Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Transactions and Use Tax Annotations

805.0000 COLLECTION OF TAX BY RETAILERS—Regulation 1827

Annotation 805.0042

805.0042 Collection of District Use Tax. A taxpayer is a software company with offices only in one county but which sells its software throughout California. All sales are made from its offices located in the one county. However, the taxpayer's representatives go to the clients' offices to install the software and, thus, the taxpayer is engaged in business in any district in which its customers are located (Regulation 1827(c)(2)). Accordingly, the taxpayer properly collects the appropriate district use tax on the sale of the software itself. Software upgrades are, however, distributed to the clients by mail or UPS, without any subsequent visits by the taxpayer's personnel. Since it ships the upgrades to its customers in districts in which it is engaged in business, the taxpayer must also collect district use tax on the sales of the upgrades (Regulation 1827(b)(1)). 4/23/96.