Could a voluntarily registered out-of-state printer use one invoice for a multistate customer and leave California use tax to the customer?

Plain-English summary

California said the Oregon printer's voluntary registration required it to collect all use tax due on sales to California consumers, even if it otherwise might not have been a retailer engaged in business in the state. It could continue sending one invoice to the Oregon headquarters rather than separately invoicing each California outlet.

The invoice and records needed to identify products sold for California use and show the corresponding use-tax calculations. The letter could not determine whether advertising flyers, bagstuffers, or store signage qualified for the printed-sales-message exemption because no samples or distribution details were provided; it stated that the submitted facts did not appear to qualify.

Common questions

Was a separate invoice required for each California store?

No.

Could the printer make the customer self-assess instead?

No. Voluntary registration carried collection duties for tax due on California use.

What had to appear in the records?

The products destined for California and the related use-tax calculations.

Did the letter finally decide the printed-sales-message exemption?

No. It lacked product samples and use or distribution facts.

Citations and references

• California Revenue and Taxation Code sections 6015(a)(1), 6051, 6203, and 6226 — retailer, sales-tax, nexus, and voluntary-registration provisions discussed
• California Sales and Use Tax Regulation 1684(b) — voluntary registrant's collection duty applied
• California Revenue and Taxation Code section 6379.5 and Regulation 1541.5 — printed-sales-message exemption identified but not finally resolved
• Finance manager's August 29, 1996 request letter — facts quoted; full request letter not reproduced in the official PDF
• Printer's first-quarter 1996 voluntary California registration and account — registration stated; application and account records not reproduced in the official PDF
• Grocer's six California outlets and Oregon and Washington outlets, printing orders, shipments, Oregon mailing-house deliveries, Portland invoices, product allocations, and use-tax calculations — facts and required records described; underlying customer, order, shipping, invoice, allocation, and tax records not reproduced in the official PDF
• Advertising flyers, bagstuffers, store signage, and other printing — no product samples or use and distribution details supplied with the request
• Enclosed copy of Regulation 1541.5 — enclosure not reproduced in the official PDF
• Required use-tax collection after the opinion — no later invoice, registration change, return, remittance, exemption determination, or final outcome supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/220-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/220-0176.pdf

Original ruling text

220.0176

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE (916) 327-2291
FAX (916) 323-3387

November 14, 1996

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento
___
E. L. SORENSEN, JR.
Executive Director

Ms. M--- C--Finance Manager
C--- P--- P--- and D--XXXX S.E. --- Way
---, OR XXXXX-XXXX
Re:

Sales Tax on Printing by Out-of State Printer
SC -- XX-XXXXXX

Dear Ms. C---:
This is in response to your letter, dated August 29, 1996, in which you inquire about the application of sales tax on printed materials prepared for one of your customers, an Oregon based grocer with six outlets in California. You explain that N--- P--- Inc., doing business as C--- P--- (C---), operates a printing facility in Oregon. In addition to printing, C--- also designs, typesets and binds printed materials for its customers. C--- registered with the Board as a retailer selling tangible personal property for use or other consumption in California, pursuant to Revenue and Taxation Code section 6226, in the first quarter of 1996. Your inquiry concerns one of your clients, an Oregon based grocer with outlets in Oregon, Washington and California. You explain that: “This client frequently requests that we produce a printed piece and ship various quantities to each of their locations; for which we currently send one invoice to the Portland office for payment. This printing is for use in the grocery outlets and consists of store signage, bagstuffers, advertising flyers, etc. On some occasions, we ship to a mailing house in Oregon.” You ask whether you are required to prepare separate invoices and collect tax on these purchases from each of your client’s California outlets. It is your position that it is only necessary to send a single bill to your client and that it is your client’s responsibility to self assess any California sales or use tax that my be owed.

Ms. M--- C---

-2-

November 14, 1996
220.0176

Under the California Sales and Use Tax Law, sales tax is imposed on a retailer's gross receipts from retail sales of tangible personal property occurring in California, unless the sale is otherwise excluded or exempted by statute. (Rev. & Tax. Code § 6051.) “Retailer” includes every seller who makes retail sales of tangible personal property. (Rev. & Tax. Code § 6015(a)(1).) If C--- is not a retailer engaged in business in this state, within the meaning of section 6203, it would not be required to collect the use tax. However, since C--- chose to voluntarily register with the Board as a retailer, under Revenue and Taxation Code section 6226, it is required to collect all use taxes due with respect to its sales to California consumers. (See Reg. 1684(b).) There is no requirement that each of the California outlets be separately invoiced for each job. Thus, your current practice of issuing a single invoice to the Oregon client is sufficient. For purposes of establishing a record of your sales for use in California , these invoices should identify the products sold for use in California as well as the corresponding calculations of the use tax on these products. The foregoing analysis applies to C---’s obligation to collect use tax. However, this tax is only required to be collected if the products sold for use in California are taxable under California’s Sales and Use Tax Laws. You identify the products sold for use in California as “advertising flyers,” “bagstuffers,” and “store signage.” Since you have not provided any samples of these products or explained the manner in which they are used or diistributed, I cannot ascertain whether any of these products are excluded from California's Sales and Use Tax Laws. However, you should be aware that Revenue and Taxation Code section 6379.5 provides an exemption from tax, under specified circumstances, for certain sales and uses of printed sales messages. From the facts you have provided I do not believe that any of these products qualify for this exemption. However, for your convenience, I have included a copy of Regulation 1541.5 which explains the circumstances under which this exemption would apply. If you have any further questions please feel free to contact this office again. Sincerely,

Patricia Hart Jorgensen
Senior Tax Counsel
PHJ:cl
Enclosure (Reg. 1541.5)
cc:

Out-of-State District Administrator