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Business Taxes Law Guide—Revision 2024
Uniform Local Sales and Use Tax Annotations
700.0000 Application of Tax—Regulation 1803
Annotation 700.0270
700.0270 Use Tax—In-State Sales Agents. Out-of-state retailers with no sales offices in California may have sales representatives operating in this state. The sales agents are employees of the retailer and may be domiciled in California or may be sent in from out of state. When these sales representatives make sales to California purchasers and title to the tangible personal property sold passes to the purchaser outside California, the sales are subject to use tax when the tangible personal property is delivered to the purchaser in this state. The residency status of the employee affects the way the local use tax revenue is reported. If the person negotiating the sales is an employee of the retailer and is domiciled and routinely conducts sales negotiations here, the employee's residence would be considered an in-state place of business of the retailer under Regulation 1620(a)(2)(A). As a result, the order is not sent by the purchaser directly to the retailer's out-of-state office. As one of the criteria for direct allocation required by Regulation 1802(c)(1)—the purchaser sending the order for the property to the retailer at an out-of-state location—is not satisfied in such situations, the local use tax must be reported to the place of first functional use through the medium of the county-wide pool. If, however, the employee negotiating the sales in state is not domiciled here, there is no local place of business of the retailer participating in the sale under Regulation 1620. The sale must then be subject to use tax. Under Regulation 1802(a)(2), an employee's activities are attributed to the sales office out of which the employee works. Thus, it is entirely proper to regard the order as having been placed directly with the retailer's out-of-state office. If the other criteria of subdivision (c)(1) were met, then the local use tax would be reported directly to the location of the place of first functional use. 7/15/03. (2004–2).