Publication 114, Consignment Sales

September 2018

Consignment Sales

Instead of making direct sales, individuals and businesses often place goods with others who make sales for them. These types of transactions are commonly called consignment sales. In most cases, the owner of the item (the consignor), and the seller (the consignee), need to register with us to obtain a seller’s permit, and report and pay sales on their returns. However, if you make no more than two qualifying sales or consignments in any twelve-month period, your sales are generally considered “occasional sales,” and you do not have to register for a seller’s permit or report those two sales or consignments.

I sell items placed with me on consignment. When is my consignment sale considered a retail sale?

You are responsible for obtaining a seller’s permit and paying the sales tax on the retail selling price of consignment sales when you:

  • Have possession or control of the item you are selling, and
  • Can transfer ownership or use of the item to the buyer without further action on the part of the owner.

For example, you may own a jewelry store where you sell jewelry on consignment. Typically, the owner of the jewelry will bring it to you and sign an agreement that authorizes you to sell the item and transfer ownership to the buyer. You are considered the retailer of jewelry you sell in this way and must pay sales tax based on your retail selling price.

If you make sales on behalf of others, and those sales do not meet the two conditions described above, please read see Broker Sales.

Note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this publication.

Resale Certificates

Can I furnish resale certificates to registered sellers who consign items to me for sale?

When a consignor holds a seller’s permit and has purchased items for resale, without the payment of tax, a resale certificate given by the consignee will ensure that the consignor will not be held liable for tax. Since consignees are not purchasing the property, they may modify the language used in the resale certificate changing the word “purchase” to “take on consignment” and issue this modified certificate to consignors.

Broker Sales

I arrange sales for other people, but my sales agreements don’t fit the two conditions described above. Are my sales taxable?

Broker sales: You may qualify as a broker if you do not transfer ownership of an item to the buyer without first getting permission from the owner, or if the owner maintains control of the item prior to the sale. A broker generally will not owe sales tax for the transaction. Instead, the owner of the property would be the seller, responsible for tax on the sale. Generally, as a broker, you need a permit if you make sales on your own behalf. For more information on retailer and broker sales, please see Regulation 1569, Consignees and Lienors of Tangible Personal Property for Sale, or you can call our Customer Service Center at 1-800-400-7115 (TTY:711). Please note that special use tax rules apply to vessel and aircraft brokers (see publication 40, Watercraft Industry).

Placing Items on Consignment

I place items with retailers on consignment. Do I need a seller’s permit?

Yes. You generally need to obtain a seller’s permit even if you make all of your sales by placing items with consignment shops, auction houses, art galleries, antique dealers, or similar businesses that make sales on your behalf.

Will I owe sales tax when someone sells an item for me on consignment?

No, unless the sale is made through a broker (see Broker sales above). You must include your receipts from consignment sales in “total sales” on your sales and use tax return for the period in which the sale is made. You then need to deduct those consignment receipts from your total sales. List them on the return line for:

  • “Sales for resale,” if the retailer has issued you a resale certificate, or
  • “Other” deductions, if the retailer has not issued you a resale certificate.

If you take the deduction on the “Other” deductions line, be sure to state that the deduction is for “consignment sales.”

What happens if the shop rents or leases my item to someone?

When you place an item with a shop on consignment and the item is subsequently rented or leased, you may be required to obtain a seller’s permit and collect and pay use tax on the full rent or lease receipts. However, you do not owe tax on the lease receipts you receive if you paid California tax on the item when you acquired it and rent or lease it in substantially the same form. You cannot take a use tax deduction for any commission you may pay to the shop.

For additional information on leasing, please see Regulation 1660, Leases of Tangible Personal Property—In General, and publication 46, Leasing of Tangible Personal Property in California, or call our Customer Service Center.

Example, typical consignment transaction

An antique bottle collector (the consignor), places five bottles on consignment with an antique store (the consignee), which issues the bottle collector a resale certificate. The store sells the bottles for $1500 and pays the collector $750 when the sales are final. The collector’s $750 in proceeds are nontaxable sales for resale. The store must pay sales tax on the full $1500 it received for the bottles.

Additional Information

For more information


1569 Consignees and Lienors of Tangible Personal Property for Sale

1660 Lease of Tangible Personal Property—in General

1668 Sales for Resale


40 Watercraft Industry

103 Sales for Resale

107 Do You Need a California Seller’s Permit?