California Use Tax Issues & Responses

Why we are asking this question in your organizer. Why it is necessary for you to answer the question.

California requires taxpayers to pay use tax (sales tax) on items purchased out of state that are brought into California and first used in California.

This has always been California law but until the Internet, the amount was probably negligible. Now, however, it is one of the predominate ways to purchase items and California wants it's tax. They have made this perfectly clear by incorporating the collection of this tax by incorporating it into your non-business tax return. (Business returns have a different procedure.)

The line item has been on the CA 540 tax return since 2003. The CA Board of Equalization (the enforcement and collection arm for sales/use tax) is continually finding more and more ways to enforce this law. Those in business are getting letters - audits going back 8 years is possible.

Please answer the question in the organizer and if the answer is YES please send us a list itemizing your out of state purchases.