Nature and rate of sales and use taxes.
The sales tax is imposed on
retailers for the privilege of selling tangible personal property at retail. The
use tax is imposed upon the storage, use or other consumption in this state
of tangible personal property purchased from a retailer. The use tax, except
as to leases, is not imposed on gross receipts from the sale of property
which were included in the measure of the sales tax. The use tax rather than
the sales tax applies to purchases shipped from an out-of-state point to a
California consumer. The obligation to pay use tax is on the consumer.
However, if an out-of-state retailer is engaged in business in this state, it is
required to collect the use tax from the consumer at the time of making the
The sales tax is measured by gross receipts from retail sales. The use tax
is measured by the sales price of the property. The state tax rate is the same
for both taxes, and is 6.25% (not including the Bradley-Burns local tax or the Transactions and Use tax) as of January 1, 2016. "Gross receipts" and "sales price" mean the total amount of the sale or lease, including all receipts, cash, credits
and property of any kind or nature but not including the amount of any tax
(except manufacturers' or importers' excise tax) imposed by the United
States upon or with respect to retail sales and not including the amount of
any tax imposed by the state upon diesel fuel, or the amount of any
transactions or sales tax or use tax imposed by any city, county or city and
county or special taxing district within this state. "Gross receipts" and "sales
price" also do not include 1) amounts charged for the value of intangible
personal property in certain technology transfer agreements, 2) certain
charges for transporting landfill, and 3) amounts equal to the sales or use tax
on the federal manufacturers' or importers' excise tax imposed on specified
fuel purchases under certain conditions.
The granting of possession of tangible personal property by a lessor to a
lessee is a continuing sale in this state, and the possession of such property
by a lessee is a continuing purchase for use in this state. The tax is collected
by the lessor at the time of each payment pursuant to the lease. Leases are
not sales if the property involved consists of motion picture and television
films or tapes, certain linen supplies and similar articles, certain household
furnishings and certain mobile transportation equipment with the exception
of chemical toilet units and videocassettes, videotapes, and videodiscs for
private use, and leases of property in substantially the same form as acquired
by the lessor on which the lessor has paid use tax or sales tax reimbursement
are not subject to tax. "Lease" does not include a use of tangible personal
property for a period of less than one day for a charge of less than twenty
dollars ($20) when the privilege to use the property is restricted to use thereof
on the premises or at a business location of the grantor of the privilege.
"Sale" and "purchase" do not include:
(a) Certain transfers of printing materials.
(b) Certain furnishing (without transferring title) of motion picture
equipment by a motion picture production partnership to its members.
(c) Certain leases or transfers of title to tangible personal property when approved by the
California Alternative Energy and Advanced Transportation Financing
(d) Certain transfers of custom computer programs other than basic
(e) Certain transfers of title to, and transfers of title and leases by, the
California Pollution Control Financing Authority.
(f) Certain transfers of qualified mass commuting vehicles pursuant to
safe harbor leases.
(g) Certain transfers of qualified motion pictures, as defined and the
performance of qualified production services as defined.
(h) Certain transfers of title to, or lease of, tangible personal property
pursuant to an acquisition sale and leaseback.
(i) Certain trades or exchanges of endangered and threatened animal and
(j) Certain transfers of original drawings, sketches, illustrations, or
paintings by an artist or designer at social gatherings, under specified
(k) Certain transfers of animals to individuals for use as pets and any
related service charges, when the transfer is made by a nonprofit animal
welfare organization or a local government animal shelter.
Under certain circumstances, the retailer may take a deduction for
accounts which become worthless. Credit is allowable against the use tax for
sales or use tax paid in another state on account of the purchase or use of the
property in that state.