Internet Auction Sales and Purchases (Publication 177)
Use Tax On Out-of-State Purchases

Use tax on out-of-state purchases

When you purchase merchandise from an out-of-state retailer, you are liable for the use tax due on your out-of-state purchases. The use tax rate is the same as the sales tax rate for any given California location.

Whether the seller charges a lump-sum price or itemizes the merchandise price and other charges, tax is due on the entire purchase price. Any service fees related to a taxable sale are generally taxable, however, shipping and delivery charges may not be taxable (see Shipping and delivery charges).

Generally, if you purchase merchandise from a private party located out-of-state and he or she makes fewer than three sales in a 12-month period, the purchase would not be subject to use tax since the sale is considered an occasional sale. However, if the private party makes three or more sales in a year, the purchase would be subject to use tax.

Most Internet auction houses provide a sales history of the vendor, which may be useful in deciding whether the transaction qualifies as an occasional sale. To determine or obtain proof that a private party's sale to you is an occasional sale, you may have to contact the individual to find out if he or she has made three or more sales in a 12-month period. If so, you would have to report the use tax.