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State of California Franchise Tax Board

State Tax Agencies Collaborate to Promote Use Tax Reporting

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Public Affairs Office

For Immediate Release


Sacramento – The Franchise Tax Board (FTB) and the Board of Equalization (BOE) today launched a jointly produced tax tip video explaining California’s use tax, who needs to pay it, and how to report it on state income tax returns

The use tax applies to most purchases from sellers who are not required to collect sales tax. That is often the case with Californians’ purchases from out-of-state or online retailers.

The use tax was created as a companion to the sales tax in 1935 in order to protect California businesses who must regularly collect sales tax and would otherwise be at a competitive disadvantage to out-of-state vendors.

Use tax, just like sales tax, goes to fund state and local services throughout California. Use tax is administered by the Board of Equalization, but legislation enacted in 2003 provided individuals the option to report use tax on their state income tax return instead of filing a use tax return with the BOE.

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

  • The seller does not collect California sales or use tax, and
  • The consumer uses, gives away, stores, or consumes the item in this state.

While sales tax is owed to BOE by the seller, the purchaser is generally responsible for paying the use tax. The use tax rate is the same as one’s local sales tax rate. Visit the BOE website for more information.

For more information on other taxes and fees in California, visit:

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