Publication 123, California Businesses: How to Identify and Report California Use Tax Due

This publication explains how California businesses should identify, calculate, and report use tax on purchases made from out-of-state sellers when sales tax is not collected. It emphasizes that use tax ensures fair competition between instate and out of state retailers and applies when merchandise is used, stored, or consumed in California. The document also outlines available resources to help businesses understand their responsibilities.

More specifically, the publication describes how to review purchase invoices, determine proper tax rates based on the location of first use, and understand when shipping and handling charges are taxable. It outlines several methods for reporting and paying use tax, including through a seller's permit, qualified purchaser registration, a consumer use tax account, or an income tax return. Additional taxes and fees for certain products, as well as special rules for vehicles, vessels, and aircraft, are also discussed to help businesses fully meet their obligations.

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

Revision July 2026