California Trucking Association

Recently, the Board of Equalization has contacted some CTA members to notify them that they are “Qualified Purchasers” subject to newer use tax reporting requirements.

So who is a Qualified Purchaser?

A "qualified purchaser" means a person that meets all of the following conditions:

1)   The person receives at least $100,000 in gross receipts from business operations per calendar year. Note: Gross receipts is the total of all receipts from both in-state and out-of-state business operations.

2)   The person is not required to hold a seller's permit or certificate of registration for use tax (under section 6226 of the Revenue and Taxation Code).

3)   The person is not a holder of a use tax direct payment permit as described in section 7051.3 of the Revenue and Taxation Code.

4)   The person is not otherwise registered with the BOE to report use tax.

For motor carriers not otherwise engaged in retail operations, and who do not regularly order products from out-of-state, this may be the first time you have been asked to register Use Tax with the State.

In 2009 budget trailer bill, AB x4-18 (Stats. 2009, Ch.16) added section 6225 to the Revenue and Taxation Code, which requires a "qualified purchaser" to register with the Board of Equalization (BOE) and report and pay use tax directly to the BOE.

Generally, use tax applies when a person or business in California purchases tangible merchandise to be used, consumed, given away, or stored in this state from a retailer outside of this state who does not collect California tax on the sale. In simpler terms, if sales tax would apply when a particular item is purchased in California, use tax applies when a similar purchase is made from a retailer outside the state and no tax is charged.

Only the registration requirement is new under AB x4-18.