Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 220.0093

220.0093 Drop Shipment from Outside the State. A taxpayer offers goods for sale through electronic terminals located in California. Purchases are made by customers who view the products on the terminals and pay by means of credit cards which are inserted into the terminals. The taxpayer pays California sales tax on such sales through terminals located in California unless the delivery address specified is outside California.

The taxpayer may ship the goods directly or, if the item is not in stock, the taxpayer will direct its out-of-state supplier to ship the goods directly. Some of the taxpayer's suppliers make sales on their own behalf by mail order. They have no other contact with this state. Sales through the electronic terminals by the taxpayer do not create sufficient nexus as to allow the Board to require the out-of-state mail order vendors to collect use tax on their own mail order sales to California consumers. 11/18/83.