Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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115.0000 AUCTIONEERS—Regulation 1565

Annotation 115.0025

115.0025 Internet Auctioneer. A California firm advertises on its website, which it administers from its California location, that it is bonded as an auctioneer in California and states in its contracts with the owners of tangible personal property that it is in the business of selling equipment at auction. The firm advertises and holds itself out as a person available to engage in the asking for, recognition of, and acceptance of offers to purchase equipment at an online auction. The auction is conducted by computer-generated exchanges between the firm and its audience, consisting of a two-week preview period in which a picture and/or description of available equipment is displayed on the firm's Web site, followed by a three-day bid period during which the three top bids are continuously displayed on the Web site and any interested viewer may bid above the preceding highest bid. At the end of three days, the highest bid is accepted. Under its contracts with the owner and buyer of the equipment, the firm has both the power to bind the owner and buyer of the property to the sale, and the power to transfer title to the property.

The firm is an auctioneer and, thus, a retailer of equipment sold by it at auction on the Internet. The firm must report sales tax from the retail sales of property shipped from a California location of the owner of the equipment to a California location of the buyer of the equipment. Since the firm maintains an office in this state, it is a retailer engaged in business in California. As such, the firm must collect and remit the use tax from California purchasers who make retail purchases of items shipped from the out-of-state location of the owner to California. 11/26/97. (M99–2).