• 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 exceeding $500,000 during the preceding or current calendar year.

Did you receive a CDTFA 790, California Nexus Questionnaire?

Your business activities in this state may require you to register under the State of California Sales and Use Tax Law.

• Complete and return this questionnaire to the address provided.
• If you have any questions regarding the questionnaire or registration, a contact person, phone number, and email address are provided at the bottom of the form you received.

For more information see Regulation 1684, Collection of Use Tax by Retailers, Revenue and Taxation Code 6203, Collection by Retailer, and our online Tax Guide Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision.

If your presence in California for conventions or trade shows is not more than fifteen days, in whole or in part, during any 12 month period and you do not derive more than $100,000 of net income during the prior calendar year from these shows, you are not considered "engaged in business" in California and you are not required to register for an ongoing permit. You must still collect and remit the use tax on the sales made during the event even though you are not required to hold an ongoing permit. You should obtain a temporary permit for reporting tax on sales made during the event.

Sales Made on State-Designated Fairgrounds

Effective July 1, 2018, if you are a retailer who makes sales of tangible personal property that take place on the real property of a California state-designated fair (“state-designated fairground”), you must separately state the amount of those sales on your Sales and Use Tax return. Sales that take place on state-designated fairgrounds include over-the-counter sales on the fairgrounds and also may include sales in which the property is shipped or delivered to or from the fairground.

The separately reported amount will be used for funding allocation purposes only. There is no additional tax or fee due on these sales. For more information on the new reporting requirement, please see Tax Guide for Reporting Requirements on State-Designated Fairgrounds.

Voluntary disclosure provides taxpayers with the following benefits:

• Limits the statutory period for assessments against unpaid tax to three years instead of eight.
• Allows us to waive late filing and late payment penalties.
• Allows taxpayers to anonymously obtain a written opinion regarding whether you will be approved for a voluntary disclosure request.

To qualify for this program, you must meet the following five conditions:

• Be located outside California and cannot have been previously registered with CDTFA;
• Be engaged in business in California.
• Register voluntarily with CDTFA;
• Have not been previously contacted by CDTFA or its agents regarding its activities in California; and
• Failure to pay the tax or file a return was due to reasonable cause and not as a result of negligence or intentional disregard of the law.

The voluntary disclosure program is not applicable to cases involving:

• Any purchases subject to the California use tax.
• Sales by persons, registered or unregistered, which are subject to California sales tax.
• Any person holding or who held a seller's permit.

How to Request a Written Opinion

To request an opinion as to whether or not we would be inclined to approve a voluntary disclosure request or to discuss your eligibility for consideration under these programs, please contact the Voluntary Disclosure Specialist at the following address:

California Department of Tax and Fee Administration
Voluntary Disclosure Program
PO Box 942879 (MIC: 44)
Sacramento, CA 94279-0044
1-916-309-5223
1-916-227-6600
1-916-322-0187 (fax)
(e-mail)

To receive the most accurate response possible to your request, please include the following:

• A description of how you meet all of the qualifications listed above.
• A description of your business activities, including how products are marketed and sold to California customers.
• A detailed description of the flow of goods to the customer from the time an order is placed.

How Do You Apply for Voluntary Disclosure?

• Complete the online registration, and
• Complete a Form CDTFA-38, Application for Out-of-State Voluntary Disclosure within thirty (30) days of registration.
• Completed forms may be sent to the following address:

• California Department of Tax and Fee Administration
  Main Out-of-State Office
  3321 Power Inn Road, Suite 130
  Sacramento, CA 95826-3893

We will provide you with a Client ID Login Code to file your tax returns. Payment may be made online at the time of filing or mailed with a printable voucher.

You will be notified in writing whether or not you have been accepted into the Voluntary Disclosure Program.

For more information, please see Publication 178, Voluntary Disclosure Program, and Revenue and Taxation Code 6487.05, Deficiency determination; unregistered out-of-state retailers.

Beginning January 1, 2020, sellers of prepaid mobile telephony services (MTS) will be required to collect, report, and pay the Emergency Telephone Users (911) Surcharge as a flat fee on each purchase of prepaid MTS made by a prepaid MTS consumer. The 911 Surcharge will be due on each retail transaction that involves a sale of prepaid MTS to a California consumer, unless otherwise exempt.

Sellers of prepaid MTS must continue to collect local charges as a percentage of total prepaid MTS retail sales (if local charges apply).

The 911 Surcharge and local charges (if local charges apply) generally applies to amounts charged for:

• Prepaid wireless airtime cards
• Prepaid wireless cards compatible with pay-as-you-go cell phones
• Prepaid wireless minutes
• Prepaid wireless plans
• Prepaid wireless refill or top-off cards
• Prepaid wireless ‘e-Cards’
• Prepaid mobile data or any other services when sold with any of the above
• Any product or service (except a cell phone), when sold with prepaid MTS for a single non-itemized price
• A cell phone sold with prepaid MTS for a single non-itemized price, unless only a minimal amount of prepaid MTS is transferred. (A minimal amount of prepaid MTS is $5 or less, or 10 minutes or less)

The current 911 Surcharge rate and local charge rates may be found on our 911 Surcharge and Local Charge Rates webpage.

If you sell prepaid wireless products and services to California consumers, you must register with the CDTFA as a prepaid MTS seller. The prepaid MTS account is a separate account from your seller's permit. For more information about your collection requirements as a sellers of prepaid MTS, please see our Tax Guide for Sellers of Prepaid Mobile Telephony Services (MTS) and Telecommunication Service Suppliers.

If you are required to have a California seller's permit or Certificate of Registration — Use Tax, you must register for a California Tire Fee account and collect the fee when you sell tires to California retail customers. If you are not sure whether you need to register and collect sales or use tax, see our Tire Fee Program page for more information, or call our Customer Service Center at 1-800-400-7115 (TTY:711).

If you are not required to register for a tire fee account, you may voluntarily register to collect and pay the tire fee as a courtesy to your California customers. Upon collecting the tire fee, you must provide the customer with an invoice or similar document that lists the tire fee as a separate charge. A copy of the invoice or similar document should be retained by both the seller and purchaser.

If you do not have a California tire fee account, the California purchaser must pay the fee directly to CDTFA.

You must provide the buyer's name and address, the brand, and quantity of cigarettes sold or transferred.

If the sale is subject to California sales tax, and the item is a CED, the eWaste fee is due. For more information visit Covered Electronic Waste Recycling Fee.

The permit allows winegrowers to ship up to two cases of wine per month directly to a California resident for personal use. The buyer must be at least 21 years old and may not resell the wine.

Permits must be obtained from the California Department of Alcoholic Beverage Control.

Once you register, you may accept a resale certificate, in good faith, from your California purchaser that relieves you of the liability to collect and report the sales or use tax.

The certificate may be in any form, must be timely, and it must contain:

• The name and address of the purchaser.
• The number of the seller's permit or a note indicating why they are not required to hold a seller's permit.
• The description of the property to be purchased.
• A statement indicating the property is being purchased for resale.
• The date of the document.
• The signature of the purchaser or someone authorized to act on their behalf.

Timely is considered to be:

• Before you bill the purchaser for the property
• At any time within your normal billing cycle
• At any time prior to delivery of the property to the purchaser.

For your convenience, you can download or print form CDTFA-230

You should always note the general character of the purchaser's business and question the use of certificates presented for items not normally sold in their line of business. You should not accept a certificate if you know or have reason to believe the property is being purchased for other than resale. You can verify whether the seller's permit supplied on the resale certificate is current by looking it up on our website at Permit, License or Account.

For more information, please see Publication 103, Sales for Resale.

Exemptions claimed should be properly documented. California has specially prescribed exemption certificates for certain kinds of property or transactions. Sample exemption certificates can be reviewed on our website.

Some common exempt sales transactions include:

Sales to Other Retailers

When you sell to California customers who plan to resell the property, you may accept a resale certificate and be relieved of the obligation to collect and report tax. For more information, see Regulation 1668, Sales for Resale.

Nontaxable Sales of Food Products

Sales of food for human consumption are exempt from sales tax. Sales of food served as meals, consumed on premises, or sold at places where admission is charged are generally taxable.

For more information on how tax applies to food sales, please see Regulation 1602, Food Products and ourTax Guide for Restaurant Owners or our Tax Guide for Grocery Stores.

Sales to the United States Government

Your sales and leases made to the United States Government and its instrumentalities are generally exempt from California sales and use tax.

The following documentation must be retained to support the tax exempt sale:

• Purchase orders
• Copy of U.S. government credit card or credit card number
• Documents showing direct payment by the U.S. government
• Shipping and related documents to substantiate that the merchandise was sold to the U.S. government and not an individual in the armed service

Keep in mind that this is only the United States government. State, city, and county government agencies are not exempt from sales tax. For more information, see Publication 102, Sales to the United States Government.

Nonprofit Organizations

Nonprofit and religious organizations are exempt from federal and state income tax; however, they are not generally exempt from sales tax. There are some exceptions, for more information see our Nonprofit Tax Guide.

Manufacturing

Beginning July 1, 2014, purchases of manufacturing and research and development equipment may be partially exempt from sales and use tax. The purchaser must meet certain conditions and provide a partial exemption certificate to the retailer. For more information on this exemption see Manufacturing Exemption.

Other Partial Exemptions

Partial exemptions are transactions exempt from the state portion of the sales and use tax rate. To claim a partial exemption on your return, you must obtain a valid and timely partial exemption certificate from your customer. Below is a list of the most common partial exemptions:

• Teleproduction or Other Postproduction Service Equipment
• Farm Equipment and Machinery
• Diesel Fuel Used in Farming and Food Processing
• Timber Harvesting Equipment and Machinery
• Racehorse Breeding Stock

Exemptions can vary between states, for complete information on California exemptions see Publication 61, Sales and Use Taxes: Exemptions and Exclusions.

A drop shipment generally involves two separate sales. First, a retailer not engaged in business in California, makes a sale to a California customer. They are the "true retailer". The true retailer then purchases the property from a supplier and requests that supplier (the drop shipper) to directly ship the item to the customer on their behalf. The true retailer never physically possesses the property.

When a true retailer uses a drop shipper that has nexus in California, the drop shipper becomes the retailer and they are responsible for collecting and reporting the tax. Tax is based on the amount the retailer invoices the California customer.

The retailer may accept a valid resale certificate from the California customer if the property is being purchased for resale. For more information, see regulation 1706, Drop Shipments and Publication 121, Drop Shipments.

Tax generally applies to delivery charges when delivery is made using your own vehicles. See Publication 100, Shipping and Delivery Charges for more detailed information.

Use tax applies to property used, consumed, given away, or stored in California. For more information, see Publication 110, California Use Tax Basics

Inventory withdrawals

If you maintain inventory in California, and you remove inventory items for use in your business operations located in this state, you are responsible to report and pay use tax on your cost of the item.

Items purchased for use at California locations

If you have items shipped to your California business locations for use, such as equipment or office supplies, you must report use tax on the items if the seller did not charge you California sales or use tax. Report the cost of the items under "Purchases subject to use tax" on your sales and use tax return.

If you paid sales or use tax at the time of purchase, to another state and subsequently store, use, or otherwise consume the items in California, you are allowed to claim a credit for the amount of tax paid to the other state. The credit may not to exceed the amount of use tax you report.

Samples

When you or your representatives give away items, such as samples or gifts in California, you are the consumer of those items and will be responsible for reporting the use tax on your cost of those items.

If you ship these types of items directly to a customer from a point outside of California using a common carrier, use is considered to have occurred outside of California and you will not report use tax.

In those districts, the total tax rate includes the statewide tax rate plus the district tax rate (which varies from district to district). Current tax rates can be easily verified on our website.

As a retailer, you are required to collect and report district tax if you are engaged in business in a district that imposes district tax. You are considered engaged in business in a district if any of the following applies:

• 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 the district.
• You have a representative, agent, or independent contractor operating in the district on your behalf or under your authority, or under the authority of your subsidiary, for the purpose 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 the district, such as leases of machinery, equipment, and furniture.
• You own or lease real property or tangible personal property in the district, such as machinery, equipment, furniture or a computer server.
• You sell or lease vehicles or undocumented vessels which will be registered in the district.
• Beginning April 1, 2019, you have total combined sales of tangible personal property in California or for delivery in California by you and all persons related to you exceeding $500,000 in the preceding or current calendar year.

Additional district use tax collection requirement

Beginning April 1, 2019, a retailer is engaged in business in a district if, during the preceding or current calendar year, the total combined sales of tangible personal property in California or for delivery in California by the retailer and all persons related to the retailer 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 1, 2019, any retailer required to be registered with CDTFA, whether located inside or outside of California that meets the $500,000 threshold is engaged in business in every district in California 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 those districts that impose a district tax. 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. For more information, see Publication 44, District Taxes (Sales and Use Taxes), and our online guides Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision and the Local and District Tax Guide for Retailers.

Local Tax

Local tax is generally reported at the location where you have your permanent place of business. When you are not located in California, but have inventory in this state, the local tax is reported to the area from where the property is shipped.

When you have no location and no inventory in California, the local tax is due based on the location where the property is delivered. You must allocate your sales to the correct locations on your sales and use tax return.

For more information about allocating local tax, visit our Local and District Tax Guide for Retailers.

Note: If you are an online retailer, you are required to collect, report, and pay tax like other retailers, but how you allocate your internet transactions can depend on several factors. For more specific information on local tax reporting requirements for online retailers, please see the Online Retailers: Registration and Local Tax tab of our Local and District Tax Guide for Retailers.

Records must be kept for at least four years. If you are being audited, retain all records that cover the audit period until the audit is complete, even if it is longer than four years.

Your records should be adequate so CDTFA representatives may:

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

Your records need to show:

• The gross receipts from all of your business income, including sales, leases, service charges, and labor income
• All of the deductions claimed on your sales and use tax returns, along with supporting documents for those deductions
• The total purchase price, including receipts, for all items you purchase for resale, lease, or your own use.

The level of detail required varies by industry. Records need to be adequate enough so CDTFA may determine the date of sale, what you sold, all taxable and nontaxable charges, and how much tax was applied to the sale. It is important that you keep all documents that support nontaxable sales.

Your Sales and Use Tax records should include, but are not limited to:

• Normal books of account that show your business income and expenses.
• Documents of original entry, such as invoices, receipts, job orders, purchase orders, contracts, or other documents used as the basis for your books of account; and
• All schedules or working papers used in preparing your tax or fee returns.

• Ledgers and sales summaries
• Receipts and/or guest checks, invoices, cash register tapes
• Paid bills and other documents that support the ledgers and summaries
• Statements of taxes or fees collected
• Resale certificates accepted, tax paid on purchases, tax paid, bank records, and records supporting your exemptions from sales and use tax.

Other taxes and fees programs have their own record keeping requirements. For specific information on record keeping for other taxes and fees, please see Special Taxes and Fees Programs

For more information, please go to Keeping Records or view our tutorial video Sales and Use Tax Record Keeping Requirements.