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Did you cash in on Black Friday or Cyber Monday deals?
By Board of Equalization
Save your receipts, you might owe Use Tax
-- Many California consumers have purchased Black Friday and Cyber Monday specials offered online or via smart phone applications. The State Board of Equalization (BOE) reminds them that they may owe use tax for pre- and post-holiday shopping sprees.
California law imposes tax on in-state purchases and also imposes tax on items purchased out-of-state for use in California. When an out-of-state or online retailer does not collect the 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 purchaser is responsible for paying the use tax on their own, based on the tax rate for the area in which they live.
There are two easy ways to pay any use tax that might be owed: 1) register and pay on eReg after each purchase; 2) as a line item on state income taxes, using BOE’s and the Franchise Tax Board’s use tax calculation based on the consumer’s adjusted gross income.
California law has required the payment of use tax since 1935 to prevent out-of-state retailers from having a competitive advantage over California-based vendors who were required to report sales tax beginning in 1933. BOE estimates that consumers and businesses that do not report and pay the use tax they owe cost the state more than $1.1 billion a year. The average California family owes about $61 in use tax each year. Like sales tax, this money helps fund programs such as public education, public safety and transportation.
For more information, visit www.boe.ca.gov