Qualified Purchaser Program

Frequently Asked Questions

  1. What is use tax?
  2. What is the difference between sales and use tax?
  3. Who is considered a qualified purchaser?
  4. I think I meet the requirement of a qualified purchaser. What do I do now?
  5. Do I have to register if I don't make any purchases subject to use tax?
  6. What if my yearly gross receipts fall below $100,000?
  7. How do I report use tax if my qualified purchaser use tax account is closed and my yearly gross receipts are below $100,000, no longer meeting the qualifications of a qualified purchaser, or I have never met the qualifications of a qualified purchaser?
  8. My qualified purchaser use tax account was closed, but I have use tax to report. Do I need to re-register?
  9. I closed my business already. Why do I have to register?

  1. What is use tax?
    Generally, use tax applies when a person or business in California purchases tangible merchandise to be used, consumed, given away, or stored in California from a retailer outside of this state who does not collect California tax on the sale. In other words, if sales tax would apply when a particular item is purchased in California, use tax applies when a similar purchase is made from a retailer outside the state and tax is not charged.
  2. What is the difference between sales and use tax?
    Tax collected by the retailer here in California is called sales tax, and the retailer is responsible for reporting and paying the tax to the state. When an out-of-state or online retailer doesn't collect the California tax for an item delivered to California, the purchaser may owe use tax, which is simply a tax on the use, storage, or consumption of personal property in California.The use tax rate in California locations is the same as the sales tax rate. Consumers are responsible for reporting and paying the use tax.
  3. Who is considered a qualified purchaser?
    Generally, a qualified purchaser is a business or person that receives at least $100,000 in gross receipts from business operations per year, and is not otherwise required to be registered with the BOE. Qualified purchasers are required to register with the Board of Equalization (BOE) and report and pay use tax due on purchases made from out-of-state retailers without paying tax.
  4. I think I meet the requirement of a qualified purchaser. What do I do now?
    If your annual gross receipts from business operations are $100,000 or greater, you must register. You can register online using electronic registration (eReg).
  5. Do I have to register if I don't make any purchases subject to use tax?
    Yes. If your gross receipts from business operations are greater than $100,000 per year, you are considered a qualified purchaser and should be registered with a qualified purchaser use tax account. A return must be filed even if you did not make any purchases subject to use tax during the reporting period. In such cases, you will simply enter zero as the amount of purchases for the calendar year in which you are reporting.
  6. What if my yearly gross receipts fall below $100,000?
    If your gross receipts from business operations fall below $100,000 for the last two consecutive years, you are allowed to close your qualified purchaser use tax account. This closeout process is not automatic; therefore, you may close your account by contacting your local BOE field office and providing sufficient documentation indicating your gross receipts from business operations have fallen below $100,000 for the last two consecutive years.
  7. How do I report use tax if my qualified purchaser use tax account is closed and my yearly gross receipts are below $100,000, no longer meeting the qualifications of a qualified purchaser, or I have never met the qualifications of a qualified purchaser?
    If you are not required to hold a seller's permit or use tax account, the easiest way to pay use tax is to report it on your California Income Tax Return found at https://ftb.ca.gov/index.shtml?disabled=true. Follow the instructions included with your income tax return. Complete the worksheet included in those instructions to determine the amount of your use tax liability.
  8. My qualified purchaser use tax account was closed, but I have use tax to report. Do I need to re-register?
    After your account is closed, if you make purchases subject to use tax and meet the $100,000 gross receipts threshold requirement of RTC 6225, you must re-register and file a qualified purchaser use tax return.
  9. I closed my business already. Why do I have to register?
    If your business has closed, but you received at least $100,000 in gross receipts during any calendar year while it was in operation, you still need to register and efile a return for the period(s) in which your business operated. Once you efile your return(s), submit form BOE-345-QP, Qualified Purchaser ­ Registration Update, to notify the BOE that your business has closed.