Local and District
Tax Guide for Retailers

Local and District Tax Guide for Retailers

We recognize that understanding tax issues related to your business can be time-consuming and complicated, and we want to help you get the information you need so that you can focus on starting and growing your business.

This guide is intended to provide you with general information regarding the collection, reporting, and paying of local and district taxes. This guide also provides examples to help you understand how local and district taxes apply to different scenarios you may encounter.

How to Use This Guide

Each section of this guide contains important information about local and district taxes. The Getting Started section provides key resources related to registration, filing returns, account maintenance, and other information a business may need.

The Local Tax section covers topics and examples related to the one percent portion of local tax included in the statewide sales and use tax rate of 7.25 percent, which requires an allocation of your sales.

The District Tax section covers topics and examples related to additional voter-approved transactions (sales) and use taxes imposed by cities, counties, and other local jurisdictions.

The Resources section provides links to additional information and references.

  1. The base statewide sales and use tax rate provided is subject to change. For current and historical base statewide sales and use tax rates, please see our webpage History of Statewide Sales and Use Tax Rates.

Get it in Writing

Local and district taxes can be complex and difficult to understand. If you have specific questions, we encourage you to put your questions in writing. This will allow us to give you the best advice and most thorough response. It may also protect you from owing additional tax, penalties, and interest in case there is incorrect information is provided. It's always important to have information in writing.

Requests for written advice can be emailed to CDTFA or mailed directly to the CDTFA office nearest you.

For more details, please see publication 8, Get It in Writing!

If You Need Help

If at any time you need assistance with topics included in this guide – or with topics not included – feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section.

If you have suggestions for improving this guide, please contact us via email.

The base statewide sales and use tax rate is currently 7.25 percent and is comprised of the following components:

  • 6.00 percent State
  • 1.00 percent Local Jurisdiction
  • 0.25 percent Local Transportation Fund

Tax rates exceeding the base statewide sales and use tax rate of 7.25 percent within specific areas are caused by voter-approved district taxes imposed by certain cities, counties and other local jurisdictions. Not all areas within California impose district tax. District tax rates vary between districts.

  1. The base statewide sales and use tax rate provided is subject to change. For current and historical base statewide sales and use tax rates, please see our webpage History of Statewide Sales and Use Tax Rates.

Local Tax

Local taxes are imposed by local jurisdictions, such as a city or county. The “Local Jurisdiction” portion is 1.00 percent and goes to the city or county where the sale or use occurs. The .25 percent “Local Transportation Fund” portion always goes to the county where the sale or use occurs. For more information on allocating your sales to report local tax, see the Local Tax section.

District Tax

District taxes are imposed under the Transactions and Use Tax Law. District tax rates range from 0.10 percent to 1.00 percent. Some areas may have more than one district tax in effect. District transactions (sales) taxes are due from retailers on their sales of tangible personal property in a district. District use taxes are due from purchasers for their use of tangible personal property in a district. However, retailers “engaged in business in a district” are generally required to collect the district's use tax from their customers on their taxable sales delivered into the district and report it on their sales and use tax return. For more information on district taxes, see the District Tax tab.

Effective Rates

For information about tax rates in specific areas, see our California City and County Sales and Use Tax Rates webpage.

You may find the tax rates for each district on our California City and County Sales and Use Tax Rates webpage. This webpage includes a look-up tool, Find a Sales and Use Tax Rate by Address, located under the Current Tax Rates section, which allows you to find a tax rate based on an address. The tax rate given will reflect the current rate of tax for the address that you enter.

Some cities within a special tax district have developed a database of addresses to help identify specific addresses located within their taxing boundaries. Please contact the cities directly if you have questions about the addresses.

Registration

Online Registration – Register with the CDTFA for a seller's permit, or to collect report and pay use tax as a courtesy for your customers; or add a business location to an existing account.

Filing and Payments

“Local Taxes” are sales and use taxes imposed by local jurisdictions, usually cities or counties, under the Bradley-Burns Uniform Local Sales and Use Tax Law. The current statewide sales and use tax rate is 7.25 percent, which includes 1.25 percent of local taxes (1.00 percent Local Jurisdiction and .25 percent Local Transportation Fund). When you file your sales and use tax return you are generally required to allocate your sales among local jurisdictions, either directly or through a countywide pool. The 1.00 percent portion goes to the city or county where the sale or use occurs. The .25 percent portion always goes to the county where the sale or use occurs. By properly allocating your sales you ensure that the local jurisdiction receives proper funding of local tax. These funds are used by local jurisdictions for their city or county operations, including for transportation.

The topics in this section may help you better understand local tax and how to allocate your sales correctly on your sales and use tax return. For guidance on properly reporting and allocating the local tax on the correct schedule please see the Reporting Your Local Tax heading.

Open All Close All

Whether you allocate your sales directly to a local jurisdiction or through a countywide pool generally depends on whether the transaction is a sales tax transaction or a use tax transaction.

Sales Tax Transactions

Generally, unless exempt or excluded from tax, your retail sale is subject to state and local sales tax if you have a place of business in California that participates in the sale and title to the goods passes to your customer within this state. If either of these conditions are not met, the applicable tax is use tax. Most local sales tax will go directly to the local jurisdiction where the sale occurred.

When a sale cannot be identified with a permanent place of business in this state, the sale will be allocated to the local jurisdictions through a countywide pool. For example, certain sellers, such as auctioneers, construction contractors making sales of fixtures, catering trucks, or other permit holders who operate in more than one location will allocate their sales through a countywide or statewide pool.

Use Tax Transactions

When sales tax does not apply, state and local use tax generally apply to the sales price of tangible personal property that was purchased from a retailer and stored, used, or otherwise consumed within the state. Local use tax is generally allocated to local jurisdictions through a countywide pool. Each local jurisdiction within a county, including the county itself, receives a prorated amount of the countywide pool (based on its proportion of the local tax that is directly allocated to jurisdictions within the county).

Place of Sale vs. Place of Use

Local sales tax transactions are generally allocated to the jurisdiction where the place of sale is located while use tax transactions are allocated to the jurisdiction where the property is first functionally used. The ship-to-address is presumed to be the place of first functional use. Therefore, when the transaction is subject to use tax you will generally allocate the local use tax to the jurisdiction into which the property was shipped through the countywide pool of the county in which that jurisdiction is located.

How local tax is allocated by a California retailer may vary.

California Retailers with one Location

If you are a retailer with only one place of business in California and that place of business participates in the sale, then the local sales tax will be allocated to the jurisdiction in which the place of business is located.

California Retailers with Multiple Locations

When you are a retailer with multiple locations in California, you must allocate your sales properly so that the local sales tax goes to the correct local jurisdiction. If you have more than one place of business in California and only one place of business participates in the sale, your sale will be allocated to the jurisdiction where that place of business is located. However, if you have more than one place of business that participates in the sale, your sale will be allocated to the local jurisdiction where the principal negotiations are carried out.

Example:

You own restaurants located in the cities of Napa and Fairfield. Your taxable sales in the city of Napa were $100,000 and in the city of Fairfield were $80,000.

When you file your sales and use tax return, you will allocate $100,000 of your sales to the city of Napa and $80,000 to the city of Fairfield.

Example:

You own retail stores in the cities of San Bernardino and Victorville. A customer at the San Bernardino store wants to purchase an item out-of-stock. The item is in stock at the Victorville store. The customer purchases the taxable item for $100 at the San Bernardino store and the Victorville store has it shipped to the customer's home located in Los Angeles County.

Since you have multiple locations in California that participated in the sale, the place of sale is the location where the principal negotiations took place. In this example the city of San Bernardino is considered the place where the principal negotiations took place as the customer purchased the item from you at that location. When you file your sales and use tax return, you will allocate $100 of your sales to the city of San Bernardino.

As an online retailer, you are required to pay applicable sales and/or use tax and allocate your sales like other retailers, but how you report and allocate your internet transactions can depend on a number of factors. For more information, see the Online Retailers: Registration and Local Tax section of this guide.

If you are an out-of-state retailer not located in California that is “engaged in business” in California or have voluntarily registered, you must collect, report, and pay state and local use tax on your sales for delivery in California.

If you are an out-of-state retailer you are engaged in business in California if, for example:

  • You maintain, occupy, or use, directly or indirectly, or through a subsidiary or agent, a permanent or temporary office, place of distribution, sales or sample room, warehouse or storage place, or other physical place of business in California.
  • You have representatives, agents, or independent contractors operating in California on your behalf or under your authority, or under the authority of your subsidiary, for purposes of making sales, taking orders, assembling or installing merchandise, training customers, making deliveries, or otherwise establishing or maintaining a market for your products.
  • You receive rental payments from the leases of tangible personal property located in California, such as leases of machinery, equipment, and furniture.
  • You own or lease real property or personal property such as, machinery or equipment, furniture, or computer servers located in California.
  • Beginning April 1, 2019, you have total combined sales of tangible personal property for delivery in California by you and all persons related to you exceeding $500,000 during the preceding or current calendar year.

As stated above, on and after April 1, 2019, you are considered engaged in business in California if, in the preceding or current calendar year, you have total combined sales of tangible personal property for delivery in California by you and all persons related to you exceeding $500,000. Please see our online tax guide, Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision, for more information.

If you are an out-of-state retailer that is not engaged in business in California, you may voluntarily register your business and collect, report, and pay use tax for your customers in this state.

For more information on Out-of-State Retailers and what it means to be “engaged in business” in California, see our Tax Guide for Out-of-State Retailers.

Below are common situations you may encounter, along with information about the proper way to allocate your sales.

Stock of Goods (Inventory) in California

As an out-of-state retailer engaged in business in California, you may be shipping property from a dedicated, non-commingled stock of goods (inventory) in a third-party fulfillment center or warehouse located in California. This stock of goods is considered a place of business. When you or the third-party fulfillment center makes shipments from this location to a California customer and title to the property passes to the customer in California, the transaction is subject to sales tax and the sales transaction will be allocated to the jurisdiction where the stock of goods is located, if no other location of yours participates in the sale.

For more information about Internet retailers that utilize a fulfillment center, please see our online guide, Fulfillment Centers.

Sales Negotiated and Shipped from Outside California

When you negotiate sales and ship property from outside California and title to the property passes to the purchaser outside of California, the transaction is subject to use tax and local use tax is allocated to the jurisdiction where the property is shipped, through the countywide pool.

Example:

You are a registered out-of-state retailer who takes orders online and ships property from a warehouse located outside of California to your California customers. Title passes out of state. You make a taxable sale of $1,300 and ship the property to your customer in Los Angeles County, and another taxable sale of $2,000 that you ship to your customer in Orange County.

The transactions are subject to use tax. When you file your sales and use tax return, you will allocate $1,300 of your sales through the countywide pool of Los Angeles County and $2,000 through the countywide pool of Orange County.

Sales Negotiated in California and Shipped from Out-of-State Stock of Goods (Inventory)

If you negotiate sales at your registered place of business in California and property is shipped from inventory located outside California, the transactions are subject to use tax if title passes to the purchaser outside California (for example, the shipping terms are freight on board (FOB) shipping point). Local use tax is allocated to the jurisdiction where the property is shipped through the countywide pool.

Example:

You are an out-of-state retailer with sales representatives taking orders in California. Your sales representative that works out of your permitted location in the city of Huntington Beach took an order in the amount of $20,000. The taxable property was shipped from your inventory located out-of-state to Huntington Beach. Title passed outside California.

The transaction is subject to use tax. When you file your sales and use tax return, you will allocate sales in the amount of $20,000 to the countywide pool for Orange County.

Example:

Assume the same facts given in the example above, except that the shipping terms of the property were FOB destination. Therefore, title to the property passed to your customer in California upon receipt of the property.

The transaction is subject to sales tax. The place of sale is the location out of which your sales representative works in the city of Huntington Beach. You will allocate your sales in the amount of $20,000 directly to the city of Huntington Beach.

Sales or Purchases of $500,000 or More Subject to Use Tax

Generally, if you are an out-of-state retailer engaged in business in California and make a sale to a California consumer of $500,000 or more, you must collect the use tax and report and pay it directly to the local jurisdiction in which the first functional use of the property occurs rather than through the countywide pool. This applies to use tax only and not to sales tax transactions.

Persons who self-report or retailers who purchase tangible personal property of $500,000 or more per transaction from sellers who are not required to collect the tax must report the local use tax to the jurisdiction where the property is first functionally used.

Holders of a Use Tax Direct Payment Permit may issue a use tax direct payment exemption certificate to any registered retailer or seller from whom they make purchases that are subject to use tax. Subsequently, holders must self-assess and report the use tax due on the purchase(s) for which the certificate was issued. Use tax transactions will be allocated directly to the local jurisdiction in which the first functional use of the tangible personal property occurs, rather than through the countywide pooling process.

As a construction contractor, the place of sale and place of use for property sold or used during the performance of your construction contract is your jobsite.

Materials

Generally, construction contractors are considered the consumer of materials furnished and installed during the performance of a construction contract. The place of use of the materials is the jobsite. Although less common, if a construction contractor is regarded as the retailer of materials and has a valid seller's permit, sales for materials installed and furnished at the jobsite will be allocated through the countywide pool of the county where the jobsite is located.

Purchase of Commingled Materials

A construction contractor that purchases a commingled lot of materials (i.e. a portion of which it will consume and a portion of which it will sell at retail) may only issue a resale certificate when they intend to resell a significant portion of the materials and, at the time of purchase, they do not know which items will be consumed and which will be resold. However, a contractor may not issue a resale certificate with respect to the entire lot of materials if, at the time of purchase, the contractor knows that certain materials will be consumed in the performance of a construction contract.

(If the contractor has paid sales tax on materials that they end up selling at retail, then the contractor may claim a tax-paid purchases resold deduction on their sales and use tax returns to offset the sales tax reimbursement previously paid to their vendor.)

Materials Purchased for Resale and Consumed

When a construction contractor properly purchases materials using a resale certificate but removes the materials from its resale inventory and consumes them during the performance of a construction contract, they owe use tax measured by the purchase price of the materials. They will report the purchase price of the materials on line 2 of their sales and use tax return and allocate the use tax through the countywide pool of the county where the jobsite is located.

A contractor improperly purchases materials using a resale certificate when, for instance, it purchases certain materials it intends to consume or purchases a lot of materials of which it does not intend to resell a significant portion. If the sale to the contractor was subject to sales tax, the contractor must report the sales tax on their sales and use tax return for the period in which the property was purchased and allocate the local tax to the jurisdiction where the sale occurred.

Example:

You are a construction contractor. You purchase materials from a vendor with a single business location in the City of Bakersfield and furnish and install the materials during the performance of construction contract at a jobsite located in the City of Fresno. You also make some retail sales of materials. The percentage of materials you purchased for resale is less than 1% of the total materials purchased. You issue a resale certificate to your California vendor for all materials you purchase. You report and pay use tax for materials consumed at your jobsite locations on line 2 of your sales and use tax return and allocate the purchase of materials through the countywide pool of the county where your jobsite is located, Fresno County.

Based on the amount of materials you purchased for resale, your use of a resale certificate was improper. Since the resale certificate was improperly issued, you owe sales tax which should have been directly allocated to the City of Bakersfield, where the sale occurred. You should file amended sales and use tax returns to report the tax during the period in which the materials were purchased and reallocate the tax to the City of Bakersfield.

Fixtures

When you make retail sales of fixtures pursuant to a construction contract, you are required to hold a valid seller's permit. The place of sale is the jobsite. Since the jobsite is usually not a registered place of business, as a construction contractor you will allocate sales of fixtures through the countywide pool of the county where the jobsite is located.

Example:

You make taxable sales of fixtures in the amount of $8,400 during the performance of your construction contract. Your jobsite is located in the city of La Habra in Los Angeles County.

The place of sale for the fixtures you sold is your jobsite location in the city of La Habra. When you file your sales and use tax return, you will allocate $8,400 of your sales through the Los Angeles County countywide pool.

Note: If the fixtures were acquired tax-paid and you bill your contracts lump-sum or time and materials, an allocation of local tax would not be required as your vendor would make the necessary local tax allocation when they file their sales and use tax returns.

Machinery and Equipment

Sales of machinery and equipment, subject to sales tax that are sold pursuant to a construction contract should be allocated to your permanent place of business where the principal negotiations of the contract take place. If you are an out-of-state construction contractor making a sale of machinery and equipment to a California customer subject to use tax, you should allocate your sales through the countywide pool to the jurisdiction of use.

Example:

During the performance of a construction contract, you make taxable sales of machinery and equipment in California in the amount $18,000. Your jobsite is located in the city of Fremont and your permanent place of business where the sales are negotiated is located in the City of Vallejo.

When you file your sales and use tax return, you will allocate $18,000 of your sales to the city of Vallejo where your permanent place of business is located.

Construction Contracts over $5,000,000

A construction contractor who enters into a construction contract equal to or greater than $5,000,000 may elect to obtain a sub-permit for the jobsite of the qualifying contract enabling the contractor to make a direct allocation of tax to the local jurisdiction in which the jobsite is located rather than through the countywide pool. The qualifying contract price applies to each contract or subcontract for work performed at the jobsite, not the total value of the prime contract.

Example:

You are a construction contractor performing a contract valued over $5,000,000 in the city of Long Beach. Your contract includes fixtures and materials. Your materials supplier is located outside California and it did not charge you tax. Your fixtures are purchased for resale from a California vendor. You elected to obtain a sub-permit for your jobsite.

Since you have obtained a sub-permit for your specific jobsite, you will allocate your sales of fixtures and purchases of materials that you consumed directly to the city of Long Beach.

For more information about construction contracts, please see publication 9Construction and Building Contractors.

Unless you have made a timely election to pay tax on the purchase price of property leased in substantially the same form as acquired, you will collect, report, and pay tax based on your rental receipts.

Generally, the tax on leases of tangible personal property is use tax. Use tax on rental receipts should be allocated through the countywide pool of the county where the leased property is used.

If you are a lessor with a single permanent place of business and make short-term leases of tangible personal property, the place of use is the local jurisdiction where your business is located. You will allocate sales for your leases directly to your business location.

For information about leases, see publication 46, Leasing Tangible Personal Property.

Note: Mobile transportation equipment (MTE) includes rail cars, locomotives, truck tractors and trailers, ships, reusable shipping containers, and airplanes. The law considers lessors of MTE to be consumers of the equipment. Therefore, unless a timely election to pay tax on rental receipts is made, tax is due on the purchase price of the MTE. For a complete listing of MTE, please see Regulation 1661, Leases of Mobile Transportation Equipment.

There are certain rules for allocating sales of long-term leases (exceeding four months) of passenger motor vehicles, and certain types of mobile transportation equipment.

The following chart provides general local tax allocation guidelines for motor vehicle leases (excluding one-way rental trucks):

Local Tax Allocation for Motor Vehicle Leases, effective January 1, 1999
(Except One-Way Rental Trucks)

Type of Lessor Type of Transaction 1% Local Tax Allocation to:
Leases Exceeding Four Months Leases of Four Months or Less
California New Motor Vehicle Dealer/Lessor Lease of motor vehicle* Dealer/Lessor's sales location Dealer/Lessor's sales location
California Leasing Company (as defined)** Lessor's place of business Lessor's place of business
California Lessor (other than a new motor vehicle dealer or leasing company as defined)**: Lease of a motor vehicle* purchased from a California new motor vehicle dealer Dealer/Lessor's place of business (Schedule F)
Lease of a motor vehicle* purchased from someone other than a California new motor vehicle dealer Lessee's place of registration (Schedule B)
Lease of MTE*** purchased from a California new motor vehicle dealer (except new pick up trucks rated less than one ton) Lessor's place of business
Out-of-State Lessor: Lease of a motor vehicle* purchased from a California new motor vehicle dealer California Dealer's place of business (Schedule F) Lessee's place of registration (Schedule B)
Lease of a motor vehicle* and MTE*** purchased from someone other than a California vehicle dealer Lessee's place of registration (Schedule B)
  1. Motor Vehicle means any (new or used) self-propelled passenger vehicle (other than a house car) or pickup truck rated less than one ton.
  2. Leasing company means a motor vehicle dealer/lessor that originates lease contracts and does not sell or assign the lease contracts and that has annual motor vehicle lease receipts of $15 million or more annually for each business location.
  3. Mobile transportation equipment (MTE) includes rail cars, locomotives, truck tractors and trailers, ships, reusable shipping containers, and airplanes. The law considers lessors of MTE to be consumers of the equipment. Therefore, unless a timely election to pay tax on rental receipts is made, tax is due on the purchase price of the MTE. For a complete listing of MTE, please see Regulation 1661, Leases of Mobile Transportation Equipment.

If you are selling items at a location for less than 90 days, you are considered a temporary seller, and are required to hold a temporary seller's permit. You will need to register each temporary sales location. On the other hand, if you already hold a seller's permit for a permanent place of business but also make sales at a temporary location(s), you do not need to register for a separate temporary seller's permit. Instead, using your current seller's permit number you must register for a sub-permit for each of your temporary locations.

Common types of temporary seller's include sellers of:

  • Fireworks
  • Property sold at Garage Sales
  • Christmas trees
  • Property sold through Internet auctions
  • Crafts
  • Property sold at conventions, trade shows, swap meets, flea markets or other special events

As a temporary seller, the place of sale is the temporary location where the event takes place. You will allocate your sales directly to that local jurisdiction.

Example:

You are a retailer with a permanent seller's permit and place of business in the city of Santa Ana. In addition to making retail sales at your permanent place of business, you attended two craft fairs in the cities of Irvine and Newport Beach. Because you already hold a seller's permit for your Santa Ana business and make sales at temporary sales locations, you will need to obtain sub-permits for the Irvine and Newport Beach locations. Taxable sales made at your business location in the city of Santa Ana were $9,000. Taxable sales made at the craft fairs in the cities of Irvine and Newport Beach were $2,000 and $1,200, respectively.

When you file your sales and use tax return, you will allocate your sales as follows:

  • $9,000 of your sales will be allocated to the city of Santa Ana for sales made at your permanent business location.
  • $2,000 of your sales will be allocated to the city of Irvine for sales made at that temporary location.
  • $1,200 of your sales will be allocated to the city of Newport Beach for sales made at that temporary location.

As a caterer, your sales are generally subject to sales tax. Even though you might travel throughout various local jurisdictions, you will allocate sales directly to your business location where sales are negotiated and catering orders are taken.

If you operate your catering business from a single retail location, you will allocate sales to that location. If you have multiple retail locations where sales are negotiated and catering orders are taken, sales will be allocated to the place where the principal negotiations take place.

Example:

You are a caterer with a retail location in the city of Brea. Customers place orders over the phone or at your business location. Your taxable sales are $57,000.

Sales in the amount of $57,000 will be allocated to the city of Brea where your business is located and the place where the principal negotiations take place.

Example:

You are a caterer that performs catering food and services throughout Alameda, San Mateo and Contra Costa Counties. You have a permanent place of business in the city of Hayward and in the city of Antioch. Taxable sales negotiated at your place of business in the city of Hayward are $30,000. Taxable sales negotiated at your place of business in the city of Antioch are $27,000.

When you file your sales and use tax return, you will allocate $30,000 of your sales to the city of Hayward and $27,000 to the city of Antioch.

If you are a caterer, our Tax Guide for Caterers may also be a helpful resource.

An itinerant merchant is a retailer with no permanent place of business similar to a door-to-door salesperson.

It may be hard to keep track of each location where sales are made. Therefore, itinerant merchants should allocate sales to the permanent business location as shown on their seller's permit (this may include a home address).

A mobile food vendor is a retailer who sells food or drinks from a truck, stand, or wheeled cart with no fixed, physical location. Because a mobile food vendor could be at multiple locations throughout the day, it can be hard or not possible to keep track of every city a mobile food vendor makes sales.

As a mobile food vendor, you are allowed to allocate sales through the countywide pool.

Example:

You operate a food truck throughout Sacramento, El Dorado and Placer Counties. Taxable sales were made as follows:

Sacramento County:

City of Sacramento
$1,800
City of Rancho Cordova
$1,100
City of Citrus Heights
$750
Total
$3,650

El Dorado County:

City of Shingle Springs
$670
City of South Lake Tahoe
$2,450
Total
$3,120

Placer County:

City of Lincoln
$300
City of Auburn
$2,130
City of Roseville
$1,410
Total
$3,840

You will allocate your sales through the countywide pool for each local jurisdiction based on the county where your taxable sales occurred. Sales will be allocated to each county pool as follows:

Countywide Pool Allocation of Sales
Sacramento County $3,650
El Dorado County $3,120
Placer County $3,840

For more information about Mobile Food Vendors, see our Mobile Food Vendors tax guide.

How local tax is allocated by auctioneers depends on where the auction is held and the amount of taxable auction sales per event.

If you are an auctioneer making retail sales in California, the place of sale is the place where the auction is held. If the auction is held at a location other than your registered place of business, you will allocate sales following these guidelines:

  • Taxable auction sales totaling $500,000 or more per event – you will allocate sales directly to the local jurisdiction where the auction occurs.
  • Taxable auction sales totaling less than $500,000 per event – you will allocate sales to the local jurisdictions within the county where the auction occurs through the countywide pool. Each local jurisdiction will receive a prorated amount of the local sales tax.

Example:

You hold regular auctions at your registered place of business in the city of Anaheim. Your taxable sales for auctions held at your business location are $600,000. You also made taxable sales at an auction in the city of Fullerton where you do not have a registered place of business. Your taxable sales made in the city of Fullerton are $250,000.

The place of sale for sales made at your registered place of business is your business location. When you file your sales and use tax return, you will allocate sales in the amount of $600,000 directly to the city of Anaheim.

Since your sales made at an auction in the city of Fullerton were less than $500,000, the place of sale is the local jurisdictions within the county where the auction occurred. When you file your sales and use tax return, you will allocate sales in the amount of $250,000 to the countywide pool for Orange County.

Special rules and reporting requirements apply to motor vehicles, vessels, and aircraft.

The following resources contain additional local tax information you may find helpful:

For periods after January 1, 2008, the place of sale for jet fuel is the place at which the retail sale of that jet fuel is consummated.

For sales and use tax purposes, the sale of jet fuel is considered consummated at the point of the delivery of that jet fuel to the aircraft. For more information about sales of jet fuel, see our webpage, Aircraft Jet Fuel.

There are various schedules available to allocate local tax.

The schedule you use depends upon the description you provide about your business activities. The most common schedules used are CDTFA-530-C, Schedule C – Detailed Allocation by Location of Sales and Use Tax Transactions, which is used to allocate sales directly to a local jurisdiction and CDTFA-531-B, Schedule B-Detailed Allocation by County of Sales and Use Tax Transactions, which is used to allocate sales for certain sellers through the countywide pool. Below you will find information about Schedules C and B, along with additional schedules used to allocate local tax. Sometimes you may need to use a combination of schedules to allocate your local tax.

Schedule C – Detailed Allocation by Location of Sales and Use Tax Transactions

This schedule is used to allocate sales among cities, towns, unincorporated areas, or counties (or occasionally a combination thereof) in which you have business locations or sub-outlets. Schedule C allows you to allocate sales to your place(s) of business or multiple business locations.

Schedule B – Detailed Allocation by County of Sales and Use Tax Transactions

The following businesses generally allocate sales through the countywide pool:

  • Certain auctioneers (taxable auction sales totaling less than $500,000 per event)
  • Certain out-of-state retailers who have been authorized by CDTFA to operate under section 6015
  • Section 6015 retailers may include a business that uses salespersons, representatives, peddlers, canvassers, agents, or other persons who operate under the direction of or obtain property from the business located outside California.
  • Vending machine operators
  • Out-of-state sellers engaged in business in California
  • Out-of-state sellers not engaged in business in California
  • Construction contractors that:
    • Purchase materials without tax from an out-of-state vendor and are the consumer of materials used in the performance of a construction contract, or
    • Purchase materials under a resale certificate because they are a retailer of materials and also withdrawal materials from resale inventory (consumable materials and materials purchased for resale are commingled) in the performance of a construct contract, or
    • Make retail sales of fixtures during the performance of a construction contract.
  • Persons making ex-tax purchases for use at locations where a seller's permit is not required
  • Mobile truck vendors
  • Itinerant merchants – retailers with no permanent place of business. This includes certain door-to-door salespersons.
  • Itinerant veteran vendors – itinerant veteran vendors are considered the consumer of property owned and sold. They are allowed to allocate local use tax on Schedule B. However, itinerant veteran vendors making sales of alcoholic beverages or items sold for more than $100 are considered a retailer and must allocate local sales tax directly to a local jurisdiction using Schedule C.

Additional Schedules

Additional schedules are listed below. Instructions are found on the back of each form.

CDTFA-531-F, Schedule F – Detailed Allocation by City of Taxable Transactions for Lessors of Motor Vehicles:

CDTFA-531-F is used by lessors of motor vehicles to allocate local tax due on certain leases to the local jurisdiction of the new motor vehicle dealer from whom the lessor acquired the leased vehicle.

CDTFA-531-H, Schedule H – Detailed Allocation by City of Taxable Sales and Use Tax Transactions of $500,000 or More:

CDTFA 531-H is used by various industries, such as Auctioneers with sales over $500,000 or persons making sales or purchases over $500,000, to allocate the local sales and use tax to the proper jurisdiction.

CDTFA-531-X, Schedule X – Partial Exemption from Bradley – Burns Local Taxes California Department of Aircraft Common Carrier:

CDTFA-531- X is used to allocate the partial exemption credit for sales to or purchases for use by aircraft common carriers, as described in Regulation 1805.

CDTFA 531-P, Schedule P – Tax Paid to Other State(s):

CDTFA-531-P is used to calculate the credit for the tax paid to other state(s). The credit offsets the tax due for the corresponding state, county, local, and special taxing jurisdictions where the purchase was consumed. Each purchase claiming this credit must be entered separately on this schedule.

CDTFA 531-Q, Schedule Q – Tax Recovery:

CDTFA-531-Q is used to claim a tax recovery for prior period(s). Amounts claimed on CDTFA-531-Q may only consist of tax recovery items where the original taxable sale was in a prior period and the tax recovery is in the current period. If you have tax recovery items that should have been claimed in a prior period, you will need to amend the prior period return or file a claim for refund for those transactions rather than claiming them in the current period.

If you represent a city, county, city and county or special tax district, the following will help you understand the local tax allocation process.

Additional information is available at our Local and District Taxes webpage. Procedures for jurisdictions to review CDTFA records and CDTFA review of local and district tax reallocation petitions are available in the Compliance Policy and Procedures Manual Chapter 9, Miscellaneous.

You may have a business making sales over the internet. Online retailers have similar reporting and registration requirements as other retailers. You may find the additional information below helpful to make sure that your business is correctly registered and that you are properly reporting and allocating local tax. How your business is registered is important so that you receive and use the correct schedules to report and allocate your sales for local tax reporting purposes.

A flowchart that includes general registration and local tax reporting information is available.

General Rules

Open All Close All

Under Regulation 1699, Permits, subdivision (a), a person that is actively engaged in selling tangible personal property in this state of a kind the gross receipts from the retail sale of which are required to be included in the measure of the sales tax is required to register for a seller's permit for each place of business in California at which the person customarily negotiates transactions relating to sales with customers. In general, permits are not required for a seller's warehouse or other places where merchandise is merely stored (i.e., storage locations) if they are maintained in conjunction with a place of business for which a seller's permit is held and customers do not customarily visit the storage location to make purchases. However:

  • At least one permit must be held by every person that maintains stocks of merchandise for sale at a storage location in this state; and
  • Seller's permits are required for storage locations from which retail sales negotiated out of state are delivered or fulfilled.

Retailers selling tangible personal property for storage, use, or other consumption in this state that are not required to hold a seller's permit but that are a “retailer engaged in business in this state” as defined in Revenue and Taxation code (RTC) section 6203, subdivision (c), are generally required to register for a Certificate of Registration – Use Tax (RTC section 6226; Regulation 1684, Payment and Collection of Use Tax, subdivision (a)). A retailer is engaged in business in this state if it has a sufficient physical presence, examples of which include, but are not limited to, maintaining a place of business in this state, having an agent, representative or salesperson under the retailer's authority for purposes of selling, delivering, or installing tangible personal property in this state, or owning or leasing real or personal property located in this state.

Additionally, as of April 1, 2019, a retailer is engaged in business in this state if, in the preceding or current calendar year, the total combined sales of tangible personal property for delivery in California by the retailer and by all persons related to the retailer exceeds $500,000.

The general registration requirements discussed in the General Registration Requirements heading above apply to all retailers. However, there are additional rules for marketplace facilitators and marketplace sellers, as defined in RTC section 6041. Beginning October 1, 2019, a marketplace facilitator that is registered or required to be registered for a seller's permit or Certificate of Registration – Use Tax is the retailer for sales and use tax purposes with respect to all the retail sales it facilitates on behalf of marketplace sellers through its marketplace (marketplace sales) (RTC section 6043), unless RTC section 6047, subdivision (a) applies.

Note: The term “marketplace sale” used in this section specifically means a retail sale facilitated by a marketplace facilitator that is registered or required to be registered for a seller's permit or Certificate of Registration – Use Tax, and is, therefore, the seller and retailer with respect to that sale pursuant to RTC section 6043.

For purposes of this section, “marketplace sale” does not include a sale facilitated by an unregistered marketplace facilitator, that is not the seller and retailer with respect to that sale. Such sales would be included in the meaning of “direct sale,” which means any sale with respect to which a marketplace facilitator is not the seller and retailer.

A marketplace facilitator must consider both its own sales and the sales it facilitates for marketplace sellers in determining whether it is required to register for a seller's permit or Certificate of Registration – Use Tax (RTC section 6042). A marketplace facilitator must include sales it facilitates on behalf of marketplace sellers through its marketplace in addition to any sales made on its own behalf when determining if it is a retailer engaged in business in this state based on the $500,000 sales threshold (RTC section 6044, subdivision (a)).

A marketplace seller, whether located inside or outside California, is not required to register for a seller's permit or Certificate of Registration – Use Tax if all of its sales in this state or for use in this state are marketplace sales. However, a marketplace seller may be required to register if it also makes direct sales, such as sales made through its own website or sales facilitated by unregistered marketplace facilitators (RTC section 6045). Also, even though a marketplace seller is not the seller or retailer with respect to its marketplace sales, it still must include its marketplace sales, along with its direct sales, when determining if it is a retailer engaged in business in this state based on the $500,000 threshold (RTC section 6044, subdivision (b)).

Generally, sales tax applies if an in-state place of business of the retailer, such as a local office, branch, outlet, or other place of business, participates in the sale and the sale occurs in this state (see Regulation 1620, Interstate and Foreign Commerce, subdivision (a)). This section primarily relates to in-state participation, but if either of these conditions are not met, sales tax does not apply. When sales tax does not apply, use tax applies to the use of property that was purchased from a retailer for use in this state.

The participation required by Regulation 1620 must be by a place of business of the retailer. A place of business of the retailer includes any location that comes within the description in RTC section 6203, subdivision (c)(1), which refers to “an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business” in this state.

Generally, the location of a third party (a separate person as defined in RTC section 6005) would not be a place of business of the retailer, even if the third party is a related entity. The presence of the retailer's employees at such a location would not, by itself, make it a place of business of the retailer. The presence of the retailer's property at a third-party storage location would also not generally make the storage location a place of business of the retailer. However, a third-party storage location can contain a place of business of the retailer if it contains dedicated storage of the retailer's property that is separate from other retailer's property (i.e. uncommingled property, see Reynolds Memo Opinion (May 31, 2007)). Note, a storage location could contain places of business for multiple retailers for which it maintains dedicated storage of uncommingled inventory.

A marketplace sale is a sale facilitated through a marketplace facilitator and the retailer is the registered marketplace facilitator, not the marketplace seller. Therefore, a location of the marketplace seller is not a place of business of the retailer.

Regulation 1620, subdivision (a)(2)(A), states that participation in the transaction in any way by the in-state place of business is sufficient for the transaction to be subject to sales tax. However, to constitute participation, an activity must serve some real purpose and have some meaningful effect in the actual sales process and involve some genuine physical human interaction with the sale from that location.

Generally, activities taking place after the sale has occurred are not participation in the sale. There are also activities that a retailer might conduct from a California location to support its operations that do not constitute participation in the sale for purposes of Regulation 1620, subdivision (a)(2)(A), including price setting, purchase of resale inventory, web design, and general marketing.

Internet transactions are generally designed and intended to be processed online, without direct human intervention until the property is picked, packed, and shipped at the storage location. As such, a storage location is often the only place of business that participates in an Internet transaction. Activities related to creating and maintaining the automated online processes would generally be considered the type of support operations that do not constitute participation in any particular transaction. The location of the server where the website is hosted or maintained is also immaterial, see Annotation 710.0013.600, Internet Transactions.

Participation Examples

Note: These examples are based on specific facts and circumstances and do not address all scenarios. All of the cities in the examples are located in California.

Example 1

An online retailer has a corporate headquarters in City A where its employees solicit advertising, maintain accounting records, design and manage its webpage, and work on software programing, and where it maintains servers that process orders.

The activities performed at the headquarters indirectly support sales but are not sufficient to constitute participation in a specific sale. Therefore, the retailer's corporate headquarters does not participate in the transactions.

Example 2

A retailer maintains a separate, dedicated stock of goods at an in-state warehouse of its supplier. There are no employees of the retailer at this location. 15% of the retailer's California sales are fulfilled from the retailer's stock of goods and 85% are fulfilled from the other portions of the supplier's warehouse. The stock of goods constitutes a place of business of the retailer, which participates in the 15% of sales that are fulfilled from it. However, that place of business does not participate in the 85% of total sales that are fulfilled from the other portion of the supplier's warehouse.

Example 3

A retailer sells medical supplies pursuant to master contracts with hospitals. Sales are fulfilled from its in-state warehouse located in City A. The master contracts are negotiated by salespersons working out of an office located in City B. The locations in both City A and City B participate in the sales. However, the place of sale would be City B, where the principal negotiations occur.

Example 4

Office employees of a multi-location department store in City C download a spreadsheet of all California orders daily. The employees then organize columns on the spreadsheet to separate out sales that require fraud review. The employees conduct the fraud review for those sales, but often goods are already shipped before the review is completed. There is no participation in sales not subject to fraud review and there is also no participation in sales reviewed since the review is not actually necessary to complete the transaction.

Example 5

A retailer sells fixtures and supplies (cash registers, display racks, etc.) to a customer for use in its stores pursuant to a master contract. The customer's orders are completed online or over the phone with the retailer's out-of-state office, with delivery from both in-state and out-of-state warehouses. The employees at the retailer's in-state office in City H receive approval lists from the retailer's out-of-state office but have no contact with customers and do not do anything with the approval lists other than file them. The employees do not have any actual participation in the transaction. Therefore, these activities do not constitute participation.

When state sales tax applies to a transaction, the Bradley-Burns Uniform Local Tax (local) sales tax also applies, and if state use tax applies to a transaction, then local use tax also applies (Regulation 1803, Application of Tax).

Local sales tax is allocated to the jurisdiction where the sale occurs. If only one place of business of the retailer in this state participates in a sale, the sale occurs at that place of business. If more than one place of business of the retailer in this state participates in a sale, the sale occurs at the place of business where the principal negotiations are carried on (see Regulation 1802, Place of Sale and Use for Purposes of Bradley-Burns Uniform Local Sales and Use Taxes, subdivisions (a)(2)(B) and (d)). Local sales tax is usually allocated directly to the jurisdiction where the place of sale is located using Schedule C. However, if the retailer is not required to have a seller's permit for the place of business where the sale occurs, then the local sales tax is allocated to the countywide pool of the jurisdiction's county using Schedule B.

Local use tax is allocated to the jurisdiction where the property is first functionally used. (Regulation 1802, subdivision (d)). The location to which the property is shipped is generally presumed to be the place of first functional use. Local use tax is generally allocated on Schedule B to the countywide pool of the county in which the first functional use occurred.

  1. Regulation 1802, Place of Sale and Use for Purposes of Bradley-Burns Uniform Local Sales and Use Taxes, subdivision (d), describes when local use tax is reported directly to the jurisdiction of use, but it would generally not apply to the type of Internet transactions discussed in this section.

The rules and information discussed in the sections above regarding the application of sales and use tax and the allocation of local tax apply to marketplace facilitators since they are the retailer with respect to marketplace sales. As such, for sales tax to apply, a place of business of the marketplace facilitator, not the marketplace seller, must participate in the marketplace sale. Likewise, the local sales tax is allocated based on participation in the marketplace sale by a place of business of the marketplace facilitator. In both instances, “participation” has the same meaning as it does for all other retailers.

Application of Tax to Internet Transactions

The following sections provide scenarios and information about how tax applies, including the allocation of local tax, to common Internet transactions. Assume the sales in the scenarios are processed online and are not negotiated at an in-state place of business of the retailer. Also, assume that sales fulfilled from an in-state location occur in this state at the time of shipment and that any in-state storage location of the retailer that participates in a sale is required to have a seller's permit under Regulation 1699.

Open All Close All

A retailer with no place of business in California that maintains commingled inventory at a third-party California fulfillment center or warehouse would generally be regarded as a retailer engaged in business in this state, and be required to register for a Certificate of Registration – Use Tax, because of the presence of its inventory in the state. The third-party storage location, however, is not a place of business of the retailer.

  • When the retailer's direct sale to a California customer is fulfilled by the third-party's in-state storage location, the sale occurs in this state, but cannot be subject to sales tax because the retailer has no in-state place of business. The transaction is subject to state and local use tax which the retailer is required to collect. The local use tax should be allocated to the countywide pool of the jurisdiction where the property is shipped to using Schedule B.

A retailer that maintains commingled inventory at a third-party California fulfillment center or warehouse and also has a place of business in California would be engaged in business in this state because of its place of business and inventory in the state. The retailer may be required to obtain a seller's permit for its place of business under Regulation 1699; if not, it would be required to register for a Certificate of Registration – Use Tax. Similar to the scenario above, the third-party storage location is not a place of business of the retailer.

  • When the retailer's in-state place of business does not participate in a direct sale to a California customer fulfilled by the in-state third-party storage location – for example, a fully automated Internet transaction with fulfillment by the third party storage location – then the sale occurring in this state is not subject to sales tax because there is no participation by the retailer's in-state place of business. The transaction is subject to use tax which the retailer is required to collect. The local use tax should be allocated to the countywide pool of the jurisdiction where the property is shipped to using Schedule B.
  • When the in-state place of business of the retailer participates in the sale, then the transaction would be subject to sales tax. Whether the local sales tax is allocated using Schedule B or C depends on whether the retailer's participating location is required to have a seller's permit under Regulation 1699.

A retailer's dedicated, uncommingled stock of goods at a third-party storage location in California is considered to be an in-state place of business of the retailer. The retailer must hold a seller's permit for the location of the stock of goods.

  • When the retailer's direct sale to a California customer is fulfilled from the in-state stock of goods and no other in-state place of business of the retailer participates in the sale, the sale is subject to sales tax. The local sales tax should be allocated directly to the jurisdiction where the stock of goods is located using Schedule C.
  • When another in-state place of business of the retailer participates in the sale, the transaction would still be subject to sales tax, and the local sales tax should be allocated to the jurisdiction where there is more “significant” participation, depending on the facts and circumstances of the transaction. If it is the place where the stock of goods is located, local sales tax would be allocated to that location using Schedule C. If it is another location, whether the local sales tax would be allocated using Schedule B or C depends on whether that location is required to have a seller's permit under Regulation 1699.
  1. When discussing whether state and local sales or use tax applies, this section will state “sales tax” or “use tax.”

A marketplace seller maintains a stock of goods at its own in-state location from which it fulfills marketplace sales to California customers.

  • Without In-State Participation – When the marketplace facilitator that facilitates the marketplace seller's sale has no in-state place of business that participates in the sale (again, “participation” has the same meaning as it does for any other retailer), the marketplace sale is subject to use tax because there is no participation by an in-state place of business of the retailer (the marketplace facilitator). The marketplace facilitator is required to collect the use tax, and allocate the local use tax to the countywide pool of the jurisdiction where the property is shipped to using Schedule B.
  • With In-State Participation – When the marketplace facilitator has an in-state place of business that participates in the sale, sales tax applies because the sale occurs in this state and there is participation in the sale by a place of business of the retailer. The local sales tax should be allocated to the jurisdiction where the in-state place of business is located. Whether the local sales tax is allocated using Schedule B or C depends on whether the marketplace facilitator's location is required to have a seller's permit under Regulation 1699.

A marketplace seller maintains a stock of goods at its own out-of-state location from which it fulfills marketplace sales to California customers.

  • Without In-State Participation – When the marketplace facilitator has no in-state place of business that participates in the sale, the sale is subject to use tax which the marketplace facilitator is required to collect. The local use tax should be allocated to the countywide pool of the jurisdiction where the property is shipped to using Schedule B.
  • With In-State Participation – When the marketplace facilitator has an in-state place of business that participates in the sale, sales tax would only apply if the sale occurs in this state. If the sale takes place out of state, it would still be subject to use tax with allocation to the countywide pool of the jurisdiction of use using Schedule B. If the sale takes place in California (e.g. the contract of sale has an F.O.B. destination clause and does not have a clause passing title prior to delivery), then the transaction would be subject to sales tax. The local sales tax should be allocated to the jurisdiction where the in-state place of business is located. Whether the local sales tax is allocated using Schedule B or C depends on whether the location is required to have a seller's permit under Regulation 1699.

A marketplace facilitator that maintains an in-state fulfillment center where it stores the marketplace sellers' merchandise and from which it fulfills marketplace sales generally must hold a seller's permit for the fulfillment center, whether or not it maintains its own inventory there as well. When a marketplace sale is fulfilled by the fulfillment center, sales tax applies because the sale occurs in this state and there is participation in the sale by a place of business of the retailer (fulfillment center).

  • When the marketplace facilitator has no other in-state place of business that participates in the sale, the local sales tax is allocated to the local jurisdiction where the fulfillment center is located using Schedule C.
  • When another in-state place of business of the marketplace facilitator participates in the sale, the local sales tax should be allocated to the jurisdiction where there is more “significant” participation.

A marketplace facilitator that maintains an out-of-state fulfillment center where it stores marketplace sellers' merchandise and from which it fulfills marketplace sales to California customers' generally must hold a Certificate of Registration – Use Tax. If the marketplace facilitator also has an in-state place of business, it may be required to obtain a seller's permit for that location under Regulation 1699.

  • When the marketplace facilitator has no in-state place of business that participates in a marketplace sale fulfilled from its out-of-state fulfillment center, the sale is subject to use tax which the marketplace facilitator is required to collect. The local use tax should be allocated to the countywide pool of the jurisdiction where the property is shipped to using Schedule B.
  • When the marketplace facilitator has an in-state place of business that participates in the sale, sales tax would only apply if the sale occurs in this state. If the sale takes place out of state, it would still be subject to use tax with allocation of the local use tax to the jurisdiction of use using Schedule B. If the sale takes place in California then the transaction would be subject to sales tax. The local sales tax should be allocated to the jurisdiction where the in-state place of business is located. Whether the local sales tax is allocated using Schedule B or C depends on whether the location is required to have a seller's permit under Regulation 1699.

District taxes are voter-approved transactions (sales) and use taxes imposed by cities, counties, and other local jurisdictions. The base statewide sales and use tax rate is 7.25 percent. However, total sales and use tax rates are higher in areas where district taxes are imposed. In these areas, the total tax rate includes the statewide tax rate plus applicable district taxes.

  1. The base statewide sales and use tax rate provided is subject to change. For current and historical base statewide sales and use tax rates, please see our webpage History of Statewide Sales and Use Tax Rates.

District Sales Tax

If you make retail sales in California subject to the state sales tax from a business located in a taxing district, district sales tax is generally due on your sales of tangible personal property unless you, your agent, or a common carrier ship or deliver the property, according to the contract of sale, to an out-of-district location for use outside the district.

District Use Tax

Since district use taxes are imposed on the storage, use, or other consumption of tangible personal property in a taxing district, you owe district use tax if you purchase or lease tangible personal property for use, storage, or consumption in a district.

You are also responsible for collecting district use tax from your customers on your sales and reporting and paying it to the California Department of Tax and Fee Administration (CDTFA) if you are engaged in business in a district. If you are not engaged in business in a taxing district, you are not responsible for collecting district tax from your customers; however, you can always voluntarily collect district use taxes as a courtesy to your customer(s).

Open All Close All

A retailer that is “engaged in business” in a district is responsible for collecting, reporting, and paying district use tax on behalf of their customer.

A retailer is “engaged in business” in a district if, for example, the retailer:

  • Owns or leases any real or tangible personal property, including, but not limited to, a computer server, in the district.
  • Maintains, occupies, or use, directly or indirectly, or through a subsidiary or agent, a permanent or temporary office, place of distribution, sales or sample room, warehouse or storage place, or other physical place of business in the district.
  • Has a representative, agent, or independent contractor operating in the district on their behalf or under your authority, or under the authority of their subsidiary, for purpose of making sales, taking orders, assembling or installing merchandise, training customers, making deliveries, or otherwise establishing or maintaining a market for your products.
  • Receives rental payments from the leases of tangible personal property located in the district, such as leases of machinery, equipment, and furniture.
  • Sells or leases vehicles or undocumented vessels which will be registered in the district.
  • Has total combined sales of tangible personal property in California or for delivery in California by the retailer and all persons related to the retailer exceeding $500,000 in the preceding or current calendar year (see "Additional district use tax collection requirement" section below).

Assembly Bill 147 and Senate Bill 92 amended Revenue and Taxation Code (RTC) section 7262 to provide that, on and after April 25, 2019, a retailer engaged in business in a district includes any retailer that, in the preceding or current calendar year, has total combined sales of tangible personal property in this state or for delivery in the state by the retailer and all persons related to the retailer that exceed $500,000. 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.

Accordingly, beginning April 25, 2019, any retailer required to be registered with the CDTFA, whether located inside or outside of California that meets the $500,000 threshold in RTC 7262 is engaged in business in every district in the state whether or not they have a physical presence in those districts. As such, these retailers are required to collect the district use tax on taxable sales made for delivery in any district that imposes a district tax.

This means that if your sales of tangible personal property did not exceed the $500,000 threshold in the preceding calendar year, but your sales go over the threshold during the current calendar year, you are required to immediately begin collecting and paying the district use tax on all sales for delivery to California consumers. Your obligation to collect and pay all district use taxes will last, at least, through the end of the next calendar year.

Retailers that do not meet the $500,000 threshold are still engaged in business in any district(s) in which they have a physical presence. Please see our online tax guide, Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision, for more information.

Example - Sales in California exceed $500,000:

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. Most of your sales are made 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. You do not have any physical presence in other cities in Los Angeles County or to districts outside of Los Angeles County other than by shipping merchandise via common carrier to your customers. You collect the district tax imposed by Los Angeles County on all sales made at your location.

For your sales prior to April 25, 2019, you 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 pursuant to RTC section 7262. As such, in addition to the statewide tax rate of 7.25 percent, you are required to collect the applicable district use tax on all of your taxable retail sales.

Example – Sale into California Putting You Over the $500,000 Threshold:

You are a California retailer with one retail location in the city of El Cerrito. The city of El Cerrito imposes a district tax and is located in Contra Costa County which also imposes a district tax. You are engaged in business in Contra Costa County and the city of El Cerrito.  You make sales at your retail location and also ship merchandise by common carrier directly to your customers throughout California. You collect the district taxes imposed by the city of El Cerrito and Contra Costa County on all sales made at your retail location. You do not have a physical presence in any other city or county in California other than by shipping merchandise via common carrier to your customers and your total sales at your retail location and for delivery to California customers did not exceed $500,000 in 2019.  

However, during 2020, your sales increased and by March 31, 2020, your sales in and for delivery to customers in California totaled $499,000. In April 2020, you make the following sales for delivery in California:

  • $500 on April 4, 2020
  • $300 on April 6, 2020
  • $400 on April 7, 2020 (shipped outside of Contra Costa County)

 Accordingly, on April 7, 2020, your sales in and for delivery in California exceed $500,000 for 2020 ($499,000 + $500 + $300 + $400 = $500,200).

 For your sales up to and including the $400 transaction on April 7, 2020, you were not considered engaged in business in any district other than the city of El Cerrito and Contra Costa County and you were therefore not required to collect any district use tax on sales delivered to your customers in any other district. (To be clear, you are not liable for the district use tax on the $400 transaction that put you over the $500,000 threshold.) However, beginning with your next transaction, you are a retailer engaged in business in all districts in California pursuant to RTC section 7262. As such, you are required to immediately begin collecting the applicable district use tax on all of your taxable retail sales. You will be considered a retailer engaged in business in California through, at least, the end of 2021.

When you have a business located in California but do not meet the $500,000 threshold; you are required to report and pay district tax on your sales made in districts in which you are engaged in business. You are engaged in business in any district, for example, where you store inventory (such as a warehouse or fulfillment center in California) or in which you deliver merchandise to your customers using your own vehicle.

Example – Sales in California Under $500,000:

You have a business located in the city of Oakland and also ship merchandise using your own delivery truck. Your sales of tangible personal property are under $500,000 in the preceding and current calendar year. However, you have a physical presence in other taxing districts where you ship property using your own delivery truck. A customer makes a taxable purchase of $2,000 at your location in the city of Oakland and asks you to deliver the merchandise to their home located in the city of Concord. The city of Concord imposes a 1.50 percent district tax, and is located in Contra Costa County, which imposes a 1 percent district tax.

You are engaged in business in Contra Costa County and the city of Concord because you make deliveries into this county and city using your own delivery truck. You are required to collect, report, and pay the Contra Costa County and city of Concord district tax at the district tax rate in effect where the property is delivered. You will allocate district tax in the amount of $30 ($2,000 x 1.50 percent district tax rate) to the city of Concord. The district tax will be automatically distributed between the city of Concord and Contra Costa County.

  1. 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.
  2. The rates provided are for example only and may not reflect the actual district tax rates. For current sales and use tax rates, please see our webpage California City & County Sales & Use Tax Rates.

If your business is located in a taxing district and you make sales at your business location, you are generally required to collect, report, and pay that district's sales tax on sales made there. And, if you are engaged in business in other districts other than where your business is located, you are also required to collect, report, and pay the district use tax on sales delivered into those districts.

Example:

You own restaurants located in the cities of Napa (Napa County) and Fairfield (Solano County). Your taxable sales made in the city of Napa were $100,000 and in the city of Fairfield were $80,000. You do not make deliveries or provide catering. The city of Napa does not impose a district tax; but Napa County imposes a district tax of .50 percent. The city of Fairfield and Solano County both impose a district tax of 1.125 percent.

You owe the district sales tax imposed by Napa County on sales made at your city of Napa restaurant and the district sales tax imposed by the city of Fairfield and Solano County on sales made at your Fairfield restaurant. You will allocate district tax in the amount of $500 ($100,000 x .50 percent district tax rate) to Napa County. You will allocate district tax in the amount of $900 ($80,000 x 1.125 percent district tax rate) to the city of Fairfield. The district tax for sales allocated to the city of Fairfield will be automatically distributed between the city of Fairfield and Solano County.

  1. The rates provided are for example only and may not reflect the actual district tax rates. For current sales and use tax rates, please see our webpage California City & County Sales & Use Tax Rates.

If you are an out-of-state retailer that is “engaged in business” in California, you must collect, report, and pay district use tax for property you ship to your California customers in districts in which you are engaged in business.

For more information on Out-of-State Retailers and what it means to be “engaged in business” in California, see our Tax Guide for Out-of-State Retailers.

Out-of-State Retailer Whose Presence is Limited to a Stock of Goods (Inventory) in California

You are an out-of-state retailer with no physical presence in California except for a stock of goods (inventory) located in a fulfillment center or warehouse. Because you have inventory stored in this state, you are engaged in business in California and must register the location(s) where your inventory is held with the California Department of Tax and Fee Administration. You are responsible for reporting and paying district tax on your taxable sales for delivery in a taxing district where you have a stock of goods.

(As noted above, on and after April 25, 2019, you are considered engaged in business in all districts in California if, in the preceding or current calendar year, your total combined sales of tangible personal property in this state or for delivery in this state exceed $500,000).

As a construction contractor your jobsite is considered a place of business. That is, your jobsite is the place of sale of fixtures that you furnish and install under a construction contract and the place of use of materials that you furnish and install under a construction contract. When your jobsite is located in a taxing district, your use of materials and sales of fixtures may be subject to district sales and/or use tax.

Materials

Construction contractors are generally the consumer of materials furnished and installed during the performance of a construction contract.

As the consumer of materials you generally may not issue a resale certificate to your supplier for materials you will knowingly consume during the performance of your construction contract. Therefore, you will generally pay sales tax reimbursement, including district sales tax reimbursement, to your supplier based on the tax rate where the sale occurs, even if your jobsite is not located in a taxing district.

District use tax generally applies to the use of the materials at the jobsite in a district imposing district taxes. If you install materials at a jobsite in a district with a lower total tax rate than the district where the sale occurred, you may claim a credit against the district use tax liability. If you install materials at a jobsite in a district with a higher tax rate than the district where the sale occurred, you are liable for the amount of district use tax in excess of the reimbursement you paid for district sales tax.

Example:

You, a construction contractor, purchase materials tax-paid in a location with a total tax rate of 8.75 percent and install the materials in a location with a total tax rate of 8.25 percent; you do not have an additional district use tax liability. In this example, the sale to you is subject to the district sales tax of the district in which the sale occurred, and you would not be entitled to a credit against the applicable district use tax.

Example:

A contractor purchased materials tax-paid in a county with a total tax rate of 7.75 percent and installs the materials in a county with a total tax rate of 8.75 percent. The contractor is liable for the additional 1.00 percent district use tax. If the contractor has a seller's permit, an adjustment can be made on Schedule A (see Reporting Your District Tax section for more information on Schedule A) to allocate the district tax to the proper district of installation.

Example:

You, a construction contractor, have your supplier ship materials to your jobsite located in an area where a district tax is not imposed. Your supplier is located in a city that imposes a district tax of 1.50 percent. However, since the materials were shipped from your supplier to your jobsite where district tax is not imposed, district sales tax does not apply.

Note: If your supplier charged you sales tax including the district tax on your purchase of materials, and title and possession of the materials passed at your jobsite where a district tax is not imposed, you may be entitled to a refund. You must request the refund directly from your vendor who collected the district tax.

If a contractor does not hold a seller's permit or is not otherwise required by law to report use tax in a different manner, the additional use tax liability can be paid by providing, in writing, all the following information:

  1. A request that the correspondence be accepted as a return or a statement, regardless of how brief, indicating that you are attempting to file a return, and
  2. The reporting period for which the correspondence (return) is filed, and
  3. The amount of tax due for each district.

Your total reported use tax should be segregated by district based on where the materials were installed. This will assist the CDTFA in distributing the use tax to the proper district.

If you do not have a seller's permit and are not required to register for a use tax account as a “qualified purchaser,” you can report your purchase(s) subject to use tax on our website by selecting Register, and then under Registration, select Register a New Business or Location. Once you have registered, you can pay any use tax due by filing your return. You can also register to report use tax in person at any of our offices.

  1. The rates provided are for example only and may not reflect the actual district tax rates. For current sales and use tax rates, please see our webpage California City & County Sales & Use Tax Rates.

Sales of Fixtures (and Materials When the Contractor is the Retailer of Materials)

Construction contractors are the retailers of fixtures and must have a valid seller's permit when making retail sales. If your jobsite is in a taxing district and you are making retail sales of fixtures in connection with a construction contract, you are required to collect, report, and pay district sales tax based on the rate imposed there.

If you did not issue a resale certificate and paid district sales tax for fixtures to your supplier at a higher district tax rate then the rate imposed at your jobsite location, you are allowed to take a tax-paid purchases resold deduction for the sales tax, including district sales tax. This is also true when you are considered the retailer of materials, for example, when the contract explicitly passes title to the materials prior to installation and the contract separately states the sale price of the materials exclusive of any charges for installation.

For more information about the application of sales and use tax to construction contractors and a more complete listing of property qualifying as materials, fixtures, machinery, and equipment, see Regulation 1521, Construction Contractors, and publication 9, Construction and Building Contractors.

Unless you have made a timely election to pay tax on the purchase price of property leased in substantially the same form as acquired, you will collect, report, and pay tax based on your lease receipts. Tax due on lease receipts of tangible personal property is generally use tax. Therefore, you may be responsible for district use tax.

Note: Mobile transportation equipment includes rail cars, locomotives, truck tractors and trailers, ships, reusable shipping containers, and airplanes. The law considers lessors of mobile transportation equipment to be consumers of the equipment. Consequently, they are usually required to pay tax on the purchase price.

District Use Tax Due on Purchase Price

As a lessor, if you lease the property in substantially the same form as acquired, you may make a timely election to pay use tax, including applicable district use tax, on the purchase price. If you do not make such a timely election, you must report and pay tax based on rental payments received.

District Use Tax Due on Lease Receipts

District use tax applies to lease receipts when:

  • The property is used in a taxing district, and
  • The payments are subject to the basic statewide use tax.

District use tax applies to lease receipts only while the property is used in an area with applicable district tax. If the property is moved into another district, the property would be subject to the district tax imposed at the new location; if moved to a location without district tax, no district tax would apply. Similarly, leased property which is first used outside a district and then moved into a district becomes subject to the district tax.

For more information on leases, including leases of motor vehicles, vessels, aircraft and mobile transportation equipment, see publication 46, Leasing Tangible Personal Property.

If you sell items at a location for less than 90 days, you are considered a temporary seller.

The most common types of temporary seller's include sellers of:

  • Fireworks
  • Garage Sales
  • Christmas trees
  • Property sold through Internet auctions
  • Crafts
  • Property at conventions, trade shows, swap meets, flea markets or other special events

District sales tax is due on sales that occur in an area with applicable district tax.

Example:

You are a retailer with a permanent place of business in the city of Corona (Riverside County). You also attended a craft fair in the city of San Diego (San Diego County). Taxable sales made at your permanent business location were $9,000. Taxable sales made at the craft fair were $1,500. The city of Corona does not impose a district tax; but Riverside County imposes a district tax of .50 percent. Similarly, the city of San Diego does not impose a district tax; but San Diego County imposes a district tax of .50 percent.

Since the city of Corona and the city of San Diego do not impose a district tax, you owe the district sales tax imposed by Riverside County on sales made at your permanent location and the district sales tax imposed by San Diego County at the craft fair. You will allocate district tax in the amount of $45 ($9,000 x .50 percent district tax rate) to Riverside County and $7.50 ($1,500 x .50 percent district tax rate) will go to San Diego County.

  1. The rates provided are for example only and may not reflect the actual district tax rates. For current sales and use tax rates, please see our webpage California City & County Sales & Use Tax Rates.

You are responsible to report and pay district tax based on the rate in the district you make catering sales in as if you were a store or restaurant.

Catering sales made in a taxing district, including where your business is located, will be subject to district tax. You will be responsible to collect, report, and pay district tax based on the rate in effect where the catering occurs.

Example:

You are a caterer with a retail location in the city of Brea (Orange County). You traveled to the city of La Habra (Los Angeles County) to cater an event. Your taxable catering sales made in La Habra were $5,000. The city of La Habra does not impose a district tax; but Los Angeles County imposes a district tax of 2.25 percent.

You are engaged in business in the city of La Habra. You are required to collect, report, and pay the applicable district tax. Since the city of La Habra does not impose a city district tax, the effective district tax rate will be the county rate. You will allocate district tax in the amount of $112.50 ($5,000 x 2.25 percent district) to Los Angeles County.

If you are a caterer, our Tax Guide for Caterers may also be a helpful resource.

  1. The rates provided are for example only and may not reflect the actual district tax rates. For current sales and use tax rates, please see our webpage California City & County Sales & Use Tax Rates.

An itinerant merchant is a retailer with no permanent place of business similar to a door-to-door salesperson.

As an itinerant merchant, you generally should collect, report, and pay district tax based on your permanent address shown on your seller's permit unless you deliver the property to the buyer outside the district for use outside the district. If your permanent address is not in a taxing district, your sales are generally exempt from district tax. However, they may be subject to district use tax if you solicit the sale in a district and ship or deliver the property to the buyer in the district. For the definition of “engaged in business,” please see the section above Retailer Engaged in Business in a District.

A mobile food vendor is a retailer who sells food or drinks from a truck, stand, or wheeled cart with no fixed, physical location. When making taxable sales in a taxing district, you are required to collect, report, and pay district tax based on the rate in effect where the sale occurs.

When you travel to other taxing districts other than where your registered place of business (usually your home address) is located and make taxable sales in those districts, you are considered engaged in business. District tax is due using either the effective city or county district tax rate, whichever applies.

Example:

You operate a food truck throughout Sacramento, El Dorado and Placer Counties. Your registered business location is your home address located in Yolo County. You did not make taxable sales in Yolo County.

Taxable sales were made as follows:

Sacramento County:

City of Sacramento
$1,800
City of Rancho Cordova
$1,100
City of Citrus Heights
$750
Total
$3,650

El Dorado County:

City of Shingle Springs
$670
City of South Lake Tahoe
$2,450
Total
$3,120

Placer County:

City of Lincoln
$300
City of Auburn
$2,130
City of Roseville
$1,410
Total
$3,840

District tax for sales made outside Yolo County (the county of your registered business location) must be collected, reported, and paid based on the district tax rate in effect where sales were made. District tax is due as follows:

Sacramento County District Tax Calculation
City of Sacramento $18 $1,800 x 1 percent district tax rate for the city of Sacramento (the city of Sacramento imposes a district tax)
City of Rancho Cordova $11 $1,100 x 1 percent district tax rate for the city of Rancho Cordova (the city of Rancho Cordova imposes a district tax)
City of Citrus Heights $3.75 $750 x .50 percent district tax rate for Sacramento County (the city of Citrus Heights does not impose a city district tax; therefore, the county district tax rate applies)
El Dorado County District Tax Calculation
City of Shingle Springs $0 The city of Shingle Springs does not impose a city district tax and El Dorado County does not impose a county district tax.
City of South Lake Tahoe $12.25 $2,450 x .50 percent* district tax rate for the city of South Lake Tahoe (the city of South Lake Tahoe imposes a district tax)
Placer County District Tax Calculation
City of Lincoln $0 The city of Lincoln does not impose a city district tax and Placer County does not impose a county district tax.
City of Auburn $0 The city of Auburn does not impose a city district tax and Placer County does not impose a county district tax.
City of Roseville $0 The city of Roseville does not impose a city district tax and Placer County does not impose a county district tax.
  1. The rates provided are for example only and may not reflect the actual district tax rates. For current sales and use tax rates, please see our webpage California City & County Sales & Use Tax Rates.

Auctioneers are responsible for district tax in a similar manner as other retailers.

If you are an auctioneer holding an auction at a location with applicable district tax, your sales are subject to district tax in the same manner as other types of retailers unless otherwise exempt.

Special rules and reporting requirements apply to motor vehicles, vessels and aircrafts.

Please see the following resources for additional information on how district tax applies.

You are required to properly report and pay the district tax you have collected.

The sales and use tax return includes CDTFA-531-A2, Schedule A—Computation Schedule for District Tax to report your district tax. Depending on your business activities, if you make sales in taxing districts, you will be prompted to file Schedule A when you file your return online.

You may collect district use tax as a courtesy to your customers.

If you are not “engaged in business” in a district, then your customers are the persons liable for the district use tax on tangible personal property purchased from you for storage, use, or other consumption in that district. As a courtesy to your customers, you may collect the district use tax from them and report and pay it on their behalf. If you do charge and collect the tax you are liable for it.

You have some options available if you have over collected district tax from your customer.

If you collect excess district tax or tax reimbursement from your customer, you should either 1) refund the over-collected amount to your customer, or 2) report and pay the over-collected amount on your sales.

For questions about how to report you over collected district tax, please contact our Customer Service Center at 1- 800-400-7115 8:00 a.m. to 5:00 p.m. Monday through Friday except state holidays.

It is important that you know the proper district tax rate that applies to your sales.

You may find the tax rates for each district on our California City and County Sales and Use Tax Rates webpage. This webpage includes a look-up tool, Find a Sales and Use Tax Rate by Address, located under the Current Tax Rates section, which allows you to find a tax rate based on an address.

To further assist you in finding the correct tax rate, our rate look-up service may also be integrated into your sales software to compute the tax rate for each of your sales. To see if our service will work with your application, select the Looking for the Tax Rate API link at the bottom of the Find a Sales and Use Tax Rate by Address page.

Need to know more? Follow the links below for more information about the topics covered in this guide, as well as other information you might find helpful:

Top Resources

Regulations

Notices

Forms

  • CDTFA-531, Schedule B – Detailed Allocation by County of Sales and Use Tax Transactions
  • CDTFA-530, Schedule C – Detailed Allocation by Location of Sales and Use Tax Transactions
  • CDTFA-531-H, Schedule H – Detailed Allocation by City Of Taxable Sales and Use Tax Transactions of $500,000 or More
  • CDTFA-531-F, Schedule F – Detailed Allocation by City of Taxable Transactions for Lessors of Motor Vehicles
  • CDTFA-531-A2, Schedule A2 – Computation Schedule For District Tax – Long Form
  • CDTFA-531-X, Schedule X – Partial Exemption From Bradley – Burns Local Taxes California Department Of Aircraft Common Carrier

Other Helpful Resources

  • Publication 73, Your California Seller's Permit
  • Sign Up for CDTFA Updates – Subscribe to our email lists and receive the latest news, newsletters, tax and fee updates, public meeting agendas, and other announcements.
  • Videos and How-To Guides – These resources will help you avoid common mistakes, file your tax returns online, and more.
  • Use Tax – What You Should Know – Helpful information and videos about use tax.
  • City and County Tax Rates – A listing of current and historical tax rates.
  • Special Notices – CDTFA special notices are issued whenever there is a change in law, tax rates, or CDTFA procedures.
  • CDTFA Online Services – Learn about the online services CDTFA offers.
  • Verify a Permit or License – You can use this application to verify a seller's permit, Cigarette and Tobacco product retailer license, eWaste account, or Underground Storage Tank Maintenance Fee Account.
  • CDTFA Field Offices – A comprehensive listing of all CDTFA field offices and contact information.
  • Get It In Writing! – The Sales and Use Tax Law can be complex, and you are encouraged to put your tax questions in writing.
  • Contact Us – A listing of CDTFA contacts for your questions and concerns.
  • Customer Service Center — You can also call our Customer Service Center at 1-800-400-7115 8:00 a.m. to 5:00 p.m. Monday through Friday except state holidays to get answers to many of your questions.