1. Introduction and General Information
California sales and use tax law, administered by the state California Department of Tax and Fee Administration (CDTFA) and applies to the University of California and its campuses, including UCD. Only tangible personal property is subject to sales and use tax. Services generally are not taxable unless they are related to the sale of tangible personal property (for example, assembly or fabrication labor services).
The basic California statewide sales and use tax rate is 7.25%. Many counties and cities have imposed local "District Taxes" under the Transactions and Use Tax Law. Current applicable tax rates are listed at the CDTFA website.
2. Sales Tax vs. Use Tax
How Sales Tax Applies to UCD
- As a purchaser, UCD pays sales tax to California vendors on taxable purchases made in California, unless the item is purchased for resale.
- As a seller, UCD charges sales tax on sales to California customers external to the UC system. Sales between UCD departments or between UC campuses are not subject to sales or use tax since the departments and campuses are part of the same legal entity.
How Use Tax Applies to UCD
As a purchaser, UCD accrues use tax and remits directly to the CDTFA in the following situations:
- Purchases from out-of-state vendors who are not doing business in California and who do not charge California sales tax.
- Purchases from in-state vendors who assess a rate less than applicable to the sale. This situation typically occurs when the vendor does not charge the correct district rate.
3. District Taxes
Many counties and cities have imposed local "District Taxes" under the Transactions and Use Tax Law. Current applicable tax rates are listed at the CDTFA website.
As a purchaser, you are generally required to report and pay district use tax on the purchase price of tangible personal property when:
• You make the first taxable use of the property in a district.
• You purchased the property without district tax or at a lesser rate of district tax than is imposed in the district of use.
What are some of the differences between district taxes and sales/ use taxes?
Since district tax ordinances must incorporate provisions of the Sales and Use Tax Law, the taxes are generally the same except for:
- Sales of property made in a district and delivered to a customer outside the district may not be subject to the district tax of the vendor's location. District taxes are applicable in the location that the goods are first used.
- Retailers located outside a district delivering property into a district may be required to collect the district’s tax if they are engaged in business in the district.
- Fixed-price contracts, including leases entered into prior to the starting date of a new district tax may not be subject to that district tax.