California Lumber Products Assessment

Beginning January 1, 2013, a new law requires a one percent (1%) assessment on purchases of lumber products and engineered wood products for use in California, based on the selling price of the products.

The new law affects retailers of lumber products or engineered wood products and purchasers, including construction contractors, who use these products in California.

How to Use This Guide

The Retailer section provides important information for retailers of lumber products and engineered wood products.

The Construction Contractor section provides important information for construction contractors and other purchasers.

The Product Definition section defines products subject to the lumber products assessment and provides examples.

The Resources tab provides links for additional information and references.

Retailers

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.
• Separately state the amount of the lumber 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 BOE on their sales and use tax return.
• Notify us if your sales and use tax return does not include the lumber assessment schedule.

Filing Returns

We have automatically updated the electronic filing status of certain sellers that we have identified as retailers of lumber products or engineered wood products. Accounts updated as retailers of lumber products and engineered wood products will include a lumber products assessment schedule for use when electronically filing (eFile) your sales and use tax return.

If you do not currently file online and you are a retailer of lumber or engineered wood products, follow the instructions under eServices to begin e-filing your sales and use tax return. The law requires electronic filing of the lumber products assessment.

Updating Your Account

If you eFile your first return that includes sales from 2013, but do not see the lumber schedule included in your sales and use tax return, please call our Taxpayer Information Section at 1-800-400-7115 or your local BOE office to update your account to include the lumber schedule.

If your eFile account was updated to include the lumber schedule as part of your sales and use tax return and you are not a retailer of lumber products or engineered wood products, contact either the Taxpayer Information Section at 1-800-400-7115 or your local BOE office to request that the lumber schedule be removed from 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 start-up costs of $250 per business location.

A business location means a location registered under your seller's permit where sales of lumber products or engineered wood products are made.

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.

Contractors

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 BOE.

This includes purchases of lumber products or engineered wood products from outside of California for use in this state.

New Law Affects Construction Contractors

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

Construction contractors that act:

• As a consumer of lumber products or engineered wood products will be required to pay the assessment to their California vendors.
• As a consumer of lumber products or engineered wood products will be required to pay the assessment directly to the BOE on purchases made from outside of California for use in this state.
• As a retailer of lumber products will be required to charge and collect the assessment from their customers and report and pay the assessment to the BOE on their sales and use tax return.
• As a retailer of items that they manufacture, assemble, process, or produce from lumber products or engineered wood products (for example, prefabricated cabinets), are not required to pay the assessment on either the contractor's purchase or on their subsequent sale of these items.

Construction Contractors that act as a retailer of merchandise (including lumber products or engineered wood products) are required to register with BOE.

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 BOE.

For more information about construction contractors, see BOE'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, follow the instructions under BOE's electronic registration system (eReg). Select Register, Pay Use Tax or Claim an Exemption, then select Register a business activity with the BOE. The law requires that you file the lumber products assessment electronically.

Beginning December 19, 2012, when registering using eReg, 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 BOE (see below).

Notify BOE to Update Your Account

If you are currently registered with the BOE and are a retailer of lumber or engineered wood products or will purchase these products from outside of California for use in this state, please call our Taxpayer Information Section at 1-800-400-7115 (TTY:711) so we may update your account.

How to Report and Pay a One-Time Purchase

Beginning in April 2013, you can report and pay the lumber products assessment (as well as any applicable use tax) on a one-time purchase of lumber products or engineered wood products made on or after January 1, 2013, using eReg; Select Register, Pay Use Tax or Claim an Exemption.

Product Definitions (Updated January 23, 2013)

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, Emergency Regulation to Implement 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 Emergency Regulations when trying to determine if a product is subject to the Lumber Products Assessment.

The following listing is current as of January 23, 2013. 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

Resources

• Lumber Products Assessment Frequently Asked Questions

Publications

• Publication 256, Lumber Products Assessment
• Publication 9, Tips for Construction and Building Contractors
• Publication 146, Sales to American Indians and Sales in Indian Country

Special Notices

• Lumber and Engineered Wood Products 1% Assessment Begins January 1, 2013
  • To Potential Retailers (L-339)
  • To Potential Retailers – Annual Filers Only (L-343)
  • To Construction Contractors (L-340)

Regulations

• Board of Forestry and Fire Protection Emergency Regulation to Implement "Lumber Products Assessment."
• Emergency Special Tax Regulation 2000, Retailer Reimbursement Retention
• Regulation 1616, Federal Areas
• Regulation 1521, Construction Contractors

Authority

• Assembly Bill 1492, Chapter 289, Statutes of 2012
• Public Resources Code Section 4629

For More Information

If you have questions or would like additional information, you may call our Taxpayer Information Section at 1-800-400-7115,
or your local BOE office.