California Use Tax: Do You Report Your Purchases On Your California Income Tax Return? It Now May Be Moot.
Have you noticed the line on your California Income Tax Return marked “Use Tax?”
The statement appears on all California Income Tax Returns but may be overlooked or misunderstood. By way of definition, use tax is the complementary tax to sales tax and is generally imposed on transactions where the sales tax cannot be imposed on the seller but the tax is still due (e.g., purchases made from out-of-state vendors). Until recently the “Use Tax” line on the Income Tax Return was the main mechanism used by California to collect use tax from individuals and businesses not required to register with the Board of Equalization (“BOE”) as a “retailer.” However, the passage of Assembly bill AB X4-18, which added Section 6225 to the Revenue and Taxation Code, changed that.