Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 220.0248

220.0248 School Acting as Solicitor for Out-of-State Retailer. An out-of-state retailer makes arrangements through school principals to solicit orders for its merchandise from students. The school principal signs a form letter agreeing to participate in the program and to display the sample merchandise to be sold. Orders and payment for the merchandise are taken by the teachers and forwarded to the out-of-state retailer. Although the out-of-state retailer specifies suggested retail selling prices, the school can charge the students any price they want. The only relevant pricing requirement is that the school must remit the "wholesale price" to the out-of-state retailer. The out-of-state retailer packages the orders by homeroom for easy distribution by the teachers. For its participation in the program the school receives an award depending on the amount of sales generated.

Under this scenario, the school, through its principal and teachers, is acting as the agent for the out-of-state retailer for the purpose of making sales to California consumers. The out-of-state retailer is therefore engaged in business in California and required to collect the use tax from purchasers and remit it to the Board