Publication 44, District Taxes (Sales and Use Taxes)
Place of Sale

A major factor that affects a retailer’s liability for district tax is the "place of sale" (the retailer’s business location). Please read this section and District Taxes if your business is located in a district or you have multiple locations.

Retailers with one location

If you are a retailer whose only business location is in a district, you must generally report transactions (sales) tax on all your sales unless:

  • You, your agent, or a common carrier ships or delivers the property, according to the contract of sale, to an out-of-state or out-of-district location for use outside the district, or
  • The sale is exempt from the general sales tax or is otherwise exempt from transactions (sales) tax.

If your business is not located in a district, generally, your sales are not subject to transactions (sales) tax. However, you may be liable for district use tax if you are engaged in business in a district, including if your total combined sales in California or for delivery in California exceed $500,000 in the current or preceding calendar year.

Example: You are a retailer located inside California with a single retail location in Los Angeles County but not in a city that imposes a district tax. You do not have any physical presence in any cities in Los Angeles County or districts outside of Los Angeles County. Most of your sales are made over the counter at your Los Angeles location, but you occasionally ship merchandise by common carrier directly to your customers throughout California. During calendar year 2018, your total sales of merchandise at your Los Angeles location and for delivery directly to your customers throughout California exceeded $500,000.

For your sales prior to April 25, 2019, you collected the Los Angeles County and Los Angeles County Metro Transportation Authority (MTA) district transactions (sales) taxes on all over-the-counter sales made at your location but were not considered engaged in business in any cities imposing a district tax or in any districts outside of Los Angeles County, and you were not required to collect any district use tax on sales delivered to your customers in other districts.

However, beginning April 25, 2019, you are a retailer engaged in business in all districts in California and are required to collect district use tax when you make a taxable retail sale to a customer located in a district that imposes a district tax.

For more information about being engaged in business in a district, including the district use tax collection requirement that began April 25, 2019, see District Taxes.

Retailers with multiple locations

If you are a retailer with more than one location, the place of sale is generally considered the location at which you carry on principal negotiations even if you must forward the order to another location for acceptance, approval of credit, shipment, or billing. Your employees’ activities will be attributed to the location from which they work. Consequently, sales made or negotiated by employees or at places located in districts are generally subject to transactions tax.

As with a single location business, you are allowed an exemption from district tax for property that is shipped, according to the contract of sale, to an out-of-district location for use outside the district or for property that is also exempt from the sales and use tax.

You are generally not liable for transactions (sales) tax on sales made at business locations outside districts. We may, however, hold you liable for collecting district use tax if you ship the property into a district where you are engaged in business. However, you are not required to collect the district use tax if you ship or deliver the merchandise to the purchaser at their principal residence address or principal business address outside of a district, and you accept a declaration in good faith, per Regulation 1823.4, Place of Delivery of Tangible Personal Property Generally, and Regulation 1823.5, Place of Delivery of Certain Vehicles, Aircraft and Undocumented Vessels. For more information, see Delivery outside district. Retailers with multiple locations have their place of sale prescribed by the Transactions and Use Tax Regulation 1822, Place of Sale for Purposes of Transactions (Sales) and Use Taxes.

Vending machine operators

For vending machine operators, the place of sale is the location of the vending machine. If you are a vending machine operator, generally you should pay tax when buying inventory. When you make a tax-free purchase of inventory, you must report use tax based on the location of the machine where the inventory is sold. When a machine is located in a district, you are liable for state, local, and district tax. For more information, see Regulation 1574, Vending Machine Operators, and publication 118, Vending Machine Food Sales.

Itinerant merchants

"Itinerant merchants" are defined as retailers with no permanent place of business. This category includes certain door-to-door salespeople.

As an itinerant merchant, your place of sale is the permanent address shown on your seller’s permit. If your permanent address is located in a district, you are generally liable for district tax on your sales unless you deliver the property to the buyer outside the district for use outside the district. If your permanent address is not in a district, your sales are generally exempt from transactions (sales) tax. However, you may be subject to district use tax if you solicit the sale or are otherwise engaged in business in a district and ship or deliver the property to the buyer in the district. For the definition of "engaged in business," see What does "engaged in business" in a district mean?

Businesses qualifying as section 6015 retailers

A business that uses salespeople, representatives, peddlers, canvassers, agents, or other individuals who operate under the direction of or obtain property from the business may be treated as the retailer under R&TC section 6015(b) of the Sales and Use Tax Law. As a section 6015 retailer, the business is responsible for reporting and paying tax on any sales made by these individuals. Section 6015 retailers include operators of certain school book clubs.

If you qualify as a section 6015 retailer, your place of sale is the location from which your salespeople, representatives, peddlers, canvassers, or agents operate. Sales made by people located in districts are generally subject to district tax unless the property is delivered to the buyer outside the district for use outside the district. Sales made by people located outside districts are generally exempt from district transactions (sales) tax but may be subject to district use tax if:

  • The sale is solicited in a district, or
  • The retailer is otherwise engaged in business in a district, and the property is shipped or delivered to the buyer in the district.

Auctioneers

For auctioneers, the place of sale is the auction location. If you are an auctioneer holding an auction in a district, your sales are subject to that district tax unless otherwise exempt, such as sales for resale.

Out-of-state retailers engaged in business in California

R&TC section 6203, Collection by Retailer, in part, defines a retailer engaged in business in California as any of the following:

  • 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.
  • 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.
  • 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 individuals related to the retailer that exceed five hundred thousand dollars ($500,000).

For purposes of this section, a person is related to a retailer if they have a relationship with the retailer described in Internal Revenue Code section 267(b) and the related regulations.

An out-of-state retailer whose only presence in the state is a stock of tangible personal property is considered a California retailer, regardless of the amount of their sales for delivery in California, and the place of sale is the location from which delivery or shipment is made. If the location is in a district, the sale may be subject to district tax.

Online marketplace sellers

An online marketplace is a website where third-party sellers (marketplace sellers) list products for sale, and the sales of such products are processed by the operator of the website (also known as a marketplace facilitator). If you are a marketplace seller that stores tangible personal property in California, you are engaged in business in this state, required to register with us, and responsible for reporting and paying tax on your sales of merchandise for delivery in California. This is true even if your inventory is stored at a California fulfillment center owned and operated by a third-party.

Online marketplace sellers required to obtain a seller’s permit must follow the same guidelines when determining whether they are engaged in business in other districts and responsible for district use tax. For more information, see What does "engaged in business" in a district mean?

For more information about retailers that store inventory in California, see our Fulfillment Centers industry guide and publication 109, Internet Sales.

Requirements for marketplace facilitators beginning October 1, 2019

Please note: Beginning October 1, 2019, a marketplace facilitator (as defined in R&TC section 6041, Marketplace Facilitator Act) is the seller and retailer for each retail sale facilitated for a marketplace seller through its marketplace (for example, an Internet shopping platform) for purposes of determining whether the marketplace facilitator is required to register with us. Also, beginning October 1, 2019, a marketplace facilitator that is required to register with us will be the retailer required to pay sales tax or collect and pay use tax, and beginning January 1, 2022, collect and pay any taxes and fees administered according to the Fee Collection Procedures Law imposed on the consumer in relation to the retail sale, on each retail sale facilitated for a marketplace seller through its marketplace.

Revision June 2026