Who is a Retailer?

• If you sell lumber or engineered wood products to a consumer in California, you are considered the retailer of the lumber or engineered wood products.
• A marketplace facilitator is considered the seller and retailer for each sale facilitated through its marketplace. Beginning January 1, 2022, a marketplace facilitator must collect the one percent assessment on sales of lumber products or engineered wood products. This is based on the passage of Assembly bill No. (AB) 1402 (Stats. 2021, ch. 421). For more information, please see our Tax Guide to Marketplace facilitator Act.

Retailers Of Lumber Products Or Engineered Wood Products Are Required To:

• Charge and collect the one percent assessment on sales of lumber products or engineered wood products. Note: The amount of the assessment is not subject to sales or use tax.
• Separately state the amount of the lumber products assessment on the sales receipt given to the customer. The separately stated amount may be designated as lumber products assessment, LPA, lumber assessment, lumber fee or lumber.
• Report and pay the lumber products assessment to the California Department of Tax and Fee Administration (CDTFA) on their sales and use tax return.
• Notify us if your sales and use tax return does not include the lumber products assessment schedule.

Certain Retailers No Longer Required To Collect Lumber Assessment

A "low-volume retailer" is a retailer whose sales of qualified lumber products or engineered wood products are less than $25,000 during the previous calendar year. For purposes of meeting the threshold, retailers that have more than one location must include sales of qualified lumber products and engineered wood products from all locations when determining if the threshold is met.

Effective January 1, 2015, low-volume retailers are not required to collect the lumber products assessment for the subsequent calendar year. If you are not required to collect the lumber products assessment, you must notify your customers that they are responsible for paying the lumber products assessment directly to the CDTFA. You may inform your customers by printing publication L-403, Lumber Products Assessment Flyer, and handing it to each customer that purchases qualifying lumber products.

However, as a convenience for your customers, you may continue to charge and collect the lumber products assessment on your retail sales of qualifying lumber products sales and report and pay it to the CDTFA. CDTFA will continue to provide the lumber schedule on your return and no action will be required from you.

If you are not required to charge and collect the lumber products assessment on your retail sales and you do not want to continue to voluntarily collect the assessment from your customer, please contact us so that we can remove the lumber schedule from your account (see Updating Your Account below).

Please note, any amounts you collected as lumber products assessment must be reported and paid to the CDTFA whether you were required to collect the assessment at that time or not. If you collect an amount greater than the actual amount of lumber products assessment due, you must either return the excess amount to the customer or pay the excess amount to CDTFA.

How To Determine If You Are Required To Collect Assessment

Each year you will be responsible for determining if you are required to collect the lumber products assessment based on your sales of qualifying lumber products in the prior calendar year. If your sales in the prior calendar year are less than $25,000, you are not required to collect the lumber products assessment in the current calendar year. For example, if your annual sales of qualifying lumber products were less than $25,000 in 2014, you will not be required to collect the lumber products assessment in 2015. However, if your annual sales of lumber are greater than or equal to $25,000 in 2015, you will again be required to collect the lumber products starting January 1, 2016, even if you were not required to collect the assessment in 2015.

Therefore, you should maintain records of your annual lumber sales. This will help you determine whether or not you will be required to collect the lumber products assessment in the following year. Keeping a record of your annual sales of lumber is especially important if your annual sales are consistently close to the $25,000 threshold. If you are required to collect the lumber products assessment, and did not collect it from your customers, you are still responsible for the payment of the assessment to CDTFA. We may issue a bill to you for any unpaid lumber products assessment; less any amounts you can show have been reported directly to CDTFA by your customers.

Filing Returns

The law requires that retailers of lumber products or engineered wood products must file the lumber products assessment electronically. If you are a lumber retailer that charges and collects the lumber products assessment, your electronic sales and use tax return must include a lumber schedule to report your sales of qualifying lumber products. If you need the lumber schedule added to your electronic return, please contact us (see Updating Your Account below).

If you do not currently file online and you are a retailer of lumber products or engineered wood products, follow the instructions under online services to begin filing your sales and use tax return online.

Updating Your Account

If you need to add or remove the lumber schedule from your electronic sales and use tax return, please call our Customer Service Center at 1-800-400-7115 or your local CDTFA office to update your account.

Reimbursement for Startup Costs

Retailers established in business selling lumber products and engineered wood products prior to January 1, 2013, may offset their reported lumber products assessment amounts for one-time start-up costs of $250 per business location.

A business location means a location registered under your seller's permit as of January 1, 2013, where retail sales of lumber products or engineered wood products are made.

Beginning January 1, 2014 lumber retailers that were in business selling lumber products or engineered wood products before January 1, 2013, may retain an additional $485 per business location as reimbursement for their start-up costs.

To claim the additional start-up cost, beginning with returns due on or after January 1, 2014, enter your allowable additional reimbursement cost ($485 per business location) on your lumber schedule in the Reimbursement Cost Offset box. Remember, you may only enter a reimbursement amount up to your total reported lumber products assessment per each return. Any remaining allowable reimbursement cost must be taken on subsequent returns as an offset to reported lumber products assessment amounts, including any allowable start-ups costs you may have remaining from 2013 ($250 per business location).

If you are eligible for the additional $485 in start-up costs but closed out your business or no longer sell lumber products or engineered wood products subject to the 1% assessment, you may file a claim for refund for lumber products assessment amounts paid in 2013 up to $485 per business location. You may only claim a refund up to the lumber products assessment amounts paid in 2013. You may use form CDTFA-101, Claim for Refund or Credit, to file a claim for refund (see also Publication 117, Filing a Claim for Refund).

Sales Not Subject to the Lumber Products Assessment

In general, the lumber products assessment is not due on the following sales:

• Sales for resale. In a sale for resale, the purchaser is not regarded as purchasing the lumber product or engineered wood product for their own use in this state.
• Sales in interstate commerce. Sales made by a retailer in California but shipped directly to customers outside of California.
• Sales to the U.S. Government.

Sales involving Native Americans follow the same rules as the sales and use tax law. See Sales and Use Tax Regulation 1616, Federal Areas, and publication 146, Sales to American Indians and Sales in Indian Country.

Purchases From Non-California Retailers

Purchasers, including construction contractors, who purchase lumber products or engineered wood products for use in California who do not pay the one percent lumber products assessment to a California retailer are required to report and pay the assessment directly to the CDTFA.

This includes purchases of lumber products or engineered wood products from outside of California for use in this state. In general, purchasers responsible for paying the one percent assessment directly to the CDTFA will also be responsible for reporting and paying the use tax. Use tax is a companion to California's sales tax, and is due whenever you purchase taxable items without payment of California sales tax from an out-of-state vendor for use in California. You also owe use tax on items that you remove from your resale inventory and use in California. To pay use tax, report the purchase price of the taxable items under Purchases Subject to Use Tax on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.

Purchases from California Retailers Who Are No Longer Collecting the Assessment

A "low-volume retailer" is a retailer whose sales of qualified lumber products or engineered wood products are less than $25,000 during the previous calendar year. For purposes of meeting the threshold, retailers that have more than one location must include sales of qualified lumber products and engineered wood products from all locations when determining if the threshold is met.

Effective January 1, 2015, low-volume retailers are not required to collect the lumber products assessment. If you purchase these products for use in California from a California retailer who does not charge and collect the lumber products assessment, you must pay the 1% assessment directly to the CDTFA.

If you have a seller's permit you can file and pay the lumber products assessment on your purchase along with your sales and use tax return online as long as your account has been updated to include the lumber schedule (see Updating Your Account below).

If you are not required to hold a seller's permit or a use tax account, see How to Report and Pay a One-Time Purchase below.

Remember, a California retailer who does not collect the 1% lumber products assessment will still charge and collect the sales tax from you on your retail purchase of lumber products. Therefore, you are only responsible for paying the 1% lumber products assessment directly to the CDTFA, not the sales tax.

Retail Sales of Lumber Products or Engineered Wood Products by Contractors

Construction contractors that make retail sales of lumber products or engineered wood products are generally required to charge and collect the lumber products assessment from their customers on their retail sales in this state.

However, effective January 1, 2015, low-volume retailers are not required to collect the lumber products assessment from their customers on their retail sales. See the Retailer section, under the heading, Certain Retailers No Longer Required To Collect Lumber Assessment.

How the Lumber Products Assessment Affects Construction Contractors

Construction contractors are either retailers or consumers of lumber products or engineered wood products.

If you are a construction contractor that is:

• a consumer of lumber products or engineered wood products, you are required to pay the assessment to California vendors. Note, effective January 1, 2015, you are required to pay the assessment directly to the CDTFA if you purchase qualifying lumber products from California vendors who do not charge and collect the 1% lumber products assessment.
• a consumer of lumber products or engineered wood products, you are required to pay the assessment directly to the CDTFA on purchases made from outside of California for use in this state.
• a retailer of lumber products, you are required to charge and collect the assessment from your customers and report and pay the assessment to the CDTFA on your sales and use tax return. Note, effective January 1, 2015, if you are a low-volume retailer, you are not required to collect the lumber products assessment from your customers on your retail sales of these products. See the Retailer section, under the heading, Certain Retailers No Longer Required To Collect Lumber Assessment.
• a retailer of items that you manufacture, assemble, process, or produce from lumber products or engineered wood products (for example, prefabricated cabinets), you are not required to pay the assessment on either your purchase or your subsequent sale of these items.

Construction contractors that are retailers of merchandise (including lumber products or engineered wood products) are required to register with CDTFA.

Construction contractors that make purchases of items from outside of California for use in this state (for example, items purchased without tax that are consumed in the performance of a construction contract) are also required to register with the CDTFA.

For more information about construction contractors, see CDTFA's publication 9, Construction and Building Contractors.

Fixed Price Contracts

The lumber products assessment law does not contain an exemption for fixed price contracts.

Therefore, lumber products or engineered wood products sold or purchased on or after January 1, 2013 are subject to the one percent lumber products assessment, even if they are sold as part of a fixed price contract entered into prior to January 1, 2013.

How To Register

To register, visit our Registration page and follow the instructions. The law requires that you file the lumber products assessment electronically.

When registering online, you will be asked if you sell or purchase lumber or engineered wood products. If you answer yes to either question, your return will automatically include a lumber schedule so you may report and pay the lumber products assessment.

If you need to update your existing account to include the lumber schedule to report and pay the lumber products assessment, please notify the CDTFA (see below).

Updating Your Account

If you need to add or remove the lumber schedule from your electronic sales and use tax return, please call our Customer Service Center at 1-800-400-7115 or your local CDTFA office to update your account.

How to Report and Pay a One-Time Purchase

Purchasers that do not have a seller's permit and are not required to register for a use tax account as a qualified purchaser, can report and pay the lumber products assessment and any applicable use tax on by visiting our Registration page. Select the option to Pay use tax and/or the lumber products assessment on one time purchase.

Purchasers May Have to Pay the Lumber Products Assessment Directly to CDTFA

The 1% lumber products assessment is imposed on you, as the purchaser of qualified lumber products and engineered wood products for use in this state (Public Resources Code § 4629.5).

You generally pay the 1% lumber products assessment on your purchases of lumber products and engineered wood products to the retailer. However, effective January 1, 2015, low-volume retailers (sell less than $25,000 of lumber products or engineered wood products in the prior calendar year) are not required to collect the 1% lumber products assessment from their customers.

If the retailer did not collect the 1% lumber products assessment from you on your purchase of lumber products or engineered wood products that you will use in this state, then you must directly report and pay the lumber products assessment to the CDTFA.

How to Report and Pay the Lumber Products Assessment Due on Your Purchase

If you have a seller's permit or use tax account, you can file and pay the lumber products assessment along with your sales and use tax return online as long as your account has been updated to include the lumber schedule (see Updating Your Account below).

If you do not have a seller's permit or use tax account, you can file and pay the lumber products assessment online by following the instructions below:

1. Access our Online Services page, Registration tab.
2. Select the “Get Started” button.
3. Scroll down and find the “File a Return” hyperlink under the “Limited Access Functions” column.
4. Select the “One-Time Use Tax and/or Lumber Return” hyperlink.
5. Follow the prompts to file and pay the lumber assessment.

On your small lumber purchase receipts, you can wait until net combined lumber purchases are $50 or more, before reporting and paying the assessment to the CDTFA.

Remember, a California retailer who does not collect the 1% lumber products assessment will still charge and collect the sales tax from you on your retail purchase of lumber products (The lumber products assessment amount is not subject to sales or use tax). Therefore, you are only responsible for paying the 1% lumber products assessment directly to the CDTFA, not the sales tax.

Updating Your Account

If you need to add the lumber schedule to your electronic sales and use tax return, please call our Customer Service Center at 1-800-400-7115 or your local CDTFA office to update your account to include the lumber schedule.

Delivery charges, handling charges and sales tax

In general, the sales price does not include separately stated delivery charges or sales tax. However, handling charges are considered part of the sales price and therefore subject to the lumber products assessment.

Please see publication 100, Shipping and Delivery Charges for additional information regarding transportation and delivery charges.

Acquiring Inventory

The lumber products assessment does not apply when you, the retailer, acquire the inventory for resale. The lumber products assessment applies when the product is sold at retail. It is imposed on the purchaser of lumber products or engineered wood products for the storage, use, or consumption in this state.

Merchandise exchanged for the same price

The lumber products assessment is based on one percent (1%) of the selling price of lumber products. There is no additional assessment on an even exchange of merchandise.

Merchandise returned for a refund

The lumber products assessment is refundable to the customer on merchandise that is returned.

If you collect an amount greater than the actual amount of lumber products assessment due, you must either return the excess amount to the customer or pay the excess amount to the CDTFA. You may not keep the excess amount of lumber products assessment you have collected.

Sale of packages or kits that contain lumber products

Packages and/or kits such as decking packages, picnic table kits, shed kits, and other similar packages or kits that contain products that include pre-cut, pre-drilled, or other items manufactured to some extent, and then disassembled for shipment are not subject to the lumber products assessment. The additional labor added to these items removes them from the category of products typically regarded as lumber products.

For more information about products subject to the lumber product assessment, visit Board of Forestry's website, and follow the link for Emergency Regulation to Implement Lumber Products Assessment.

Lumber Products and Engineered Wood Products

The Board of Forestry and Fire Protection (Board of Forestry) is responsible for determining the products that are subject to the lumber products assessment. See the Board of Forestry's Regulations, Lumber Products Assessment. The Board of Forestry is required to annually update their regulation.

In general, lumber products and engineered wood products subject to the assessment are building products usually used in construction in which wood is at least 10% of total content. For example all dimensions and grades of lumber, roofing, (shakes and wooden shingles), siding, lath, plywood, particle board, fiberboard, oriented strand board, I-joists, laminated veneer lumber, veneer-based sheeting material, and inorganic-bonded and wood thermoplastic composites, including plastic lumber and decking.

Based on guidance provided by Board of Forestry the lumber products assessment does not apply to products where labor has added 'significant value' to them, such as:

• furniture,
• doors,
• windows,
• decorative products such as wainscoting, paneling, molding or baseboards that have added profiling, patterns, chamfering or other craftsmanship.

However, the addition of any value to a lumber product does not automatically result in a product not subject to the assessment. Many lumber products undergo additional processing before being used, but are still subject to the assessment, for example lumber that is graded and planed. In addition, engineered wood products, which are subject to the assessment, have been, by definition, processed or manufactured from raw materials. Thus, it is important to consult the Board of Forestry's Regulation when trying to determine if a product is subject to the Lumber Products Assessment.

The Board of Forestry provides additional information on its website in a document entitled Guidance for classifying products under the Lumber Assessment. This document is intended to provide guidance in determining the products that are subject to the Lumber Products Assessment and does not have the same effect of the law. In instances where there is an inconsistency between the guidance and the law, the law is controlling.

The following listing is current as of July 31, 2014. We will add additional products as we receive further guidance from the Board of Forestry.

Products Subject to the Lumber Products Assessment

Inorganic-Bonded and Wood Thermoplastic Composites:

Products Not Subject to the Lumber Products Assessment

Effective July 1, 2013, the Board of Forestry and Fire Protection (Board of Forestry) determined that these James Hardie products are no longer subject to the 1% lumber products assessment:

• Hardieplank® lap siding (effective July 1, 2013)
• Hardiepanel® vertical siding (effective July 1, 2013)
• Hardieshingle® siding (effective July 1, 2013)
• Hardiesoffit® panels (effective July 1, 2013)
• Hardietrim® (effective July 1, 2013)
• Hardiebacker® underlayment panels (effective July 1, 2013)
• Cemplank® siding (effective July 1, 2013)
• Cempanel®siding (effective July 1, 2013)
• Cemtrim® (effective July 1, 2013)
• Artisan® siding (effective July 1, 2013)
• Prevail® panel and lap siding (effective July 1, 2013)
• Hardie® Reveal™ panels (effective July 1, 2013)

Sales or purchases of the above James Hardie products prior to July 1, 2013, for use in California were subject to the 1% assessment.

• L-403, Lumber Products Assessment Flyer

Publications

• Publication 9, Tips for Construction and Building Contractors
• Publication 146, Sales to American Indians and Sales in Indian Country

Regulations

• Board of Forestry and Fire Protection Lumber Products Assessment.
• Regulation 2000, Retailer Reimbursement Retention
• Regulation 2001, Additional Allowed Retailer Reimbursement Retention

• Regulation 1616, Federal Areas
• Regulation 1521, Construction Contractors

Board of Forestry, Additional Information

• Guidance for classifying products under the Lumber Assessment (2014)

Authority

• Assembly Bill 1492, Chapter 289, Statutes of 2012
• Assembly Bill 2031, Chapter 810, Statutes of 2014
• Public Resources Code Section 4629-4629.13

Tax and Fee Guides

• Tax Guide to Marketplace Facilitator Act