While there is no general sales tax exemption for sales to Native Americans, this guide explains when and how sales or use tax is applicable to transactions with Native Americans and non-Native Americans when the transactions occur on a reservation. This guide also describes the types of documentation that retailers and Native American purchasers need to maintain for qualified exemptions from paying sales or use taxes on certain transactions.

Use tax is imposed on consumers. When sales tax does not apply, use tax generally applies to the purchase of taxable items made from an out-of-state retailer for use in California. You may also owe use tax on items that you remove from your inventory and use in California when you did not pay tax when you purchased the items.

If you have more than one place of business (located at a different address), you generally must separately register each individual location with us. Generally, it is possible to obtain a consolidated permit for multiple locations. A consolidated permit has sub-permits issued for each location. At the time you apply for a permit, be sure to provide information for all business locations.

Whether you are a Native American, a Native American organization, or a non-Native American, you generally must hold a seller's permit when making sales in California. Certain sales made only on reservations by Native American retailers, including federally licensed Native American traders, are subject to use tax but not sales tax.

Native American sellers who only make this type of sale do not need a seller's permit. Instead, they must obtain a California Certificate of Registration – Use Tax. You can register by visiting our website, and under the How Do I… drop-down menu, select Register for a Permit, License, or Account. On the Online Services webpage, click Get Started and then click Register for a Permit, License, or Account under the Registration heading.

Be sure to let us know about any changes to your business, or to your mailing or email address, so we can keep our records updated and inform you of important changes in laws, tax rates, or procedures. You can easily update your account information through our online services system by logging in with a username and password. You may also contact our Customer Service Center or any one of our offices  throughout the state. Contact information is available in the Resources section of this guide.

If you are selling on a reservation, you may need to obtain a tribal sales license. Please contact the tribal government in whose jurisdiction you are operating for information regarding the requirement to obtain a tribal sales license and the proper application of tribal tax laws.

A tribal sales license is not a legal substitute for a California seller's permit or a Certificate of Registration – Use Tax to collect use tax.

If you accept in good faith a timely, completed resale certificate from your customer, you generally do not owe tax on your sale.

Retailers may purchase items for resale whether or not they are required to hold a seller's permit. Native American purchasers who are not required to hold a seller's permit need to make note of this fact on their resale certificate. For example, the purchaser may state, “I do not hold a California seller's permit for all my sales are made on a reservation. None of my sales are subject to California sales or use tax.”

Other documents to show the purchaser is selling the kind of property being purchased may include business license, business card, or a copy of an advertisement from a newspaper or telephone book.

For more information, please see Regulation 1668, Sales for Resale, and our publication 103, Sales for Resale.

Maintaining good books and records will help you keep track of your sales and purchases and will assist you when preparing your sales and use tax returns. You are required to keep records for at least four years, unless directed by us to keep them longer. Not maintaining records may be considered evidence of negligence or as an intent to evade the tax laws. This may result in penalties.

Your records should be adequate so our representatives may:

• Verify the accuracy of your tax returns; and
• Determine if you have correctly paid the tax due on your sales and purchases.

Records you should keep include, but are not limited to:

• Cash register tapes and receipts
• Purchase invoices
• Sales invoices
• Shipping documents
• Resale and exemption certificates
• Tax returns and supporting documents

For more information on recordkeeping, please see publication 116, Sales and Use Tax Records.

District taxes are voter-approved taxes imposed by cities, counties, and other local jurisdictions and are added to the statewide base rate. As a retailer, you are responsible for reporting your retail sales and paying the tax to us at the proper rate. If you make retail sales in California from a business located in a taxing district, you are generally responsible for the district sales tax. You are also responsible for collecting, reporting, and paying the district use tax when making sales for delivery into taxing districts in which you are considered “engaged in business in the district.”

Generally, you are “engaged in business in a district” when you:

• Have a permanent or temporary business location in the district, including a warehouse, salesroom, or office,
• Have a representative or agent in the district even temporarily, who, for example, makes sales, takes orders, or makes deliveries for you,
• Receive rental income from the lease of merchandise located in the district, or
• Make annual sales of tangible personal property in California or for delivery in California exceeding $500,000.
  • On and after April 25, 2019, a retailer is considered engaged in business in all districts that impose a district tax if in the preceding or current calendar year their total combined sales of tangible personal property in this state or for delivery in this state exceed $500,000. As such, all retailers meeting this threshold are responsible for collecting and paying any district tax on taxable sales made for delivery in any district that imposes a district tax.

For more information on being engaged in business and the correct district tax rates, please see publication 44, District Taxes (Sales and Use Taxes).

You can look up tax rates by city and county or find the full tax rate in your city or county by going to the Find a Sales and Use Tax Rate webpage and entering the address as prompted.

According to Regulation 1616, Federal Areas, to qualify for this exemption, all these criteria must be met:

1. The sale must be to a tribal government of a Native American tribe that is officially recognized by the United States,
2. The tribal government's Indian tribe does not have a reservation, or the principal place where the tribal government meets to conduct tribal business is not on the reservation because the reservation does not have a building or lacks essential utility services necessary to meet and conduct tribal business,
3. The property is purchased by the tribal government for use in tribal self-governance, and
4. Title to the property transfers and the property is delivered to the tribal government at the principal place where the tribal government meets to conduct tribal business.

Since the tribal government may take title and possession of the property outside of Indian country and still qualify as an exempt transaction under the circumstances outlined above, a retailer may verify that the address at which title to the property will transfer is valid by examining the list below. This list contains tribal governments along with the address at which they meet to conduct tribal business that are outside Indian country. Additionally, the retailer should obtain an exemption certificate from the tribal government as supporting documentation for the exempt sale. Tribal governments may use CDTFA-146-TSG, Exemption Certificate – Property Used in Tribal Self-Governance and Statement of Delivery, as part of the necessary documentation to retailers that the sale meets the criteria for the exemption as outlined above.

Please contact us if you believe your tribal government is eligible for the exemption discussed above and your tribal government is not on the list of eligible tribal governments. To be added to the list, please provide:

• The name of the tribe
• The name, address, and telephone number of the contact person
• The address of the qualifying location
• An explanation why your tribal government is eligible for the exemption

The information may be provided via email or a letter to:
California Department of Tax and Fee Administration
Business Taxes Committee MIC:50
P.O. Box 942879
Sacramento, CA 94279-0050

For California sales and use tax purposes, a “Native American” is a person who is both:

• An individual of Native American descent; and
• Eligible to receive services as a Native American from the United States Department of the Interior.

This generally includes a married couple, or a domestic partnership entered under the Domestic Partner Rights and Responsibilities Act of 2003. Tribes have the authority to establish their own laws and regulations regarding such unions. Tribal laws include not only written laws but may also include tribal customs and practices. However, such customs and practices must be that of the tribe, not of an individual tribal member. Therefore, if California law or tribal law recognizes the family relationship, and at least one member of the couple is a Native American, the couple qualifies as a Native American couple.

Partnerships qualify as Native American organizations for California sales and use tax purposes only when all the partners are Native Americans.

Corporations and limited liability companies qualify as Native American organizations only if they are organized under tribal authority and wholly owned by Native Americans.

If an organization does not meet these criteria, it does not qualify, even when owned or operated by Native Americans.

Native American purchaser means and includes an individual Native American, a Native American couple, or a Native American organization.

These terms refer to tribal areas. For example, Indian country includes any of the following:

• A reservation, including rights-of-way and easements running through a reservation,
• A rancheria, and
• Any land held by the United States in trust for any federally recognized Native American tribe or Native American individual (also known as “trust land”).

Not all portions of a facility housing a Native American gaming establishment are necessarily on a reservation.

For example, some portions of a facility containing a gaming establishment (for example, parking lot) may be located on land adjacent to a reservation. Transactions occurring on land adjacent to a reservation may not meet the exemption requirements.

Use tax is due when Native American purchasers who reside on a reservation take ownership of the property delivered on a reservation and use the property off the reservation more than half of the time during the first 12 months after the sale.

For example: A Native American purchaser who resides on a reservation operates an event business and negotiates the purchase of a sound system for $3,500 from a dealer in Los Angeles. The dealer, using their own truck, delivers the system on the reservation and ownership transfers to the purchaser upon delivery. The sale is exempt from sales tax. The purchaser will use the sound system at concerts and events all over California. The purchaser owes use tax based on the system's purchase price ($3,500) if the purchase is used or stored outside the reservation for more than half of the time during the first 12 months after the purchase.

Paying Use Tax

If you owe use tax, you can pay it by using our online services system. Businesses that hold seller's permits should pay any use tax they owe when filing their sales and use tax return. Other businesses that are required to collect use tax from customers and pay it to us must obtain a California Certificate of Registration – Use Tax.

A mobilehome is often referred to as a manufactured home. Revenue and Taxation Code uses the term mobilehome for such homes, and for consistency, this tax guide does also. “Manufactured home” is a relatively new term and meets the definition of a mobilehome.

Recreational vehicles, commercial coaches, and factory-built houses are not considered mobilehomes.

A sale of a mobilehome to a Native American purchaser who resides on a reservation and takes ownership and delivery on the reservation will not be exempt from tax if the mobilehome is used outside the reservation more than half of the time during the first 12 months after the sale.

In this case, the Native American purchaser who resides on a reservation owes use tax and is responsible for paying it using one of these methods:

• Report a One-Time Use Tax – Go to our website, select the Login button. From there, select the File a Return under and thenselect the One-Time Use tax and/or Lumber Return
• Report use tax on a sales and use tax return if the purchaser has a California seller's permit

For more information on mobilehomes and factory-built housing, please see publication 47, Mobilehomes and Factory-Built Housing, and publication 9, Construction and Building Contractors.

In the absence of evidence to the contrary, it is assumed the property used by the Native American lessee is on a reservation if the lessor delivers the property to the Native American lessee on the reservation. However, tax applies to leased vehicles registered with the Department of Motor Vehicles to the extent that the vehicles are used outside the reservation.

Use tax does not apply if a vehicle or vessel is used on a reservation more than half of the time during the first 12 months after the purchase. A vehicle or vessel is used off a reservation when it is used or stored off the reservation. Use tax, if due, is payable by the Native American purchaser directly to us.

How to file a request for a use tax clearance (CDTFA-111 or CDTFA-111-B)

To file a request for a use tax clearance, please submit a CDTFA-106, Vehicle/Vessel Use Tax Clearance Request, to us. If you are registering more than one vehicle or vessel, you can attach a list to the form. Please include copies of the following documentation:

• A copy of the certificate of title or current registration if title is not available;
• Purchase invoice, showing the date you took title of the vehicle or vessel and showing the date and place the vehicle or vessel was delivered to you; and
• Documentation showing you are a Native American residing on a reservation. This may include any one of the following:
  • Either a proof-of-residency letter from your tribal council, or
  • Your tribal identification card, or
  • A letter from the U.S. Department of the Interior to show the purchaser is a Native American.

For more information, please see publication 146, Sales to Native Americans and Sales in Indian Country, and our Tax Guide for Purchasers of Vehicles, Vessels, & Aircrafts.

Sale by retailer located on a reservation

Ownership of an item being sold transfers on a reservation when an “on-reservation” retailer negotiates the sale on the reservation and delivers the property to a Native American or Native American's agent on the reservation.

Sale by retailer not located on reservation

“Off-reservation” retailers may sell to Native American purchasers who request delivery on a reservation.

For a sale to qualify as a transfer of ownership on a reservation, the contract of sale or other sales agreement cannot transfer ownership of the property to the purchaser before the property is delivered on the reservation and the purchaser or purchaser's agent cannot take possession of the property before delivery on the reservation.

In addition, the retailer generally must deliver the property:

1. Using their own vehicle, or
2. By mail, common carrier (for example, UPS, FedEx), or contract carrier (for example, a shipping, trucking, or transport company), when both of the following conditions are met:
   • The contract of sale or sales invoice includes a statement specifically requiring delivery on a reservation (for example, Freight on Board [F.O.B.] name of Native American reservation) and provides that ownership passes upon delivery on a reservation, and
   • The goods are in fact delivered on a reservation.

When delivery does not take place as described here, ownership of the property being sold or purchased generally transfers to the purchaser outside a reservation because the retailer's obligations with respect to physical delivery are usually completed outside the reservation.

If you are a Native American organization, you must also provide documents showing that you qualify for the exemption, such as:

• Partnership agreements, showing all partners are Native Americans, if the organization is a partnership.
• Documents showing that the organization is a federally recognized Native American tribe or tribal organization.
• Articles of incorporations showing that the organization is under tribal authority and wholly owned by Native Americans.
• An exemption certificate containing certain required elements.

Exemption Certificates

• CDTFA-146-RES, Exemption Certificate and Statement of Delivery in Indian Country, is used to document exempt sales of property, vehicles, vessels, and aircraft for delivery on a reservation to a Native American purchaser.
• CDTFA-146-TSG, Exemption Certificate – Property Used in Tribal Self-Governance and Statement of Delivery, is used to document exempt sales of property, vehicles, vessels, and aircraft for delivery on a reservation to a tribal government of a federally recognized Native American tribe.
• CDTFA-146-CC, Construction Contract Exemption Certificate and Statement of Delivery in Indian Country, is used to document exempt retail sales of materials and fixtures by a construction contractor to a Native American purchaser on a reservation.

For more information on exemption certificates, please see Regulation 1667, Exemption Certificates.

In such a case, the Native American purchaser needs to pay use tax on the purchase if the property is used outside the reservation more than half of the time during the first 12 months after the sale.

The Native American purchaser does not need to live on a reservation where ownership transfers. For example, Reservation A purchaser can qualify for the exemption when taking ownership of property on Reservation B.

However, use tax generally applies to sales by “on-reservation” Native American retailers made to non-Native Americans and Native Americans who do not reside on a reservation. The purchased property is presumed for use by the purchaser outside the reservation, and the Native American retailer is required to collect the use tax from such purchaser and must register with us for a California Certificate of Registration – Use Tax. For more information on registration, please see Permit Requirements Getting Started.

However, the sales and use tax law provides that all meals, food, and beverages sold or purchased from a drive-through counter or window of an eating or drinking establishment on a reservation are presumed for consumption off the reservation and tax applies.

In such a case, the Native American purchaser needs to pay use tax on the purchase if the property is used outside the reservation more than half of the time during the first 12 months after the sale.

The Native American purchaser does not need to live on a reservation where ownership transfers. For example, Reservation A purchaser can qualify for the exemption when taking ownership of property on Reservation B.

Either sales or use tax generally applies to sales of tangible personal property by “on-reservation” non-Native American retailers to non-Native Americans and Native Americans who do not reside on a reservation unless the non-Native American retailer is operating an eating or drinking establishment (see Sales of Meals, Food, and Beverages to Non-Native Americans and Native Americans).

• The non-Native American operates an eating or drinking establishment (for example, restaurant or bar) on a reservation under a federally authorized lease or sublease;
• The sales are subject to a tribal sales or use tax; and
• The meals, food, and beverages are sold for consumption on the reservation.

However, the sales and use tax law provides that meals, food, and beverages sold or purchased from the drive-through of an eating or drinking establishment located on a reservation are presumed for consumption off the reservation. Therefore, tax generally applies to the sale or purchase of meals, food, and beverages sold from such drive-through counter or window on a reservation. Tax also applies to sales of meals, food, and beverages sold or purchased for delivery off a reservation.

If a federally recognized Native American tribe charges a tribal tax to customers of an “on-reservation” retailer, then the amount of tax imposed by the tribe may not be subject to California sales or use tax provided:

• The tax is a percentage of the selling price of the property; and
• The retailer complies with the requirements of the California Sales and Use Tax Law. That is, they have a seller's permit or a Certificate of Registration – Use Tax to collect the use tax, file timely sales and use tax returns, properly report all sales, and pay the California taxes due.

The imposition of the tribal tax does not affect the retailer's liability for California sales or use taxes.

Sales tax generally does not apply to sales made by “off-reservation” retailers to Native Americans who reside on a reservation when the retailer delivers and transfers ownership of the property on the reservation.

Even if the purchaser is a Native American organization, the requirement that the Native American purchaser resides on a reservation must still be met. A Native American organization is considered to reside on a reservation when it is located or otherwise conducts business on the reservation.

If the property is purchased by a Native American not residing on a reservation, the property is presumed to be purchased for use outside the reservation, and the retailer must collect use tax, even though the transaction may be exempt from sales tax. In the event the nonresident Native American purchaser can demonstrate or document that the use of the property occurred on the reservation more than half of the time within the first 12 months after the sale, the purchaser may request a refund of the use tax paid. Purchasers may complete a CDTFA-101, Claim for Refund or Credit, and submit the completed form with supporting documentation to us.

The purchaser does not need to reside on the same reservation where ownership transfers. For example, Reservation A purchaser may qualify for the exemption even when taking ownership of the property on Reservation B.

For more information on the refund for use tax paid, please contact our Audit Determination & Refund Section at 1-916-445-1315.

Sales tax generally does not apply to sales made by “off-reservation” retailers to Native American couples who reside on a reservation when the retailer delivers and transfers ownership of the property on the reservation.

A Native American couple is a married couple or registered domestic partnership that consists of two Native Americans or of a Native American and a non-Native American that have entered into an officially recognized family relationship under California or tribal law. See definition of a Native American couple in the Key Definitions section.

A Native American couple may be liable for use tax on the property's purchase price if the property is used outside the reservation more than half of the time within the first 12 months after the sale.

For tax not to apply to such sales, all the following conditions must be met:

• The purchaser is a Native American who resides on a reservation,
• The property is delivered to the purchaser on a reservation, and
• Ownership of the tangible personal property transfers to the purchaser on a reservation.

Improvements to real property include:

• Buildings, structures, fixtures, and fences erected on or attached to land. For purposes of this sales tax exemption, improvements include trailer coaches that are not registered with the Department of Motor Vehicles (DMV), mobile homes, manufactured homes, and factory-built housing, and
• Ornamental trees and vines.
  • Fruit and nut trees can also be improvements, but their sale may be exempt under section 6358 of the Sales and Use Tax Law.

For information on construction contractors, please see Sales Related to Construction Contracts segment below.

The sale does not qualify for the exemption if the Native American takes possession before delivery onto the reservation. The same principle applies to sales to Native American organizations and Native American couples.

For more information, please see Documenting Exempt Purchases of Vehicles, Vessels, and Aircraft.

If the vehicle's physical storage address is a different location than the mailing address, the physical storage address determines whether the purchaser must document the use within and outside the reservation.

For example, if the purchaser has a post office box for receiving mail that is not located on a reservation, but the vehicle is garaged at the purchaser's residence on a reservation, the purchaser is not required to document the use of the vehicle within and outside the reservation. The purchaser, however, must be able to document that the vehicle is stored on the reservation. The same principle generally applies to purchases of vessels and aircrafts.

California retailers may obtain documentation such as:

1. Documents that show the purchaser is a Native American, such as a copy of the purchaser's tribal ID card, a letter from a tribal council, and/or a letter from the United States Department of the Interior.
2. Documents that show that ownership of the property transferred to the purchaser while on the reservation and delivery occurred there, such as contracts of sale, invoices, bills of lading, delivery receipts, and freight invoices. Generally, the retailer must retain documents to show property was delivered:
   1. Using their own vehicle, or
   2. By mail, common carrier (for example, UPS, FedEx), or contract carrier (for example, a shipping, trucking, or transport company), when both of the following conditions are met:
      • The contract of sale or sales invoice includes a statement specifically requiring delivery on a reservation (for example, Freight on Board [F.O.B.] name of Native American reservation) and provides that ownership passes upon delivery on a reservation, and
      • The goods are in fact delivered on a reservation.

Please note: The transportation document, such as a bill of lading, may remain silent on where title transfers but it cannot contain contradictory language to the language contained in the contract of sale or sales invoice.

To help document exempt sales, retailers may obtain an exemption certificate from the Native American purchaser. The exemption certificate should state that the Native American purchaser resides on a reservation and serve as support that the property was sold to a Native American. By obtaining an exemption certificate, retailers will not need to obtain any additional documentation to show the purchaser is a Native American, such as a tribal ID card. However, you will still need to retain documentation showing transfer of ownership and delivery of the property to the Native American on the reservation.

Forms CDTFA-146-RES, Exemption Certificate and Statement of Delivery in Indian Country, and CDTFA-146-TSG, Exemption Certificate – Property Used in Tribal Self-Governance and Statement of Delivery, are available on our website to download and use. These forms contain all required elements of an exemption certificate and contain a section that may be completed by a notary public to document delivery of the property on the reservation or at the principal place where the tribal government meets to conduct tribal matters. A notarized CDTFA-146-RES or CDTFA-146-TSG may be used to document delivery of the property made by facilities of the retailer. The retailer is not required to obtain a notarized statement of delivery but is required to obtain documentation demonstrating the property was delivered to the Native American purchaser on the reservation. If a properly completed and notarized CDTFA-146-RES or CDTFA-146-TSG is obtained, you do not need to obtain any additional documentation showing the property was delivered directly to the purchaser in Indian country. If the property is delivered by a common carrier or contract carrier, freight invoices or bills of lading will generally qualify as sufficient documentation of delivery to the Native American purchaser on the reservation.

If a state-licensed notary public is not readily available to document delivery of the property by facilities of the retailer on the reservation, tribal council officers' or their authorized representatives' delivery certification is also acceptable to document delivery of the property on the reservation.

For more information on exemption certificates, please see Regulation 1667, Exemption Certificates.

Materials are construction components and other tangible personal property incorporated into, attached to, or affixed to real property by contractors in the performance of a construction contract and lose their identity to become an integral and inseparable part of the real property. Examples of materials include concrete, doors, electric wiring, lumber, flooring, roofing, windows, and paint.

Fixtures are properties that are accessory to a building or other structure and do not lose their identity as accessories when installed. Examples of fixtures include signs, heating and air conditioning units, furnaces, plumbing fixtures, lighting fixtures, shutters, and blinds.

Please see Appendix A and Appendix B of Regulation 1521, Construction Contractors, for typical items regarded as materials and fixtures, respectively.

However, this may not apply for retail sales of materials. As previously described, the contractor is generally a consumer of materials that are furnished and installed in the performance of a construction contract. Unless the construction contractor qualifies as a retailer of materials, they are the consumer of materials and tax applies to those purchases.

Below is an overview on how tax applies to those sales of material and fixture to Native and Non-Native American construction contractors.

Material and Fixture Sales to Native American Construction Contractors

Tax applies to sales of materials to Native American construction contractors when the materials are delivered at any point outside a reservation. However, tax does not apply if materials are delivered to Native American construction contractors on the reservation and title transfers to the Native American construction contractor on the reservation.

Tax does not apply to sales of fixtures furnished and installed by Native American construction contractors on a reservation. The “off-reservation” retailer should obtain timely a completed California resale certificate from the Native American contractor. If the Native American construction contractor does not hold a California seller's permit, instead of including a seller's permit number, the resale certificate must include information explaining why the Native American construction contractor is not required to hold a seller's permit.

Material and Fixture Sales to Non-Native American Construction Contractors

Generally, construction contractors are consumers of materials furnished and installed in the performance of a construction contract. Tax generally applies to sales of materials to non-Native American construction contractors. This is true even if the materials are delivered onto a reservation and permanently incorporated into the real property on the reservation.

A construction contractor qualifies as a retailer of materials under certain specific circumstances. To be a retailer, the construction contractor must:

• Be in the business of selling materials or other tangible personal property,
• Possess a valid seller's permit,
• Explicitly provide for the transfer of title to the materials prior to the time the materials are installed,
• Separately state the price of materials, exclusive of the charges of installation, and
• Provide a valid and timely resale certificate to the vendor.

If a construction contractor only furnishes and installs hardwood flooring and tiling and makes no over-the-counter sales of materials, they are generally not required to hold a seller's permit. If the contractor wants to enter into a construction contract with a Native American purchaser residing on a reservation to furnish and install materials and to qualify as the retailer of materials, the contractor must obtain a seller's permit. If the construction contractor does not obtain a seller's permit, the contractor may not act as a retailer of materials. Construction contractors that obtain a seller's permit are considered to be in the business of selling materials. If the construction contractor does not obtain a seller's permit, the contractor may not sell the materials at retail.

Sales of fixtures to non-Native American construction contractors are generally not subject to tax when the fixtures are furnished and installed on a reservation. A timely completed California resale certificate should be obtained from the construction contractor.

Notes

1. Unless the non-Native American construction contractor is the retailer of the materials.

For more information, please see Sales for Resale in the Getting Started tab.

However, the same provisions do not necessarily apply to materials since a construction contractor is generally a consumer of materials that are furnished and installed in the performance of a construction contract. Unless you qualify as a retailer of materials, you are the consumer of materials and tax is generally due on your purchase of those materials.

When a construction contractor qualifies as a retailer of materials, the contractor may purchase materials from its vendor for resale. To resell materials in a tax-exempt transaction to a Native American purchaser in performance of a construction contract on a reservation, each of the requirements must be met:

1. The construction contract must separately list the price of materials, exclusive of the charge for installation,
2. The contract must specify the title of the materials transferred to the American purchaser on the reservation before use or installation of the materials,
3. The materials must be delivered to the Native American purchaser on the reservation, and
4. The construction contractor must obtain an exemption certificate from the Native American purchaser.

Please be sure to retain documentation (see Claimed Exempt Sales to Native Americans Require Documentation).

Subcontractor

In a situation where a subcontractor is acting as a retailer of materials that are furnished and installed, or is furnishing and installing fixtures, the subcontractor generally may not accept a resale certificate from a prime contractor. The subcontractor must sell the materials or fixtures at retail directly to the Native American purchaser on a reservation for the transaction to qualify as tax exempt. However, if the subcontractor is making a retail sale of materials or fixtures to a prime contractor, and the materials or fixtures are resold by the prime contractor to the Native American purchaser prior to installation, the subcontractor may accept a resale certificate from the prime contractor in this case.

Examples of Contract Language for Tax-Exempt Transactions

For a contractor to be a retailer of materials, the contractor must separately state the selling price of the materials and the contract must contain sufficient language of transferring title of the materials to the Native American purchaser within a reservation prior to installation on the reservation by the contractor.

The following are examples of contract language allowing a contractor to be a retailer of materials. The examples shown separately state the selling price of material in a guaranteed maximum price construction contract.

The use of the language below does not automatically result in the contractor being a retailer of materials. The contract needs to be examined in its entirety.

Example 1:

Contract Price

Subject to the terms and conditions hereof, as payment for contractor's performance of the services under this Agreement, Tribe shall pay a guaranteed maximum cost of $10,000 (contract price). The portion of the contract price which is the guaranteed maximum cost of materials only is $5,000 (total cost of materials amount), which amount is exclusive of any charge for installation and performance of labor services.

Example 2.

Contract Sum

The sum of the cost of the work and the contractor's fee is guaranteed by the contractor not to exceed an aggregate amount, hereinafter the “guaranteed maximum price,” equal to $10,000 (guaranteed maximum price amount). The cost of the work shall include materials that are exempt from tax under 18 CCR 1616(d)(4)(C), which materials contractor shall, pursuant to this agreement, sell or cause to be sold to owner. The final cost of such materials is estimated to be $5,000 (estimated cost of materials amount). Changes to the cost of materials exempt from sales tax under 18 CCR 1616(d)(4)(C), stated above, shall be affected through change orders, which shall in all cases separately state the cost of such materials.

Two Agreements

Notwithstanding anything to the contrary contained herein, this Agreement is intended to constitute, and shall be construed and interpreted as if it constitutes, two agreements with regard to materials exempt from sales tax under 18 CCR 1616(d)(4)(C), as follows:

1. The retail sale of such materials from the contractor of the Tribe, with delivery to the Tribe, and transfer of title to the Tribe occurring in Indian country prior to installation, and
2. The later installation (and labor associated therewith) of the Tribe's materials into the project.

Contractor as Seller

It is the intent of the parties that contractor, subcontractors, and sub-subcontractors be “sellers” of materials as provided in 18 CCR 1521(b)(2)(A)2.

For more information on tax exempt sales related to construction contract involving Native Americans, please see publication 146, Sales to Native Americans and Sales in Indian Country.

If tire(s) are purchased in Indian country by a Native American who resides in Indian country, the tire fee is not owed. However, the Native American retailer of tires must register with us to collect and pay the fee for tires that are sold to non-Native Americans and Native Americans who do not reside in Indian country.

Please see the Getting Started tab in our California Tire Fee Guide on how to register for a California Tire Fee account.

A non-Native American cigarette distributor who sells cigarettes to a Native American must pay the cigarette tax by buying California cigarette tax stamps from us and affixing them to the cigarette packages. A non-Native American tobacco products distributor who sells tobacco products to a Native American must report and pay the tobacco products excise tax.

When a Native American retailer in California buys untaxed cigarettes or untaxed tobacco products and then sells them to non-Native Americans in Indian country, the Native American retailer is required to collect the cigarette and tobacco products excise tax from the purchasers and pay the excise tax to us.

If the Native American retailer does not collect and pay the excise taxes due, the non-Native American purchaser is ultimately liable for the excise tax. Non-Native Americans who purchase cigarettes without California tax stamps or purchase untaxed tobacco products from a Native American retailer, owe the cigarette and tobacco products excise tax. The non-Native American purchaser must register with us, file returns, report their purchases, and pay the applicable California excise tax.

License and Fee Requirements

Generally, California law requires federally recognized Native American tribes to obtain and maintain the appropriate cigarette and tobacco products license(s) to sell cigarettes and tobacco products to businesses or consumers in California.

A Native American tribe must provide supporting documentation that they are a federally recognized tribe operating all business activities on their own reservation for the cigarette and tobacco products license fee to be waived at registration. A license will not be issued without proper documentation.

Please see the Getting Started tab in our Tax Guide for Cigarettes and Tobacco Products to register for a cigarette and tobacco products license, a seller's permit, and many other permits, license, or accounts. For more information about cigarette and tobacco products taxes and licensing, please see our Tax Guide for Cigarettes and Tobacco Products, Industry Topics tab, under the heading Native Americans.

The following CEDs are covered by the eWaste fee:

• Televisions
  • Cathode ray tube (CRT)
  • Liquid crystal display (LCD) but excludes LCD projection televisions
  • Light-emitting diode (LED)
  • Plasma but excludes plasma projection televisions
  • Organic light-emitting diode (OLED) screens
• Desktop monitors and laptop computers
  • LCD
  • LED
  • OLED
• LCD, LED, or OLED containing tablets
• Bare CRT or any other CRT devices
• Portable DVD players with LCD or LED screens
• LCD or LED Smart Displays

If any of the items above are purchased in Indian country by a Native American who resides in Indian country, the eWaste fee is not owed. However, the Native American retailer of those items must register with us to collect and pay the fee to us if those items are sold to non-Native Americans and Native Americans who do not reside in Indian country.

Please see the Getting Started tab in our Covered Electronic Waste Recycling Fee Guide on how to register for an eWaste Fee account.

Any person who uses fuel in Indian country that is not part of a state or local road system may file a claim for refund for taxes paid on fuel consumed off-highway in Indian country.

For example, Bureau of Indian Affairs roads are generally located within Indian country and are not considered part of a state or local road system. If you used gasoline off-highway in Indian country, you may file a claim for refund with the California State Controller's Office (SCO). You can download the Gasoline Tax Refund Claim form (SCGR-1), and schedules, by going to SCO's Gasoline Tax Refund webpage. Follow the instruction to file your claim for refund. If you need assistance, please contact SCO's Gas Tax Refund Section at 1-916-322-7952 or by email at GTR@sco.ca.gov.

If you used tax-paid clear diesel fuel off-highway in Indian country, you may file a claim for refund by completing a Diesel Fuel Claim for Refund on Nontaxable Uses through our online services. If you are not registered to file claims for refund for nontaxable uses, you must do both of the following before you file your first claim:

• Register to obtain a diesel user account number.
• Submit a completed Diesel Fuel Tax Claim for Refund Questionnaire.

Your claims for refund may be filed annually or quarterly (if each quarterly claim is for $750 or more) and must be filed within three years from the date the fuel was purchased.

For more information, please visit our Users – Nontaxable Uses – Filing Claims for Refund webpage.