Publication 35, Interior Designers and Decorators
Purchases, Resale Certificates, and Use Tax
Under certain circumstances, you are required to pay amounts for tax on your purchases. This page describes how tax applies to typical business purchases.
Purchases for resale
When you are the retailer of an item, you may buy that item for resale without paying an amount for sales and use tax to your vendor. You may also buy for resale those materials you physically incorporate into items you sell, such as fabric. To make purchases of this type, you must give the seller a properly completed resale certificate. You should not issue a resale certificate when you are buying a product that you will use rather than sell, use before you sell it, or use for a personal purpose. You may not furnish resale certificates to construction contractors for work they perform on real property.
If you know at the time you make a purchase that you will not resell the merchandise you are buying, you should not use a resale certificate for that transaction. In addition, it is not legal for you to give out your permit number to any other party, including your clients, for their use at retail stores or furniture marts to make purchases without paying sales tax.
For more information on issuing resale certificates, see Regulation 1668, Sales for Resale, and publication 103, Sales for Resale.
Merchandise you use in your business
Tax generally applies to purchases of items that you will use in your business rather than resell. Examples include cleaning supplies, office supplies, stationery, business cards, display fixtures, tools, and equipment. You should pay an amount for sales or use tax to your suppliers when you buy these and similar items. If you use an item you originally purchased for resale, that use is generally taxable (see below).
Purchases subject to use tax
If you purchase products without paying tax and use the merchandise for a purpose other than resale, you must generally pay use tax with your sales and use tax return. The use tax rate is the same as the sales tax rate for your location.
Common examples of situations where you may owe use tax include:
- Giving an item purchased for resale to a family member, friend, or client.
- Using in your home or business an item purchased for resale.
- Using in your business office supplies, tools, or equipment you purchased without paying tax.
- Using, storing, or giving away items purchased from an out-of-state seller who did not collect California sales or use tax on your purchase.
To report your use tax liability, enter the purchase price for the items on your sales and use tax return as Purchases Subject to Use Tax.
Typical situations—purchases subject to use tax
Items used for demonstration and display
If you remove an item from your resale inventory and use it for demonstration or display, you do not owe use tax provided the item remains for sale. However, if you use a demonstration or display item for any additional purpose—including personal use—or you do not offer it for sale while it is used for demonstration or display, you owe use tax on its purchase price. For more information, see Regulation 1669, Demonstration, Display and Use of Property Held for Resale—General.
Purchases from out-of-state vendors
You generally owe use tax when you purchase merchandise from an out-of-state vendor and use, store, give away, or consume the merchandise in this state. If the vendor does not collect the tax on your purchase, you must pay the tax directly to our agency.
Some out-of-state retailers are authorized to collect and pay California use tax. If such a retailer charges you California tax, you should obtain a receipt from them. It must describe the item and show the purchase amount; the tax amount; the vendor’s name, address, and California seller’s permit number (or use tax registration number); and your name and address.
You should also check the tax rate applied to your purchase. While out-of-state vendors often apply tax at the statewide rate, you are liable for the use tax at the full rate in effect at the California location where you use or store the item. If the vendor charged you tax at a lower rate than the rate in effect for your location, you owe the remaining use tax.
Purchases made over the Internet
Except for the purchase of electronically transmitted products such as software or digital graphics, tax applies to your Internet purchases in the same way it does to your purchases from brick-and-mortar stores or mail-order dealers. You owe use tax when:
- You purchase goods over the Internet from an out-of-state retailer,
- The seller does not collect an amount for California sales or use tax from you, and
- The merchandise was delivered for your own use in California.
You must pay the use tax on the purchase with your next regularly filed sales and use tax return.
Tax deductions related to taxable purchases
If you pay another state’s sales tax on a purchase or sell an item on which you have paid California tax before you use it, you may be able to take a deduction on your sales and use tax return. (See Tax-paid purchase resold prior to use, also see Credit for payment of another state’s tax.)
Revision July 2026