Do you need to report use tax?

If you have not reported use tax for the 2012 tax year, there is still time. Most individuals can report use tax on their California personal income tax return. The general information below will help you decide whether you should report use tax.

1. What is use tax?

California's sales tax generally applies to the sale of merchandise, including vehicles, in the state. California's use tax applies to the use, storage, or other consumption of the same types of items in the state purchased from retailers located outside of California. The use tax is intended to protect California sellers who otherwise would be at a competitive disadvantage when out-of-state sellers make sales of goods to California customers without charging tax. The use tax also assures that all consumers in the state contribute fairly to the funding of state and local programs whether they choose to make purchases in California or outside the state.

2. When does use tax apply?

Generally, if sales tax would apply when you buy merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state. For example, you would owe use tax when you purchase something from a mail order catalog or the Internet, the retailer is located outside of California, and you do not pay tax to the retailer. For further information and examples, see: BOE 401-A2, State, Local, and District Sales and Use Tax Return.

3. Who has to pay use tax?

The purchaser is liable for the California use tax and must pay it directly to the seller from whom the physical merchandise was purchased or directly to the Board of Equalization (BOE) if the retailer is not required to collect and report California tax.

4. How is use tax reported?

Generally, manner of use tax reporting depends on the individual or business entity, as well as the type of products purchased. For individuals or unregistered service businesses not required to hold a seller's permit or use tax account (see below), the easiest way to pay use tax is to report it on your California state income tax return found at www.ftb.ca.gov. However, you may choose to report and pay use tax directly to the BOE. BOE seller's permit holders report use tax under "Purchases Subject to Use Tax" (Line 2) of their sales and use tax return (See eFile Sales and Use Tax Return or BOE 401-A2, State, Local, and District Sales and Use Tax Return). Service businesses that make at least 100,000 dollars in Gross Receipts must pay use tax due by efiling annual use tax returns for the previous calendar year by April 15 (See eFile Sales and Use Tax Return). Frequent purchasers of out-of-state goods that hold a consumer use tax account must report use tax on their use tax return (See eFile Sales and Use Tax Return or BOE 401-E, State, Local, And District Consumer Use Tax Return).

Purchasers of a vehicle, vessel, aircraft, or mobile home will generally remit use tax on private purchases of vehicles and undocumented vessels to the Department of Motor Vehicles (DMV) at time of registration. You can use electronic registration (eReg) to report and pay use tax on a vehicle, a vessel registered with DMV, a documented vessel registered with the U.S. Coast Guard, an aircraft, or a mobile home. For additional information about how to report and pay use tax, please see publication 79, publication 79A, or Regulation 1610.2. Purchases of vehicles, vessels, aircraft, and mobile homes are not to be reported on your California state income tax return. For additional information, please see Frequently Asked Questions—Use Tax on Vehicles, Vessels, and Aircraft.

If you purchase untaxed cigarette and/or tobacco products from an out-of-state retailer, you will need to register with the BOE to report unpaid excise and use taxes. If the BOE receives information from an out-of-state seller regarding the purchase of untaxed cigarette and tobacco products, you will receive tax returns to report excise and use taxes. If you receive tax returns, you are already registered. If you have not received a tax return, please use eReg to register and receive tax returns. Unpaid excise tax on purchases of cigarette and tobacco products cannot be reported on your California state income tax return. More information is available at Frequently Asked Questions Cigarette & Tobacco Products Internet Program; publication 93, and eReg.

If you purchase foreign goods that do not qualify for any exclusion, you should report and pay use tax using the method based on your purchaser type as described above (individual, seller's permit holder, etc.). Please see Foreign Purchases for additional information on reporting requirements for goods purchased out of the country.

District Offices

Culver City
5901 Green Valley Circle
Suite 200, 90230-6948
(PO Box 3652, 90231-3652)
Phone: 310-342-1000
Fax: 310-342-1061
Norwalk
12440 E. Imperial Highway
Suite 200, 90650-8397
(PO Box 409, 90651-0409)
Phone: 562-466-1694
Fax: 562-466-1598
Van Nuys
15350 Sherman Way
Suite 250, 91406-4203
(PO Box 7735, 91409-7735)
Phone: 818-904-2300
Fax: 818-901-5252
West Covina
1521 West Cameron Ave.
Suite 300, 91790-2738
(PO Box 1500, 91793-1500)
Phone: 626-480-7200