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September 4, 2012 > Out-of-state retailers to collect use tax

Out-of-state retailers to collect use tax

Consumers to see tax at point-of-sale for online purchases

Submitted By Board of Equalization

On September 15, 2012, a new law takes effect (Stats. 2011, ch. 313 (AB 155) that expands the types of out-of-state retailers required to register with the California State Board of Equalization (BOE) and requires them to begin collecting and remitting use tax on sales of tangible personal property to California consumers. The law applies to out-of-state retailers that have substantial nexus with California consumers. This includes any out-of-state retailer that has sold more than $1 million to California consumers in the past year and has had more than $10,000 in sales referred by an affiliate operating in California.

"This is an important step forward for fairness in the market place and for consumers to begin to see tax collected in the same way on all of their transactions, regardless of whether they occur online or in the store," Board Member Betty T. Yee said. "It is in every Californian's interest for online and store-front businesses to play by the same rules."

When AB 155 takes effect September 15, some additional out-of-state retailers, including Internet retailers, will collect the use tax at the point of sale and California consumers will begin to see the tax on their bills.

However, if out-of-state retailers do not collect the tax, California consumers must continue to report and pay their use taxes. Consumers can pay directly to the BOE using eReg or pay on their California income tax returns with the option of using the Use Tax Lookup Table.

AB 155 is expected to help the BOE collect tens of millions of dollars in use tax that will help pay for services such as public safety, schools and health care.

For more information on California's new use tax registration and collection requirements, visit

Retailers with questions should contact the BOE Out-of-State Office at (916) 227-6600.

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