Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 220.0197

220.0197 Publishing Company. A publishing company headquartered out of state operates two divisions. Division A makes retail sales of training aids in California through sales people who live and work in California. Division B sells exempt periodicals and clothbound books based on topics appearing in the periodicals. All orders for these books are sent to New York from where they are filled and shipped to California (or other state) buyers by mail. The Division A sales people are not involved in the sale of Division B books, nor does Division B have any sales people, office, merchandise storage, or representative of any kind in California. Although operating as two divisions, the company is a single "person" for purposes of sales and use tax. Thus, the publishing company is required to collect and report use tax on the sales of Division B books to California consumers, even though the activity of Division A is what causes it to be "engaged in business" in this state. Once it is established that a seller is engaged in business in this state, the seller must collect and remit the applicable use tax for all its sales to California. 2/17/71. (Am. M98–3).