Who must pay use tax?

California residents and businesses that use, store, or consume tangible personal property in California are generally liable for use tax when sales tax was not paid at purchase. Responsibility may fall on the purchaser or, in some cases, the seller depending on nexus and collection practices.

How do I report and pay?

Report use tax through a registered CDTFA account using the appropriate return form, or report it on your California individual income tax return by the annual tax filing deadline. Businesses follow their assigned filing frequency (monthly, quarterly, or annual) for remittance.

Are any purchases exempt?

Certain purchases may qualify for exemptions or resale treatment when supported by a valid exemption or resale certificate. Exemptions are transaction-specific; retain certificates and supporting invoices to substantiate claims during CDTFA review or audits.

Can I rely on a seller's sales tax payment?

If a seller collects and remits California sales tax, the purchaser typically receives credit. Maintain invoices showing tax collected; absent documentation, the purchaser may still be liable for use tax and must self-assess accordingly.

Are electronic signatures valid?

Electronic signatures are generally valid under the federal ESIGN Act (15 U.S.C. §7001) and state UETA laws where adopted. Exceptions include types of records excluded by statute. Use platforms that provide audit trails, tamper-evident PDFs, and appropriate authentication.

How long should I retain records?

Retain records for at least three years from filing to comply with federal standards (IRC §6501(a)); healthcare-related procurement must be retained six years per 45 CFR §164.530(j). State or industry requirements may mandate longer retention periods.

Electronic Signature
Templates
Tax
California Use Tax Information

California Use Tax Information

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

What California Use Tax Information Covers

California Use Tax Information explains the state's use tax obligations that apply when tangible personal property is purchased outside California for use, storage, or consumption inside the state and sales tax was not paid at the point of purchase. The information clarifies who is liable (purchaser or retailer), how to determine taxable use, and when to report and pay the tax to the California Department of Tax and Fee Administration (CDTFA). It also summarizes documentation, recordkeeping, and common filing options for consumers and businesses that owe use tax.

Why Accurate California Use Tax Information Matters

Understanding California Use Tax Information helps taxpayers avoid penalties, correctly report out-of-state purchases, and claim allowable exemptions or credits. Accurate compliance reduces audit risk, supports correct financial reporting, and ensures businesses collect or remit tax where required by state law and CDTFA guidance.

Who Relies on This Guidance

Typical users include consumers, online retailers, and businesses that purchase or sell tangible goods subject to California use tax.

Individual consumers who buy items from out-of-state sellers and did not pay California sales tax.
Businesses that acquire equipment, supplies, or inventory for use or storage in California.
Online marketplace sellers and remote vendors with nexus-based collection obligations under state law.

Step-by-step: Determine Liability and File

Follow these steps to determine use tax liability and complete reporting or voluntary disclosure to the CDTFA.

01

Gather Purchases: Collect invoices and receipts for out-of-state purchases for the tax year.
02

Determine Taxability: Assess whether items are taxable under California law or exempt.
03

Calculate Use Tax: Compute tax using applicable local and statewide rates; include use tax on purchases.
04

File & Pay: Report on CDTFA return, account, or through individual use tax form and remit payment.

Where and How to Submit Use Tax Reporting

Filing options include online CDTFA account, paper returns, or reporting with your annual income tax return.

Online Filing: Use CDTFA online portal to file returns and make payments.
Paper Return: Mail completed form to the CDTFA address listed on instructions.
Income Tax Reporting: Claim use tax on state return if not separately reported.
Third-Party Reporting: Accountants or tax services can file on behalf of taxpayers.

Electronic Submission and eSignature Considerations

Electronic submission and signatures are accepted for many California use tax filings when platforms comply with ESIGN and state requirements.

eSignature Law: Compliant under ESIGN and UETA.
Authentication: Email, SMS, or MFA supported.
File Types: PDF, DOCX, or scanned image.

Key Deadlines and Processing Expectations

Key filing deadlines and processing expectations help avoid late penalties and interest assessed by CDTFA.

Reporting Frequency:

Due according to your sales/use tax account filing schedule.

Individual Reporting:

Report use tax on California income tax return by April 15.

Monthly/Quarterly Returns:

Businesses remit on assigned filing periods; consult CDTFA notice.

Late Payment Processing:

Penalties and interest accrue from the original due date.

Record Retention:

Keep records for at least three years or longer for audits.

Penalties and Risks for Incorrect Reporting

Late Filing: State penalties and interest apply.

Underreporting: Assessment plus interest possible.

Intentional Fraud: Higher civil penalties and criminal exposure.

Backup Withholding: Missing TIN triggers federal backup withholding.

Audit Risk: Increased likelihood of CDTFA audit.

Loss of Credits: Cannot claim tax paid without documentation.

Common Preparation Mistakes to Avoid

Assuming small, infrequent purchases are exempt — failing to self-assess use tax on online or out-of-state purchases commonly leads to unexpected audits and back taxes.
Using only statewide rate and ignoring city or district taxes results in underpayment when local use tax components apply.
Discarding seller invoices or failing to record exemption certificates prevents credit for tax paid and complicates audit responses.
Assuming the seller remitted tax when liability actually rests with purchaser for untaxed out-of-state acquisitions.

Practical Tips for Accurate and Efficient Completion

Follow these recommendations to reduce errors, speed processing, and support audit readiness for California use tax filings.

Consolidate records electronically

Scan and index invoices, exemption certificates, and purchase orders in searchable PDF format. Use consistent file names and a single secure repository to make audits faster, ensure accurate rate application, and provide proof of tax paid when requested by CDTFA.

Reconcile purchase ledgers monthly

Match vendor invoices to bank and credit-card statements monthly to identify untaxed purchases quickly. Regular reconciliation reduces year-end adjustments and limits exposure to penalties or interest due to late self-assessment.

Verify seller exemption status

Obtain and retain seller resale certificates or exemption documentation before relying on tax-free treatment. Periodically re-verify certificates and document their validity to support credits during audits.

Use precise local tax rates

Determine the correct combined state and local rate by the purchaser's use location, not the seller address. Maintain a record of rate sources and calculations to support assessments or refunds.

eSignature Vendor Comparison for Filing and eSubmission

Pricing and feature comparison for common eSignature vendors used when submitting California use tax information.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial, no card required	Varies by plan	Varies by plan	Varies by plan	Varies by plan
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No
Envelope Cap	No cap	100 envelopes/user/year	Varies by plan	Varies by plan	Varies by plan

Frequently Asked Questions About California Use Tax Information

Answers to common questions about liability, reporting options, documentation, e-signatures, and record retention for California use tax.

Need help? Contact support

Who must pay use tax?
California residents and businesses that use, store, or consume tangible personal property in California are generally liable for use tax when sales tax was not paid at purchase. Responsibility may fall on the purchaser or, in some cases, the seller depending on nexus and collection practices.
How do I report and pay?
Report use tax through a registered CDTFA account using the appropriate return form, or report it on your California individual income tax return by the annual tax filing deadline. Businesses follow their assigned filing frequency (monthly, quarterly, or annual) for remittance.
Are any purchases exempt?
Certain purchases may qualify for exemptions or resale treatment when supported by a valid exemption or resale certificate. Exemptions are transaction-specific; retain certificates and supporting invoices to substantiate claims during CDTFA review or audits.
Can I rely on a seller's sales tax payment?
If a seller collects and remits California sales tax, the purchaser typically receives credit. Maintain invoices showing tax collected; absent documentation, the purchaser may still be liable for use tax and must self-assess accordingly.
Are electronic signatures valid?
Electronic signatures are generally valid under the federal ESIGN Act (15 U.S.C. §7001) and state UETA laws where adopted. Exceptions include types of records excluded by statute. Use platforms that provide audit trails, tamper-evident PDFs, and appropriate authentication.
How long should I retain records?
Retain records for at least three years from filing to comply with federal standards (IRC §6501(a)); healthcare-related procurement must be retained six years per 45 CFR §164.530(j). State or industry requirements may mandate longer retention periods.

Explore Templates

Tan Tock Seng Medical Report Additional Work Authorization Form Authorization for Vehicle Services Form School Pick Up Authorization Form Authorization of Automatic Payment Withdrawal for Consumer Leases Texas Authorization to Embalm

be ready to get more

Join over 28 million airSlate SignNow users

Sign Now