Debra A. Simmons, CPA

Do You Owe Use Tax?

In Uncategorized on July 20, 2010 at 4:14 pm

You may owe use tax on purchases you made from out-of-state or Internet sellers. Use tax is similar to the sales tax paid on purchases you make in California. You may report use tax on your income tax return instead of filing a use tax return with the State Board of Equalization.

In general, you must pay California use tax if you purchase an item out-of-state (for example, by telephone, over the Internet, by mail, or in person) and

*The seller does not collect California sales or use tax, and
*You use, give away, store, or consume the item in this state.

To determine the amount of use tax you owe:

1. Add the amount of all purchases made from out-of-state or Internet sellers made without payment of California Sales/Use tax. Include only items on which you would have paid sales tax if you had purchased them in California.
2. Look up the use tax rate for the location where you used, gave away, stored, or consumed the items you purchased.
3. Multiply the amount by the use tax rate.
4. Subtract any sales or use tax you paid to another state for the items you purchased.
5. Enter this amount.

Report use tax due on the following items directly to the Board of Equalization:

*Vehicles, vessels, and trailers that must be registered with the Department of Motor Vehicles.
*Mobile homes or commercial coaches that must be registered annually as required by the Health and Safety Code.
*Vessels documented with the U.S. Coast Guard.
*Aircraft.
*Leases of machinery, equipment, vehicles, and other tangible personal property.

If you owe use tax for prior years, the Board of Equalization has established a voluntary use tax liability disclosure program for in-state qualified purchasers who wish to acknowledge their liability for California use tax. By voluntarily coming forward to the Board of Equalization under this program, you may be able to limit your liability for tax, penalties, and interest due for prior periods. Get more information.

If your filing status is “Married/RDP Filing Separately”, you may elect to report one-half of the use tax due or the entire amount on your income tax return. If you elect to report one-half, your spouse may report the remaining half on his or her income tax return or on the individual use tax return available from the State Board of Equalization.

For more information about use tax, contact Debbie Simmons at (310) 701-1825.

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