Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 175.0155

175.0155 Selling Activities. A mail order retailer conducts one to five photo shoots per year in California. The photo shoots are of products and models (who could be employees but not usually), with or without props, houses, or other structures in the photos. The resulting photos will be used in catalogs. A photo shoot lasts from one to four weeks and includes one to twelve employees, freelance contractors, and other suppliers of services. The products and props would be valued at between $5,000 and $50,000 and are removed from the state after the shoot. Employees come into California prior to the shoot and remain for a period after the shoot for purposes related to the shoot (e.g., site selection).

A retailer whose employees or representatives engage in selling activities in California is engaged in business in this state under subdivision (b) of Revenue and Taxation Code section 6203. The taking of pictures for catalogs is not a selling activity coming within section 6203(b). Thus, if the retailer's employees and representatives engage only in photo shoot activities, it is not engaged in business in California under subdivision (b) of section 6203 as a result of those activities. If the employees or representatives of the retailer do engage in soliciting sales, taking orders, or making contacts for future sales, the retailer would be engaged in business in California under section 6203(b).

The substantial nature of the retailer's presence in California raises the issue of whether it has a location in California under subdivision (a) of section 6203. If so, it is engaged in business in California and must collect use tax from its California shoppers. If the retailer were to arrange a specific location for its employees to work out of, to the exclusion of others, or if an area were identified as the retailer's area (e.g., by posting a sign), the retailer would generally be regarded as having a location in California. Likewise, if the firm had an exclusive license for a photo site, that site would be considered a location of the retailer. On the other hand, a photo site arranged through a nonexclusive license where others have access during the photo shoot would not be regarded as a location of the retailer. 3/12/97.