California – BOE Urges Everyone to Save their Receipts from Online Purchases

SALT Report 1246 – The Board of Equalization is reminding Californians that use tax may be owed for purchases made online from out-of-state retailers. Payment of California use tax is the responsibility of the purchaser and must be paid either directly to the seller from whom the item was purchased or directly to the Board of Equalization if the retailer is not required to collect and report California tax.

Use tax generally applies to purchases of items that would be subject to sales tax if they had been purchased in the state. In California, that means use tax applies to the sale or use of tangible personal property – items that can be seen, weighed, measured, felt, or touched.

For example, you would owe use tax when:

  • You purchase something tax free from a mail order catalog, the Internet, an online auction, or television shopping network and the item is located outside California
  • You withdraw taxable merchandise from your business’s resale inventory and use it for your personal or business use
  • You purchase vehicles, vessels, mobile homes, and aircraft from sellers who do not hold seller’s permits
The most recent BOE estimates show an annual revenue loss of more than $1.1 billion in unpaid use tax owed by both consumers and businesses. The average California household owes approximately $61 per year in use tax, and the average business owes an average of $102 annually. Revenue collected by the BOE from sales and use tax supports California programs and services including law enforcement, health care, and transportation.
If you are not required by the BOE to have a seller’s permit or to have a use tax account, the easiest way to report and pay use tax is on your California state income tax return, due for most filers on April 15. You may also register with the BOE as a use tax payer and make payments directly to the BOE. If you are a retailer with a seller’s permit, the use tax should be reported on your regular sales and use tax return.
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