Lumber Products Assessment – Frequently Asked Questions (FAQ's)
These FAQs are designed to assist retailers and consumers of lumber products or engineered wood products understand the new lumber products assessment. The BOE drafted an Emergency Regulation to provide guidance to retailers on certain reimbursable start-up costs to implement the Lumber Products Assessment at their businesses. To check the status of the Emergency Regulation, see Emergency Special Tax Regulation 2000, Retailer Reimbursement Retention.
What is the lumber products assessment?
Beginning January 1, 2013, a one percent (1%) Lumber Products Assessment is imposed on the purchaser of lumber products or engineered wood products for storage, use, or other consumption in this state. Retailers of lumber products or engineered wood products will be required to charge and collect the lumber products assessment on their sales to consumers in California and report and pay the amounts collected to the State Board of Equalization (BOE).
How much is the lumber products assessment?
The assessment is one percent (1%) of the sales price of the lumber product or engineered wood product.
Who is responsible for paying the assessment?
Retailers who sell lumber products and engineered wood products are required to collect the lumber products assessment on sales to consumers in this state and report and pay the amounts collected to the BOE.
Consumers who purchase a lumber product or an engineered wood product for use in California, including construction contractors who bring in these products from outside the state, are required to report and pay the assessment to the BOE.
What products are subject to the assessment?
In general, lumber products and engineered wood products subject to the one percent (1%) assessment are defined as "primary" wood products produced directly from forest trees in which wood is a principal component (at least 10% of total content).
Wood products that have been manufactured, assembled, processed, or produced from primary wood products are not subject to the 1% assessment. These include "secondary" wood products, where there has been additional labor that adds significant value to the product. See the following examples:
Subject to Assesment
- lumber
- plywood particle board
- fiberboard
- poles
- posts
- structural panels
- decking
- railings
- fencing
- roofing (shakes and wooden shingles)
- siding
- sub-flooring
- oriented strand board
- glue-laminated timber
- laminated veneer lumber
- lath (for example, a thin narrow strip of wood used for support)
Not Subject to Assesment
- furniture
- firewood
- paper products
- indoor finished flooring
- wainscoting (such as facing or paneling applied to walls)
- paneling
- shutters
- blinds
- frames
- windows
- doors
- cabinets
- molding
- millwork (e.g., baseboards)
- trusses
- pre-constructed railing sections
- carvings and craft products
For more information about products subject to the lumber products assessment, visit Board of Forestry’s website at www.bof.fire.ca.gov, and follow the link for Emergency Regulation to Implement “Lumber Products Assessment.”
How does a retailer collect the lumber products assessment from their customers?
Retailers of lumber products and engineered wood products are responsible for charging their customers one percent (1%) of the selling price of these products and remitting the assessment to the BOE.
Retailers must separately state the lumber products assessment amount on the sales receipt given to the customer. The amount on the receipt may be designated as "lumber products assessment" or "LPA" or "lumber assessment" or "lumber fee" or "lumber." The lumber products assessment is not regarded as a tax for administrative purposes.
However, the amount of the assessment is not subject to sales or use tax.
How does a retailer report the lumber products assessment collected from their customers to the BOE?
Retailers of lumber products or engineered wood products are required to report the lumber products assessment when electronically filing their sales and use tax returns. When you efile your sales and use tax return as a retailer of lumber products, you will be prompted to complete the lumber products assessment schedule. An amount, including zero if applicable, must be entered on the lumber schedule if it is part of your filing status.
BOE is currently updating our eFile program to include a separate electronic schedule to report the lumber products assessment collected from your customers.
Are any of the retailer's costs incurred to collect the lumber products assessment reimbursable?
Certain costs associated with the implementation of the lumber products assessment may be offset against amounts collected by the retailer and paid to the BOE. The intent of the law was to allow retailers to reimburse themselves for start-up costs only. BOE drafted an Emergency Regulation to provide guidance to retailers on certain reimbursable start-up costs to implement the Lumber Products Assessment at their businesses. To check the status of the Emergency Regulation, see Emergency Special Tax Regulation 2000, Retailer Reimbursement Retention.
The reimbursement for certain start-up costs is for retailers that currently hold seller’s permits (or Certificate of Registration—Use Tax) and must modify their current system to implement the lumber products assessment. New retailers that obtain their seller’s permit or register to collect the use tax from California consumers on or after January 1, 2013, are not eligible to offset the collected assessment with start-up costs.
Are fixed price contracts exempt from the lumber products assessment?
No. The lumber products assessment law does not contain an exemption for fixed price contracts. Therefore, lumber products or engineered products sold or purchased on or after January 1, 2013 are subject to the 1% lumber products assessment, even if they are sold as part of a fixed price contract entered into prior to January 1, 2013.
When is a construction contractor responsible for paying the 1% assessment to their supplier and when is the contractor responsible for collecting the 1% assessment from their customer?
In general, contractors are required to pay the 1% assessment to their supplier when:
- The contractor will consume the products in the performance of a construction contract and does not make a retail sale of the lumber or engineered wood products to their customer.
- The lumber or engineered products are for the contractor's own use.
A purchase for resale is not subject to the 1% assessment. In general, when a contractor properly issues a valid resale certificate to purchase lumber or engineered wood products for resale, the contractor does not owe the 1% assessment on their purchase. A retailer who accepts in good faith a valid resale certificate from their purchaser should not charge the purchaser the assessment on their sale for resale.
In a situation where the contractor will resell the products to their customer prior to any use, the contractor is regarded as the retailer of the lumber or engineered wood products and is responsible for collecting the 1% assessment from their customer.
FAQ Topics
FAQ: Information for Retailers Required to Collect the Lumber Products Assessment
Does the "sale price" include delivery charges, handling charges, or sales tax?
No, in general, the "sale price" does not include separately stated delivery charges or sales tax. However, handling charges are considered part of the sales price and therefore subject to the lumber assessment.
Please see Regulation 1628 for additional information regarding transportation and delivery charges.
Is the lumber products assessment subject to sales tax?
No, the lumber products assessment is not subject to sales or use tax.
What if a retailer does not currently eFile their sales and use tax returns?
You may sign up to eFile your sales and use tax returns by visiting www.boe.ca.gov and going to the "eServices" tab. eFiling is the fast, easy and convenient method of electronically filing tax returns or reports and paying amounts owed.
Does a retailer need to inform the BOE that they sell lumber products or engineered wood products?
The BOE will automatically update the electronic filing status of retailers that we have been able to identify as selling lumber or engineered wood products.
If you eFile your first return that includes sales from 2013, but you do not see the lumber schedule included in your sales and use tax return, please call BOE's Taxpayer Information Section at 1-800-400-7115 to update your account. Representatives are available Monday through Friday 8:00 a.m. to 5:00 p.m. (Pacific Time) excluding state holidays, or you may call your local BOE office.
If your eFile account was updated to include the lumber products assessment schedule and you are not a retailer of lumber or engineered wood products, contact either the Taxpayer Information Section at 1-800-400-7115 or your local BOE office to request that the lumber schedule be removed from the account. Representatives are available Monday through Friday 8:00 a.m. to 5:00 p.m. (Pacific Time) excluding state holidays.
What if a retailer collects a lumber products assessment amount that is more than that actually due?
If a retailer collects an amount greater than the actual amount due the retailer must either return the excess amount to the customer, or if that is not possible, pay the excess amount to the BOE.
What if a retailer sells a product that is subject to the lumber products assessment but fails to collect the assessment from their customer?
The retailer is responsible for reporting and paying the lumber products assessment to the BOE on their sales subject to the assessment even though they may have failed to collect the assessment from their customer.
Is the lumber products assessment due on sales made from stores outside of California but shipped to customers inside California?
Yes, the lumber products assessment is imposed on the purchaser of these products for use in this state. Retailers located outside of California that are required to collect use tax on sales to consumers in California must charge and collect the lumber products assessment on their sales of lumber products or engineered wood products.
If the out-of-state retailer does not collect the lumber products assessment from the California consumer, the consumer must report and pay the assessment directly to the BOE.
If you are an out-of-state seller and you are not sure whether you need to register with the BOE to comply with California’s Sales and Use Tax Laws, see our Publication 77, Do You Need to Register with California? For Out-of-State Sellers.
How does the lumber products assessment apply to sales of packages or kits sold for one price that contain products that are regarded as lumber products or engineered wood products and products that are not?
Packages and/or kits such as decking packages, picnic table kits, shed kits, and other similar packages or kits that contain products that include pre-cut, pre-drilled, or other items manufactured to some extent, and then disassembled for shipment are not subject to the assessment because the additional labor added to these items removes them from the category of products typically regarded as lumber products.
For more information about products subject to the lumber product assessment, visit Board of Forestry’s website at www.bof.fire.ca.gov, and follow the link for Emergency Regulation to Implement “Lumber Products Assessment.”
Does the lumber products assessment apply when a retailer acquires inventory or just when the items are sold?
The lumber products assessment applies just when the product is sold. It is imposed on the purchaser of lumber products or engineered wood products for storage, use, or consumption in this state.
Is the lumber products assessment refundable if merchandise is returned for a refund?
Yes. The lumber products assessment is refundable to the customer on returned merchandise.
How is the lumber products assessment handled if merchandise is exchanged for merchandise that is the same price (an even exchange)?
The lumber products assessment is based on one percent (1%) of the selling price of the products. There would be no additional assessment on an even exchange of merchandise.
What sales are not subject to the assessment?
The lumber products assessment is not due on the following sales:
- Sales for resale. In a sale for resale, the purchaser is not regarded as purchasing the lumber product or engineered wood product for their own use in this state.
- Sales in interstate commerce. Sales made by a retailer in California but shipped to customers outside of this state.
- Sales to the U.S. Government.
- Sales involving Native Americans (Indians) follow the same rules as sales and use tax law. See Sales and Use Tax Regulation 1616, Federal Areas, for further information regarding sales to Indians.
FAQs: Information for Consumers Required to Pay the Lumber Products Assessment
Why do consumers have to pay the assessment to the BOE?
The lumber products assessment is imposed on the purchaser of lumber products or engineered wood products for use in this state. The purchaser is required to pay the assessment directly to the BOE on the products purchased for use in California if they are not purchased from a retailer required to collect the assessment. See question below on how to pay the assessment to the BOE.
What if a purchaser buys lumber products or engineered wood products out-of-state without paying the assessment and brings the products into California to use here?
Since the items will be used in California, the purchaser is required to pay the assessment directly to the BOE. See question below on how to pay the assessment to the BOE.
How does a purchaser pay the lumber products assessment to the BOE?
Consumers pay the lumber products assessment by registering electronically to report and pay the lumber products assessment by visiting our website at www.boe.ca.gov. Click the eServices tab and use BOE’s online eReg service.
Are construction contractors required to pay the lumber products assessment?
Yes, if a construction contractor purchases lumber products or engineered wood products that they will consume in the performance of a construction contract in California, the lumber products assessment must be paid either to the retailer upon purchase or directly to the BOE.
Yes, if the construction contractor purchases lumber products or engineered wood products for resale and will sell the products as a retailer in the performance of a construction contract, the construction contractor is responsible for collecting the lumber products assessment from the purchaser, and reporting and remitting the assessment to the BOE.
No, if a construction contractor purchases lumber products or engineered wood products from which the construction contractor will manufacture or produce items that they will sell at retail (for example, lumber products to make prefabricated cabinets), or if the construction contractor will resell the products prior to making any use of the products, then the construction contractor may purchase the products for resale and their purchase is not subject to the lumber products assessment.
For more information about products subject to the lumber products assessment, visit Board of Forestry’s website at www.bof.fire.ca.gov, and follow the link for Emergency Regulation to Implement “Lumber Products Assessment.”
For more information about construction contractors, see our Publication 9, Construction and Building Contractors.