereafter in whole or in part collected by the retailer, the amount collected shall be included in the first return filed after the collection and the amount of the tax shall be paid with the return. For purposes of this subdivision, the term "retailer" shall include any entity affiliated with the retailer under Section 1504 of Title 26 of the United States Code.

(b) (1) In the case of accounts held by a lender, a retailer or lender that makes a proper election under paragraph (4) shall be entitled to a deduction or refund of the tax that the retailer has previously reported and paid if all of the following conditions are met:

(A) A deduction was not previously claimed or allowed on any portion of the accounts.

(B) The accounts have been found worthless and written off by the lender in accordance with the requirements of subdivision (a).

(C) The contract between the retailer and the lender contains an irrevocable relinquishment of all rights to the account from the retailer to the lender.

(D) The retailer remitted the tax on or after January 1, 2000.

(E) The party electing to claim the deduction or refund under paragraph (4) files a claim in a manner prescribed by the board.

(2) If the retailer or the lender thereafter collects in whole or in part any accounts, one of the following shall apply:

(A) If the retailer is entitled to the deduction or refund under the election specified in paragraph (4), the retailer shall include the amount collected in its first return filed after the collection and pay tax on that amount with the return.

(B) If the lender is entitled to the deduction or refund under the election specified in paragraph (4), the lender shall pay the tax to the board in accordance with Section 6451.

(3) For purposes of this subdivision, the term "lender" means any of the following:

(A) Any person that holds a retail account which that person purchased directly from a retailer who reported the tax.

(B) Any person that holds a retail account pursuant to that person's contract directly with the retailer that reported the tax.

(C) Any person that is either an affiliated entity, under Section 1504 of Title 26 of the United States Code, of a person described in subparagraph (A) or (B), or an assignee of a person described in subparagraph (A) or (B).

(4) For purposes of this section, a "proper election" shall be established when the retailer that reported the tax and the lender shall prepare and retain an election, signed by both parties, designating which party is entitled to claim the deduction or refund. This election may not be amended or revoked unless a new election, signed by both parties, is prepared and retained by the retailer and the lender.

History—Added by Stats. 1959, p. 3263, in effect September 18, 1959. Adopted from former Section 6453.5, added by Stats. 1957, p. 1938, in effect September 11, 1957, except that Section 6203.5 applies solely to use tax, substitutes "retailer" for "seller," adds the provision for relief from liability, changes from a "credit … against the tax shown to be due on the return" to a "deduction," deletes the requirement that the credit be limited to accounts found to be worthless and actually charged off "during the period covered by the return," and rearranges wording for clarity. Stats. 1970, p. 1057, in effect November 23, 1970, added to first sentence, "or, if the retailer is not required to file income tax returns, charged off in accordance with generally accepted accounting principles.", and deleted "for income tax purposes" from the end of the second sentence. Stats. 2000, Ch. 600 (AB 599), in effect January 1, 2001, added subdivision letter designation (a) before first paragraph, substituted "that" for "which" after "collect use tax", deleted "subsequent to September 30, 1957" after "due and payable", substituted "that" for "which" after "by accounts", and added "by the retailer" after "tax purposes" therein; substituted "A retailer that" for "If the retailer" before "has previously", deleted ", he" after "of the tax", and added "by the retailer" after "charged off" in the second sentence; substituted "these" for "any such" after "If", deleted "so" after "the amount", substituted "the" for "such" after "return filed after" and substituted "shall be" for "thereon" after "of the tax" in the third sentence, and added the fourth sentence therein; and added subdivision (b). Stats. 2011, Ch. 727 (AB 242), in effect January 1, 2012, substituted "A deduction was not" for "No deduction was" before "previously claimed" in subparagraph (A) of paragraph (1) of subdivision (b); and substituted "prepare and retain" for "file" after "the lender shall", deleted "with the board" after "an election", substituted "prepared and retained by the retailer and the lender" for "filed with the board" after "new election, signed by both parties," in paragraph (4) of subdivision (b). Stats. 2012, Ch. 362 (AB 2688), in effect January 1, 2013, substituted "that" for "who" in paragraph (1) and in subparagraphs (A), twice in (B) and in (C) of paragraph (3), substituted "For purposes … retailer that" for "Prior to claiming any deduction or refund under this subdivision, the retailer who" after "(4)", and deleted "shall" after "and the lender" in paragraph (4) of subdivision (b).

6204. Tax as debt. The tax required to be collected by the retailer and any amount unreturned to the customer which is not tax but was collected from the customer under the representation by the retailer that it was tax constitutes debts owed by the retailer to this state.

History—Stats. 1968, p. 1144, in effect November 13, 1968, added the clause "and any amount unreturned to the customer which is not tax but was collected from the customer under the representation by the retailer that it was tax."

6205. Unlawful advertising. It is unlawful for any retailer to advertise or hold out or state to the public or to any customer, directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the retailer or that it will not be added to the selling price of the property sold or that if added it or any part thereof will be refunded.

6206. Separate statement of tax. The tax required to be collected by the retailer from the purchaser shall be displayed separately from the list price, the price advertised in the premises, the marked price, or other price on the sales check or other proof of sales.

6207. Unlawful acts. Any person violating Sections 6203, 6205, or 6206 is guilty of a misdemeanor.

Article 2. Registration

Text of Section Operative January 1, 2024, Through December 31, 2028

6225. Use tax registration. (a) In order to facilitate the collection of use tax imposed by this part, a qualified purchaser shall register with the department on a form prescribed by the department and shall set forth the name under which the qualified purchaser transacts or intends to transact business, the location of the qualified purchaser's place or places of business, and other information as the department may require.

(b) Article 1 (commencing with Section 6451) of Chapter 5 shall apply to a qualified purchaser, except that a return showing the total sales price of the tangible personal property purchased by the qualified purchaser, the storage, use, or other consumption of which became subject to the use tax during the preceding calendar year, and which was not paid to a retailer required to collect the tax or which was not paid to a retailer the qualified purchaser reasonably believed was required to collect the tax, shall be filed, together with a remittance of the amount of the tax due, with the department on or before April 15.

(1) The person is not required to hold a seller's permit pursuant to this part.

(2) The person is not required to be registered pursuant to Section 6226.

(3) The person is not a holder of a use tax direct payment permit as described in Section 7051.3.

(4) The person makes more than ten thousand dollars ($10,000) in purchases subject to use tax per calendar year and that tax has not otherwise been paid on those purchases to a retailer engaged in business in this state or to a retailer who is authorized by the department, under the rules and regulations as it may prescribe, to collect the tax.

(5) The person is not otherwise registered with the department to report use tax.

(d) This section shall not apply to the purchase of a vehicle, vessel, or aircraft as defined in Article 1 (commencing with Section 6271) of Chapter 3.5.

(e) This section shall remain in effect only until January 1, 2029, and as of that date is repealed.

History—Added by Stats. 2009, Ch. 16XXXX (AB 18XXXX), in effect July 28, 2009, but operative October 23, 2009. Stats. 2023, Ch. 355 (AB 1097), in effect January 1, 2024, replaced "board" with "department" throughout; deleted "of this part" after "Chapter 5" in subdivision (b); substituted "makes more than ten" for "receives at least one hundred" after "The person" in paragraph (4) of subdivision (c); substituted "$10,000" for "$100,000" after "thousand dollars" in paragraph (4) of subdivision (c); substituted "purchases subject to use tax per" for "gross receipts from business operations" before "per calendar year" in paragraph (4) of subdivision (c); added "and that tax has not otherwise been paid on those purchases to a retailer engaged in business in this state or to a retailer who is authorized by the department, under the rules and regulations as it may prescribe, to collect the tax" after "per calendar year" in paragraph (4) of subdivision (c); deleted "of this part" after "of Chapter 3.5" in subdivision (d); added subdivision (e).

Text of Section Operative January 1, 2029

6225. Use tax registration.(a) In order to facilitate the collection of use tax imposed by this part, a qualified purchaser shall register with the board on a form prescribed by the board and shall set forth the name under which the qualified purchaser transacts or intends to transact business, the location of the qualified purchaser’s place or places of business, and other information as the board may require.

(1) The person is not required to hold a seller’s permit pursuant to this part.

(2) The person is not required to be registered pursuant to Section 6226.

(3) The person is not a holder of a use tax direct payment permit as described in Section 7051.3.

(4) The person receives at least one hundred thousand dollars ($100,000) in gross receipts from business operations per calendar year.

(5) The person is not otherwise registered with the board to report use tax.

(d) This section shall not apply to the purchase of a vehicle, vessel, or aircraft as defined in Article 1 (commencing with Section 6271) of Chapter 3.5.

(e) This section shall become operative on January 1, 2029.

History—Added by Stats. 2023, Ch. 355 (AB 1097), in effect January 1, 2023, but operative January 1, 2023.

6226. Registration of retailers. Every retailer selling tangible personal property for storage, use, or other consumption in this State shall register with the board and give the name and address of all agents operating in this State, the location of all distribution or sales houses or offices or other places of business in this State, and such other information as the board may require.

Article 3. Presumptions and Resale Certificates

6241. Presumption of purchase for use; resale certificate. For the purpose of the proper administration of this part and to prevent evasion of the use tax and the duty to collect the use tax, it shall be presumed that tangible personal property sold by any person for delivery in this State is sold for storage, use, or other consumption in this State until the contrary is established. The burden of proving the contrary is upon the person who makes the sale unless he takes from the purchaser a certificate to the effect that the property is purchased for resale.

6242. Effect of certificate. The certificate relieves the person selling the property from the duty of collecting the use tax only if taken in good faith from a person who is engaged in the business of selling tangible personal property and who holds the permit provided for by Article 2 (commencing with Section 6066) of Chapter 2 of this part.

History—Stats. 1966, p. 176, in effect July 1, 1967, substituted "the duty of collecting the use tax" for "the burden of proof", added reference to section 6066, and deleted the last clause providing "and who, at the time of purchasing the tangible personal property, intends to sell it in the regular course of business or is unable to ascertain at the time of purchase whether the property will be sold or will be used for some other purpose."

6243. Form of certificate. The certificate shall be signed by and bear the name and address of the purchaser, shall indicate the number of the permit issued to the purchaser, and shall indicate the general character of the tangible personal property sold by the purchaser in the regular course of business. The certificate shall be substantially in such form as the board may prescribe.

6243.1. Lessors of mobile transportation equipment. Notwithstanding any other provision of law, any person, other than a person exempt from payment of use tax in accordance with Section 6352, who leases mobile transportation equipment and who cannot otherwise properly issue a resale certificate may issue such a certificate for the limited purpose of reporting his use tax liability based on fair rental value as provided in subdivision (d) of Section 6094 and subdivision (d) of Section 6244.

With respect to matters arising out of mergers or acquisitions, the provisions of this section shall apply to any matters pending before the board on the effective date of this section.

History—Added by Stats. 1979, Ch. 1161, operative January 1, 1980.

6244. Liability of purchaser; accommodation loans. (a) If a purchaser who gives a resale certificate or purchases property for the purpose of reselling it makes any storage or use of the property other than retention, demonstration, or display while holding it for sale in the regular course of business, the storage or use is taxable as of the time the property is first so stored or used.

(b) If such use is limited to the loan of the property to customers as an accommodation while awaiting delivery of property purchased or leased from the lender or while property is being repaired for customers by the lender, the measure of the tax is the fair rental value of the property for the duration of each loan so made.

(c) If the property is used frequently for purposes of demonstration or display while holding it for sale in the regular course of business and is used partly for other purposes, the measure of the tax is the fair rental value of the property for the period of such other use or uses.

(d) If the property is mobile transportation equipment as defined in Section 6023, and the use is limited to leasing the equipment, the purchaser may elect to pay his use tax measured by the fair rental value, if the election is made on or before the due date of a return for the period in which the equipment is first leased. The election must be made by reporting tax measured by the fair rental value on the return for that period, or in such other manner as the board may prescribe. Tax must thereafter be paid with the return for each reporting period, measured by the fair rental value, whether the equipment is within or without the state. The election may not be revoked with respect to the equipment as to which it is made.

(e) As used in subdivision (d), the term "fair rental value" means the rentals required by the purchaser under the lease except where the board determines that such rentals are nominal. The term shall not include any reimbursement payments made by the lessee to the purchaser for such use tax.

History—Stats. 1965, p. 5448 (First Extra Session), operative August 1, 1965, deleted last sentence providing, "If the sole use of the property, other than retention, demonstration, or display in the regular course of business, is the rental of the property while holding it for sale, the purchaser may elect to pay the tax on the use measured by the amount of the rental charged rather than the sales price of the property to him." Stats. 1967, p. 2062, in effect November 8, 1967, added most of the language of (b). Stats. 1968, p. 2000, in effect November 13, 1968, divided the former section into subdivisions, added "or while property is being repaired for customers by the lender" to (b), and added (c). Stats. 1971, p. 3835, in effect December 16, 1971, operative January 1, 1972, added subdivision (d). Stats. 1978, Ch. 1211, effective January 1, 1979, deleted the last sentence in (d): "The purchaser's use tax liability may not be charged to the lessee as separately stated tax or tax reimbursement." Stats. 1980, Ch. 1352, effective September 30, 1980, added (e).

Special Test Equipment Purchased for Resale by Government Contractor.—In order for tax to apply under this section, the taxable "use" must occur while the purchaser is the owner, since the taxable use is that which is incident to ownership of the property. Lockheed Aircraft Corp. v. State Board of Equalization; Aerojet General Corp. v. State Board of Equalization (1978) 81 Cal.App.3d 257.

Use Tax Due is the Price Paid by Taxpayer.—When a taxpayer uses tangible personal property for purposes other than retention, demonstration or display it must pay use tax based on the price paid by the taxpayer for the goods rather than the cost to the manufacturer of the raw material used in the manufacture of the property involved. Mercedes Benz v. State Board of Equalization (1982) 127 Cal.App.3d 871.

6244.5. Leases of qualifying manufacturing property; "cost price." [Repealed by Stats. 2021, Ch. 432, (SB 824) effective January 1, 2021.]

6245. Resale certificate; fungible goods. If a purchaser gives a certificate with respect to the purchase of fungible goods, or purchases those goods for resale in the regular course of business, and thereafter commingles these goods with other fungible goods not so purchased but of such similarity that the identity of the constituent goods in the commingled mass cannot be determined, sales from the mass of commingled goods shall be deemed to be sales of the goods so purchased until a quantity of commingled goods equal to the quantity of purchased goods so commingled has been sold. Goods removed from the commingled mass for consumption shall be deemed to be consumption of goods not so purchased until a quantity of commingled goods equal to the quantity of goods not so purchased has been consumed.

History—Stats. 1943, p. 2455, operative July 1, 1943, renumbered former provision as Section 6246 and added present provisions. Stats. 1983, Ch. 337, in effect January 1, 1984, added "or purchases … business" after the first "goods" in the first sentence and added the second sentence.

6245.5. Exemption certificate; fuel purchases. (a) A person qualified under subdivision (b) may issue a certificate to a retailer with respect to the amount of manufacturers' or importers' excise tax imposed pursuant to Section 4081 or 4091 of the Internal Revenue Code for purposes of subparagraph (B) of paragraph (4) of subdivision (c) of Section 6011 or subparagraph (B) of paragraph (4) of subdivision (c) of Section 6012 when purchasing fuel from the retailer.

(b) A person is qualified for purposes of this section if all of the following conditions are met:

(1) The person was entitled to either a direct refund or credit against his or her income tax for the manufacturers' or importers' excise tax imposed pursuant to Section 4081 or 4091 of the Internal Revenue Code for more than 50 percent of the person's purchases of fuel during the prior calendar year.

(2) The person's business remains substantially the same as during the prior calendar year whereby the person expects to be entitled to either a direct refund or credit against his or her income tax for the manufacturers' or importers' excise tax imposed pursuant to Section 4081 or 4091 of the Internal Revenue Code for more than 50 percent of the person's purchases of fuel.

(3) The person holds a valid California seller's permit.

(c) A person issuing a certificate for purposes of subparagraph (B) of paragraph (4) of subdivision (c) of Section 6011 or subparagraph (B) of paragraph (4) of subdivision (c) of Section 6012 is liable for use tax on the amount of the manufacturers' or importers' excise tax imposed pursuant to Section 4081 or 4091 of the Internal Revenue Code if the person used fuel purchased under the certificate in a manner whereby the person is not entitled to a direct refund or credit against his or her income tax of the federal excise tax.

(d) A person liable for the use tax under subdivision (c) of this section shall report and pay that use tax with the return for the reporting period in which the person uses the fuel in such a manner that the person is not entitled to a direct refund or credit against his or her income tax of the federal excise tax.

History—Added by Stats. 2000, Ch. 923 (AB 2894), in effect January 1, 2001.

6246. Presumption of purchase from retailer. It shall be further presumed that tangible personal property shipped or brought to this State by the purchaser was purchased from a retailer on or after July 1, 1935, for storage, use, or other consumption in this State.

History—Stats. 1943, p. 2455, operative July 1, 1943, added former provisions of Section 6245.

6247. Presumption of use; out-of-state delivery. On and after the effective date of this section, it shall be further presumed that tangible personal property delivered outside this State to a purchaser known by the retailer to be a resident of this State was purchased from a retailer for storage, use or other consumption in this State and stored, used or otherwise consumed in this State.

This presumption may be controverted by a statement in writing, signed by the purchaser or his authorized representative, and retained by the vendor, that the property was purchased for use at a designated point or points outside this State. This presumption may also be controverted by other evidence satisfactory to the board that the property was not purchased for storage, use, or other consumption in this State.

History—Added by Stats. 1953, p. 3385, in effect September 9, 1953.

Out-of-state border stores do not have to collect use tax on over-the-counter credit sales.—A retailer otherwise engaged in business in California does not have to collect California use tax on over-the-counter credit sales at the retailer's stores in Klamath Falls, Oregon, and Reno, Nevada, to customers with charge accounts bearing a California address. Montgomery Ward and Co. v. State Board of Equalization (1969) 272 Cal.App.2d 728, cert. denied (1970) 396 U.S. 1040.

6248. Presumption of purchase for use; vehicles, vessels, and aircraft. (a) On and after the effective date of this section there shall be a rebuttable presumption that any vehicle, vessel, or aircraft bought outside of this state, and which is brought into California within 12 months from the date of its purchase, was acquired for storage, use, or other consumption in this state and is subject to use tax if any of the following occur:

(1) The vehicle, vessel, or aircraft was purchased by a California resident as defined in Section 516 of the Vehicle Code.

(2) In the case of a vehicle, the vehicle was subject to registration under Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code during the first 12 months of ownership.

(3) In the case of a vessel or aircraft, that vessel or aircraft was subject to property tax in this state during the first 12 months of ownership.

(4) The vehicle, vessel, or aircraft is used or stored in this state more than one-half of the time during the first 12 months of ownership.

(b) This presumption may be controverted by documentary evidence that the vehicle, vessel, or aircraft was purchased for use outside of this state during the first 12 months of ownership. This evidence may include, but is not limited to, evidence of registration of that vehicle, vessel, or aircraft, with the proper authority, outside of this state.

(c) This section does not apply to any vehicle, vessel, or aircraft used in interstate or foreign commerce pursuant to regulations prescribed by the board.

(d) The amendments made to this section by the act adding this subdivision do not apply to any vehicle, vessel, or aircraft that is either purchased, or is the subject of a binding purchase contract that is entered into, on or before the operative date of this subdivision.

(e) (1) Notwithstanding subdivision (a), aircraft or vessels brought into this state for the purpose of repair, retrofit, or modification shall not be deemed to be acquired for storage, use, or other consumption in this state.

(2) This subdivision does not apply if, during the period following the time the aircraft or vessel is brought into this state and ending when the repair, retrofit, or modification of the aircraft or vessel is complete, more than 25 hours of airtime in the case of an airplane or 25 hours of sailing time in the case of a vessel are logged on the aircraft or vessel by the registered owner of that aircraft or vessel or by an authorized agent operating the aircraft or vessel on behalf of the registered owner of the aircraft or vessel. The calculation of airtime or sailing time logged on the aircraft or vessel does not include airtime or sailing time following the completion of the repair, retrofit, or modification of the aircraft or vessel that is logged for the sole purpose of returning or delivering the aircraft or vessel to a point outside of this state.

(3) This subdivision applies to aircraft or vessels brought into this state for the purpose of repair, retrofit, or modification on or after the operative date of this subdivision.

(f) The presumption set forth in subdivision (a) may be controverted by documentary evidence that the vehicle was brought into this state for the exclusive purpose of warranty or repair service and was used or stored in this state for that purpose for 30 days or less. The 30-day period begins when the vehicle enters this state, includes any time of travel to and from the warranty or repair facility, and ends when the vehicle is returned to a point outside the state. The documentary evidence shall include a work order stating the dates that the vehicle is in the possession of the warranty or repair facility and a statement by the owner of the vehicle specifying dates of travel to and from the warranty or repair facility.

(g) The amendments made by Section 2 of Chapter 226 of the Statutes of 2004 adding this subdivision shall become operative on October 1, 2004.

(h) The Legislative Analyst's office shall conduct a study of the economic impacts of the amendments made to this section by the act adding this subdivision, and shall report its findings to the Legislature on or before June 30, 2006.

(i) This section shall remain in effect only until and including June 30, 2007, and as of July 1, 2007, is repealed.

History—Added by Stats. 1963, p. 3834, operative October 1, 1963. Stats. 2004, Ch. 226 (SB 1100), in effect August 16, 2004, revised entire statute which read, "On and after the effective date of this section there shall be a rebuttable presumption that any vehicle bought outside of this State which is brought into California within 90 days from the date of its purchase, and which is subject to registration under Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, was acquired for storage, use, or other consumption in this State." Stats. 2006, Ch. 49 (AB 1809), in effect June 30, 2006, substituted "state, and" for "State" after "outside of this" in subdivision (a); substituted "Section 2 of Chapter 226 of the Statutes of 2004" for "the act" after "The amendments made by" in subdivision (f); substituted "and including June 30, 2007" for "July 1, 2006" after "effect only until" and substituted "July 1, 2007," for "that date" after "and as of" in subdivision (h). Stats. 2006, Ch. 352 (AB 2239), in effect September 20, 2006, added subdivision (f), and relettered former subdivisions (f), (g), and (h) as (g), (h), and (i), respectively.

6248. Presumption of purchase for use; vehicles, vessels, and aircraft. (a) There shall be a rebuttable presumption that any vehicle, vessel, or aircraft bought outside of this state on or after the effective date of this section, and which is brought into California within 12 months from the date of its purchase, was acquired for storage, use, or other consumption in this state and is subject to use tax if any of the following occurs:

(1) The vehicle, vessel, or aircraft was purchased by a California resident as defined in Section 516 of the Vehicle Code. For purposes of this section, a closely held corporation or limited liability company shall also be considered a California resident if 50 percent or more of the shares or membership interests are held by shareholders or members who are residents of California as defined in Section 516 of the Vehicle Code.

(2) In the case of a vehicle, the vehicle was subject to registration under Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code during the first 12 months of ownership.

(3) In the case of a vessel or aircraft, that vessel or aircraft was subject to property tax in this state during the first 12 months of ownership.

(4) If purchased by a nonresident of California, the vehicle, vessel, or aircraft is used or stored in this state more than one-half of the time during the first 12 months of ownership.

(c) This section shall not apply to any vehicle, vessel, or aircraft used in interstate or foreign commerce pursuant to regulations prescribed by the board.

(d) The amendments made to this section by the act adding this subdivision shall not apply to any vehicle, vessel, or aircraft that is either purchased, or is the subject of a binding purchase contract that is entered into, on or before the operative date of this subdivision.

(e) Notwithstanding subdivision (a), any aircraft or vessel brought into this state exclusively for the purpose of repair, retrofit, or modification shall not be deemed to be acquired for storage, use, or other consumption in this state if the repair, retrofit, or modification is, in the case of a vessel, performed by a repair facility that holds an appropriate permit issued by the board and is licensed to do business by the city, county, or city and county in which it is located if the city, county, or city and county so requires, or, in the case of an aircraft, performed by a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility.

History—Added by Stats. 2004, Ch. 226 (SB 1100), in effect August 16, 2004. Stats. 2006, Ch. 49 (AB 1809), in effect June 30, 2006, substituted "2007" for "2006" after "July 1," in subdivisions (a) and (b), and substituted "state" for "State" after "in this" twice in subdivision (a). Stats. 2008, Ch. 763 (AB 1452), in effect September 30, 2008, revised entire statute which read, "(a) On and after July 1, 2007, there shall be a rebuttable presumption that any vehicle bought outside of this state which is brought into California within 90 days from the date of its purchase, and which is subject to registration under Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, was acquired for storage, use, or other consumption in this state. (b) This section shall become operative on July 1, 2007."; and added new subdivisions (b), (c), (d), (e), and (f). Stats. 2009, Ch. 545 (AB 1547), in effect January 1, 2010, substituted "There" for "On and after the effective date of this section, there" and added "on or after the effective date of this section" after "of this state" in subdivision (a), added second sentence in subdivision (1) and substituted "If purchased by … the" before "vehicle, vessel" in subdivision (4) of subdivision (a); deleted subdivision number designation (1) in subdivision (e) and added "exclusively" after "into this state" and "if the repair … maintenance facility" after "in this state" therein; deleted former subdivisions (2) and (3) of subdivision (e), which provided the following: "(2) This subdivision shall not apply if, during the period following the time the aircraft or vessel is brought into this state and ending when the repair, retrofit, or modification of the aircraft or vessel is complete, more than 25 hours of airtime in the case of an airplane or 25 hours of sailing time in the case of a vessel is logged on the aircraft or vessel by the registered owner of that aircraft or vessel or by an authorized agent operating the aircraft or vessel on behalf of the registered owner of the aircraft or vessel. The calculation of airtime or sailing time logged on the aircraft or vessel shall not include airtime or sailing time following the completion of the repair, retrofit, or modification of the aircraft or vessel that is logged for the sole purpose of returning or delivering the aircraft or vessel to a point outside of this state. (3) This subdivision shall apply to aircraft or vessels brought into this state for the purpose of repair, retrofit, or modification on or after the operative date of this subdivision." Stats. 2010, Ch. 328 (SB 1330), in effect January 1, 2011, substituted "company" for "corporation" after "limited liability" in paragraph (1) of subdivision (a). Stats. 2011, Ch. 727 (AB 242), in effect January 1, 2012, added "city," after "business by the", added ", or city and county" after "county", and added "if the city, county, or city and county so requires" after "in which it is located" in subdivision (e).

6249. Exemption; member of armed services. A member of the armed services on active duty who purchases a vehicle prior to the effective date of his discharge shall not be subject to the presumption established by Section 6248. He shall not be deemed to have purchased the vehicle for storage, use or other consumption in this State unless at the time of purchase he intended to use it in this State, such intent resulting from his own determination, rather than from official orders received as a member of the armed services transferring him to this State.

History—Added by Stats. 1963, p. 3834, operative October 1, 1963.

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