Did California use tax apply to stationery printed outside the state for California customers?

Plain-English summary

An out-of-state printer took orders from California customers, printed stationery outside California, and supplied it for use in California.

California said the transaction created use tax imposed on the purchaser. If the retailer was engaged in business in California through a place of business or agents, representatives, salespeople, or solicitors taking orders, the retailer had to collect the tax from the customer.

Without those California contacts, the seller could register voluntarily; otherwise, the purchaser had to report and pay the tax. The letter treated printing charges as taxable whether the printer or customer supplied the paper.

Common questions

Did printing the stationery outside California avoid use tax?

No. The stationery was ordered for customer use in California.

Are the rates stated in the letter current?

No. Its 3% state and 1% local illustration is historical.

Citations and references

• Historical California Sales and Use Tax Rulings 24, 73, and 74

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/430-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/430-0170.pdf

Original ruling text

430.0170

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

March 22, 1960

X-------------------

Your letter March 8

Dear Mr. X-----------------,
Your letter of the above date, addressed to the “Department of Revenue, Sales Tax Collection Division”, has been referred to the State Board of Equalization, which is the agency which administers the California Sales and Use Tax Laws. You inquire about the application of sales tax to transactions where you print stationery outside of California upon orders from customers in California for their use in this State. Under the California Sales and Use Tax Law, such a transaction would give rise to a use tax which is imposed upon the purchaser. This use tax must be collected by the retail seller from the purchaser if the retailer is engaged in business in California either by virtue of maintaining a place of business herein or by having agents, representatives, salesmen or solicitors operating in this State for the purpose of taking orders to be filled by the out-of-state retailer. If the retailer is not engaged in business in California as defined by the law, he may still voluntarily register with the State Board of Equalization and collect the tax for the State from the customer. Otherwise, the purchaser must report and pay the tax to the State. The use tax (which is 3% State and 1% local where applicable) applies to charges for printing regardless of whether the paper stock is supplied by the printer or by the customer. For your convenience, we are enclosing herewith Sales and Use Tax Rulings 24, 73, and 74. Thank you for your inquiry, and if we may be of any further assistance to you do not hesitate to contact us. Very truly yours Stanley G. Lerner Assistant Tax Counsel SGL:fb Enclosures Cc: Chicago – (CFH)