Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Question re California District Sales Taxes. Our company sells

Question re California District Sales...
Question re California District Sales Taxes.
Our company sells and installs office furniture: We very rarely have walk-in traffic to our warehouse/sales office, and then it is by appointment only as our sales staff is almost always in the field. Our customer contact is either by phone or face-to-face at their business sites. We sell and install primarily to businesses in central and northern California, from the Bay Area to the Nevada border and from Fresno to Marysville. We charge for product (new and/or used), for the labor costs to locate and retrieve product from our own warehouse or from warehouses owned by other businesses, for the labor to refurbish worn product, for delivery to the customer's business location and for installing product including assembling and installing cubicles on site and wiring for power and networking. The BOE's many documents on the relevant topics are confusing and sometimes contradictory. How can we determine whether we should charge sales tax based on the location of our own sales office/warehouse v. the location of the business to whom we deliver the product or perform the service, and on which of the referenced activities do we charge sales tax?
Show More
Show Less
Ask Your Own Tax Question
Answered in 30 minutes by:
11/13/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
Verified

Lev :

Hi and welcome to our site!
Sales tax charges are based on the sale location - means - the location at which your company transfers possession or ownership of the merchandise.
The location of your business or warehouses are irrelevant in this situation.
To assist retailers and consumers in identifying addresses located within special taxing jurisdictions- here is website provides a link to their address databases at: www.boe.ca.gov/sutax/cityaddresses.htm.
If you deliver the product into the district with your own vehicle - you are considered “engaged in business” in a district.

Customer:

Thank you Lev for that clarity about transfer of possession/ownership. The other part of the question was - are all of the activities for which we assess a charge subject to sales tax? product (new and/or used), for the labor costs to locate and retrieve product from our own warehouse or from warehouses owned by other businesses, for the labor to refurbish worn product, for delivery to the customer's business location and for installing product including assembling and installing cubicles on site and wiring for power and networking.

Lev :

Here is the BOE publication http://www.boe.ca.gov/pdf/pub44.pdf

Lev :

When the customer takes merchandise from your warehouse - and deliveries it using their own transportation - that means - they are taking possession at your warehouse location.
However - when warehouse is delivered to customer's location - that means - they are taking possession at that location.

Lev :

See page 6 in referenced publication - The following example illustrates when retailers should collect and report district use tax:
A retailer in Santa Clara County makes a taxable sale of property which is delivered to and used by the purchaser in unincorporated Alameda County. Even though it is subject to the general sales tax, the sale would be exempt from Santa Clara County district taxes because the property was delivered pursuant to the contract of sale outside the county for use outside the county. However, use of the property in Alameda County makes the sale subject to the district use tax in Alameda County. If the retailer is engaged in business in Alameda County and ships or delivers the property within Alameda County, he or she is responsible for collecting and reporting all applicable county-wide district use taxes on his or her sales. If the retailer is not engaged in business in the county, the purchaser is generally responsible for reporting and paying district use tax on his or her purchases.

Customer:

Hi Lev, Thank you for the clarity about the Location and Possession/Ownership criteria. That is very clear and helpful. Can you provide similar enlightenment regarding the second part of the question as to which activities are sales-taxable? The BOE pamphlets and bulletins I have read are confusing an sometimes contradictory. (product (new and/or used), labor costs to locate and retrieve product from our own warehouse or from warehouses owned by other businesses, labor to refurbish worn product, delivery to the customer's business location, installing product including assembling and installing cubicles on site, and wiring for power and networking.)

Lev :

Tax applies to charges for producing, fabricating, or processing tangible personal property for your customers. Thus charges to refurbish worn product are subject of the tax.


Fabrication is considered to be work done in creating, producing, processing, or assembling a product. Modifying an item or system as part of a sale is also considered fabrication. Charges for fabrication labor are generally taxable, whether you itemize your labor charges or include them in the price of the product. This is true whether you supply the materials for the job or your customer supplies the materials.

Lev :

For installing product including assembling - see here - http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutr/1546.html


(a) INSTALLATION GENERALLY. Charges for labor or services used in installing or applying the property sold are excluded from the measure of the tax. Such labor and services do not include the fabrication of property in place.

Lev :

For delivery charges - see Publication 100, Shipping and Delivery Charges - http://www.boe.ca.gov/formspubs/pub100/
Delivery–related charges may be nontaxable, partially taxable, or fully taxable based on conditions.

Lev :

Delivery–related charge is taxable when You deliver merchandise with your own vehicles.

Customer:

OK, I think we're getting closer - I think I understand about refurbishing. So, would it be correct to say that charges to get a product ready for delivery are taxable including labor to locate the product in the warehouse and clean the product; delivery charges to deliver the product in our own vehicle is taxable, but installing the product at the customer's premises is not taxable? And after reading 1546 repair section it seems fair to say that when we are hired to reconfigure an office cubicle (ie to relocate the access point or rotate the cubicle to face a different direction) that is non-taxable labor, but if we replace a high panel with a lower panel, the price of that replacement panel would be taxable and should be separately listed to limit the tax applicability to just the replacement part?

Lev :

So far - assuming all charges are stated separately
-- charges to refurbish worn product - taxable
-- delivery charges - taxable
-- installation charges - not taxable.

Lev :

I would agree with your assessment - but because that is related to very specific business operations - you might know better the difference between repair and installation. Sometimes - there is no clear cut - and we must use a common sense for determination.
What is important - all these charges must be clear identified and separately stated on the invoice.

Lev :

In additional - BOE provides educational seminars for sale tax practitioners that might be helpful.
There is no charge to participate - and you may bring your specific questions.
Please take a look at schedule - http://www.boe.ca.gov/cgi-bin/tax_class.cgi

Customer:

I think the one area where there may still be some confusion (or maybe it's resistance) is about the labor to locate a product in the warehouse - can you identify that specifically as taxable or non-taxable?

Lev :

"the labor to locate a product" is not specifically mentioned in any regulations.
I would classify it as a part of delivery charges.

Customer:

That's interesting. It can sometimes take 40 man-hours to locate and gather all the parts for 100 cubicles, so you can see why we would assess that cost specifically. Does that information modify your opinion of taxability of those charges? I think were home after your answer to that....

Lev :

The classification of each charge is very specific for your business operations.
So far - I see three main steps - fabrication, delivery and installation.
Because - you would not install the merchandise which is not completed - I assume that "locate a product" sub-step would be either a part of fabrication or delivery.
I do not think that BOE would accept arguments that "locate a product" is part of installation - that would mean delivered merchandise is not ready for installation - and all installation might be classified as fabrication...
But again - that might be very specific for your business and there might not be a clear cut.

Customer:

OK. I think that greatly improves my understanding of the application of these regulations to this business. Thank you for your very complete response.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
30,132 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I own a business in Kentucky and owe state sales tax to the
I own a business in Kentucky and owe state sales tax to the state of Kentucky. Can the state of Kentucky place a lien on my home in Pennsylvania jointly owned by me and my wife … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
What is the statue of limitations for restaurant sales tax
what is the statue of limitations for restaurant sales tax delinquency in Virginia and can you discharge it in bankruptcy?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Certificate of Registration for sales tax Illinois. How to renew?
We have an Illinois Business Authorization Certificate of Registration for Sales Tax as a reseller only. Apparently, this certificate expired on 3-1-11. How do I go about getting this renewed?… read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
US taxation and sales tax issueI started ebay business with
Second opinion] US taxation and sales tax issueI started ebay business with a Korean relative. We don't have a partnership agreement. The partner has an paypal and ebay account, gets a sales order, an… read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
In New Jersey, are sales taxes applicable for consulting services?
In New Jersey, are sales taxes applicable for consulting services, billed on a hourly basis?… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Second opinion] do I pay sales tax for items bought from
Second opinion] do I pay sales tax for items bought from Iowa … read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
US taxation and sales tax issue I started ebay business with
US taxation and sales tax issueI started ebay business with a Korean relative. We don't have a partnership agreement. The partner has an paypal and ebay account, gets a sales order, and let me dropshi… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
I have a quesiton about sales tax. I am setting up an
i am setting up an ecommerce shop in boston and need to calculate sales tax. i was wondering how to approach this … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
How this service works? I have some sales tax questions in
i have a wholesale lighting store, and sometimes we do labor jobs. like installation or repair, is these chsrges taxables?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Do I have to pay city sales tax on a vehicle I purchased
Do I have to pay city sales tax on a vehicle I purchased four years ago outside of Colorado which I now drive as a resident of Colorado Springs? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
NC Sales Tax Are computer "subscription license" taxable for
NC Sales TaxAre computer "subscription license" taxable for NC sales tax? Subscriptions such as a monthly backup program.Thanks, JW… read more
abci168
abci168
Principal
27 satisfied customers
2 Questions: SALES TAX COLLECTED and GROUPON SALES Does
2 Questions: SALES TAX COLLECTED and GROUPON SALESDoes Sales tax get reported on the Corporate Tax Return (1120) as part of Gross Receipts or Sales?I just got an IRS bill because I did not include Sal… read more
abci168
abci168
Principal
27 satisfied customers
Is there a statute of limitation for sales tax in ohio?
Is there a statute of limitation for sales tax in ohio? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Sales tax in Florida on motor vehicles, what is the date the
Sales tax in Florida on motor vehicles, what is the date the sale needs to be reported to the DOR?… read more
abci168
abci168
Principal
27 satisfied customers
What is the current NY State sales tax on materials and
What is the current NY State sales tax on materials and labor? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Is there an exemption for the Philadelphia sales tax? For
Is there an exemption for the Philadelphia sales tax? For example a business enterprise requires a service provider services. Such as pest control service for rental properties? Or, accounting service… read more
abci168
abci168
Principal
27 satisfied customers
If person A sales a used car to person, is a sales tax
If person A sales a used car to person B, is a sales tax required to be paid by either party? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Sales tax questions: When file sales tax report, do you
sales tax questions:When file sales tax report, do you prepare it on cash basis or accrual basis?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x