CA Sales Tax

J.Racenstein has a single CA location business and sell all over California, we are not engaged in business in any other California district than Orange County. See excerpt from boe website below for definition.
We do not have an external salesforce and only offer will call service at our warehouse in Santa Ana CA.
Currently we collect the base rate CA Sales rate for Shipments of product to other Districts in California and other non-district areas in California.
J.Racenstein applies the base rate CA tax to these shipments based upon instructions obtained from the BOE.
J.Racenstein collects the base tax plus district tax for shipments to Orange County destinations as well as will call/ pickups at our facility in Santa Ana.
J.Racenstein does accept “Internet Sales” and collects Sales Tax for all sales in CA based upon the destination of the order.
IE: District Tax where our warehouse is and Base rate everywhere else.

J.Racenstein uses the information in Publication 44  to derive the taxes on its invoices

Excerpt: Publication 44 dated January 2017

From section Sales across District Lines states:
Retailers As a retailer, you are required to collect and report district use tax on a sale in a district in which you are “engaged in business” (please see What does “engaged in business” mean?), and one of the following conditions applies:

  • You ship or deliver the property into the district.
  • You participate in the sale of the property within that district. “Participation” includes solicitation whether direct or indirect. It also includes receipt of orders at a place of business in the district or through any representative, agent, canvasser, solicitor, subsidiary, or any other person working in the district under your authority.
  • You are a licensed dealer of vehicles or undocumented vessels that are registered by the purchaser in a county with district taxes. If a sale meets these conditions, you must collect district use tax on all taxable charges including those taxable charges which result from repairs or reconditioning.

Internet seller “engaged in business” If you are an Internet seller “engaged in business” in California and you are engaged in business in a district that imposes a transactions and use tax (district tax), you must report and pay district taxes to that district. However, if you are not engaged in business in a district, you are not required to report and pay district taxes imposed by that district, but you must still report and pay tax at the statewide rate, please see California City and County Sales and Use Tax Rates. Generally, if you are not engaged in business in a district and you ship by common carrier into the district, your customer is liable for the district use tax. As a courtesy to your customer, you may choose to collect the district use tax from them. If you do, it should be shown on the customer’s invoice and you must report it on your return. If you store inventory at various locations in California (at Internet auction houses’ fulfillment centers, for example), you are considered engaged in business in those districts where your inventory is located. JANUARY 2017 | DISTRICT TAXES (SALES AND USE TAXES) 2 When you are engaged in business within a district you are responsible for reporting and paying that district’s sales and use tax, even if you do not collect it from your customer. Alternatively, if you collect excess district tax or tax reimbursement from your customer, you should either:

  1. Refund to your customer the over-collected amount, or
  2. Report and pay the over-collected amount on your sales and use tax return.

Applying one tax rate on all sales in California, such as an average combined tax rate for all districts in California, is not an accepted method of collecting tax or tax reimbursement. A retailer should not knowingly collect more sales tax reimbursement or use tax than the customer owes on a particular transaction, which will occur when the single rate is higher than the actual rate of tax that applies to the transaction. When the single rate is less than the actual rate on a particular transaction, as stated above, the retailer who is engaged in business in the district(s) remains liable for the entire amount of district tax owed, not just the amount collected from the customer.
Are you a retailer “engaged in business” in a district?
You are considered “engaged in business” in a district if you:

  • Ship or deliver the property into the district using your own vehicle.
  • Maintain, occupy, or use any type of office, sales room, warehouse, or other place of business in the district, even if it is used temporarily, indirectly, or through an agent.
  • Have any kind of representative operating in the district for the purposes of making sales or deliveries, installing or assembling tangible personal property, or taking orders.
  • Derive rentals from a lease of tangible personal property located in the district.
    Sell or lease vehicles or undocumented vessels which will be registered in a district.