Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
175.0000 COLLECTION OF USE TAX BY RETAILERS—Regulation 1684
175.0015 Book Sales by Out-of-State Publisher. A company is engaged in selling books and printed materials by direct mail solicitation and also through arrangements with school teachers in California. The company sends promotional material through the mail to teachers to pass out to their students. The students take the materials home and together with their parents, select the books they wish to purchase. The students bring the order forms and payment to the classroom where the teacher consolidates the orders and sends the orders and payment to the company. The company ships the books to the teachers who distribute the books to the students.
The teachers represent the company to the students and participate in making the sales. The teachers operate under the company's authority in that they are authorized to take orders, collect payment, and make deliveries of the merchandise. The use of school organizations to perform the identical activities were regarded as the establishment of an agency relationship (Scholastic Book Clubs, Inc. v. State Board of Equalization, 207 Cal.App.3d 734). There is ample basis for finding that the teachers are the company's agents and that the company is engaged in business in this state. By being engaged in business in this state, the company is required to collect the use tax on all sales to California customers. 11/19/92.