Publication 177, Internet Auction Sales and Purchases

July 2019

If you are making sales of tangible personal property in California using an Internet auction house or shopping platform, you may be required to register with the California Department of Tax and Fee Administration (CDTFA) and report and pay tax on your sales. "Tangible personal property" (merchandise) means personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses.

California permit requirements

Generally, a person in California who makes three or more sales of merchandise in a 12-month period is required to hold a seller's permit. This is true regardless of whether the sales are at retail or for resale. When you sell merchandise in California, even temporarily, you are generally required to register with the CDTFA, and to pay sales tax on your taxable sales.

Please see publication 107, Do You Need a California Seller’s Permit?

Internet sales

There is no general tax exemption for sales of tangible personal property made over the Internet.

Internet sales are treated just like sales made by sales representatives, at retail stores, over the telephone, or by mail order. Therefore, your retail Internet sales that take place in California, or to California consumers, are generally subject to sales or use tax, unless a specific exemption or exclusion applies.

For more information please see publication 109, Internet Sales.

Internet auction houses

If you list your merchandise to sell, seek bids, accept a bid from the highest bidder, and transfer the merchandise to the purchaser through Internet auction houses, you are generally considered the retailer in your transactions. This is true whether you receive the funds or have a third party collect the funds on your behalf.

Internet auction houses differ from most online companies by offering a service to other retailers allowing the retailers to post their merchandise for sale on the auction house’s site. Your sales made through Internet auction houses or sites that offer online classified advertisements (online advertisers) are generally subject to California sales tax. Currently, Internet auction houses are generally not considered retailers and are not responsible for collecting tax on those transactions. These businesses aid sellers and sales are the responsibility of the holder of the property. It should be noted, however, that this may be subject to change beginning October 1, 2019 (please see New Requirements for Marketplace Facilitators Beginning October 1, 2019 section below).

New requirements for marketplace facilitators beginning October 1, 2019

Beginning October 1, 2019, a marketplace facilitator (as defined by Revenue and Taxation Code section 6041) is considered the seller and retailer for each sale facilitated through its marketplace (for example, Internet website) for purposes of determining whether the marketplace facilitator is required to register with the CDTFA for a seller’s permit or Certification of Registration – Use Tax. Also, a marketplace facilitator that is registered with the CDTFA or required to register with the CDTFA for a seller’s permit or Certificate of Registration – Use Tax, is the seller and retailer for each retail sale it facilitates for a marketplace seller through its marketplace. As such, the marketplace facilitator will be required to pay sales tax or collect and remit use tax on each retail sale facilitated for a marketplace seller through its marketplace. We will update our website and issue a special notice with more information about the new requirements for marketplace facilitators. Please check our website at for updates.

Please 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.

District Taxes

District taxes - sellers

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. Please see publication 44, District Taxes (Sales and Use Taxes). 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. For current tax rates, please see our California City & County Sales & Use Tax Rates page. 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.

You are considered "engaged in business" in a district if you, for example:

  • Own or lease any real or tangible personal property, including, but not limited to, a computer server, in the district.
  • Maintain, occupy, or use, directly or indirectly, or through a subsidiary or agent, a permanent or temporary office, place of distribution, sales or sample room, warehouse or storage place, or other physical place of business in the district.
  • Have a representative, agent, or independent contractor operating in the district on your behalf or under your authority, or under the authority or your subsidiary, for purposes of making sales, taking orders, assembling or installing merchandise, training customers, making deliveries, or otherwise establishing or maintaining a market for your products.
  • Receive rental payments from the leases of tangible personal property located in the district, such as leases of machinery, equipment, and furniture.
  • Sell or lease vehicles or undocumented vessels which will be registered in the district.
  • Have total combined sales of tangible personal property in California or for delivery in California by you and all persons related to you exceeding $500,000 in the preceding or current calendar year (please see Additional district use tax collection requirement section below).

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.

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 the over-collected amount to your customer, 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.

Additional district use tax collection requirement

Beginning April 1, 2019, you are engaged in business in a district, if during the preceding or current calendar year, the total combined sales of tangible personal property in California or for delivery in California by you and all persons related to you exceed $500,000. A person is related to you, if they have a relationship with you, described in Internal Revenue Code section 267(b) and the related regulations.

Accordingly, beginning April 1, 2019, any retailer required to be registered with the CDTFA, whether located inside or outside of California that meets the $500,000 threshold is engaged in business in every district in the state whether or not they have a physical presence in those districts. As such, these retailers are required to collect the district use tax on taxable sales made for delivery in any district that imposes a district tax. Retailers that do not meet the $500,000 threshold are still engaged in business in any district(s) in which they have a physical presence. For more information, please see publication 44, District Taxes (Sales and Use Taxes) and the online guide, Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision.

District taxes-purchasers

When making purchases, be sure to verify the tax rate that applies to your purchase. As stated above, generally, if the property is shipped by common carrier to you in your "home" district, the district use tax applies. So if you purchase tangible personal property through an Internet auction for storage, use or other consumption in a district, and the seller only charged you tax at the statewide rate, in most cases you will be liable for the additional district use tax.*

Tax applies to vehicles purchased over the Internet in the same manner as those purchased from a vehicle dealer or private party. Please refer to Regulation 1610, Vehicles, Vessels, and Aircraft, and publication 34, Motor Vehicle Dealers.

For district tax requirements on sales and purchases, please see publication 44, District Taxes (Sales and Use Taxes), and publication 105, District Taxes and Sales Delivered in California. For tax rates, see California City & County Sales & Use Tax Rates. For more information about the CDTFA, please refer to the homepage at, as well as for all regulations and publications referenced in this publication.

*Please note: If you do not hold a California seller's permit, you can report and pay use tax on your California income tax return. You may also report your purchase(s) subject to use tax, including any additional district use tax you may owe, by filing a use tax return on the CDTFA's website at To do so, please complete the following steps: select Register, select Pay sales and use tax, returns, prepayments, or billings, select File a Return, and select One-Time Use Tax and/or Lumber Return. You can also register to report use tax in person at any of the CDTFA field offices. Please contact our Customer Service Center for assistance at 1-800-400-7115 (CRS:711). If you have a California seller's permit, and need to report personal purchases not related to your business follow the steps above.

If you are a business that holds a seller's permit, you can report and pay use tax for your business purchases when submitting your return on line item Purchases subject to use tax.

District tax example

You purchase merchandise from an online seller who charges sales tax at the statewide rate (7.25 percent). The seller ships the merchandise to you in a special tax district where the total sales and use tax rate is 8.75 percent. You (the purchaser) are liable for the additional 1.50 percent district tax in the special tax district.

Out-of-State Purchases

Use tax on out-of-state purchases

When you purchase merchandise from an out-of-state retailer, you are liable for the use tax due on your out-of-state purchases. The use tax rate is the same as the sales tax rate for any given California location.

Whether the seller charges a lump-sum price or itemizes the merchandise price and other charges, tax is due on the entire purchase price. Any service fees related to a taxable sale are generally taxable, however, shipping and delivery charges may not be taxable (see Shipping and delivery charges).

Generally, if you purchase merchandise from a private party located out-of-state and he or she makes fewer than three sales in a 12-month period, the purchase would not be subject to use tax since the sale is considered an occasional sale. However, if the private party makes three or more sales in a year, the purchase would be subject to use tax.

Most Internet auction houses provide a sales history of the vendor, which may be useful in deciding whether the transaction qualifies as an occasional sale. To determine or obtain proof that a private party’s sale to you is an occasional sale, you may have to contact the individual to find out if he or she has made three or more sales in a 12-month period. If so, you would have to report the use tax.

Shipping And Delivery Charges

Shipping and delivery charges

Tax does not apply to separately stated charges for delivery of property from the retailer’s place of business or other point from which shipment is made directly to the purchaser, provided the delivery is by other than the facilities of the retailer (by United States mail, independent contract or common carrier). Handling charges are a service related to the sale and are subject to tax when related to a taxable sale. Please see publication 100, Shipping and Delivery Charges.

A retailer selling merchandise for an artificially low price and then charging an excessive amount for “shipping” without payment of tax on the excessive shipping charge would be understating taxable sales. Since the law provides that only the actual cost of shipment is exempt from tax, the difference between the actual cost of shipment and the amount charged for shipping would be subject to tax.

Sales Delivered Outside California

Sales delivered outside California

Sales tax generally does not apply to your transaction when you sell a product to a nonresident of this state, and under an agreement with the purchaser, ship it directly to the purchaser at an out-of-state location, for use outside California. Please see publication 101, Sales Delivered Outside California.

Additional Information

For more information

CDTFA regulations, publications, and additional information are available on the CDTFA website or by calling our Customer Service Center at 1-800-400-7115 (CRS:711).


1595 Occasional Sales–Sale of a Business–Business Reorganization

1610 Vehicles, Vessels, and Aircraft

1620 Interstate and Foreign Commerce

1684 Collection of Use Tax by Retailers

1685 Payment of Tax by Purchasers

1686 Receipts for Tax Paid to Retailers

1699 Permits

1700 Reimbursement for Sales Tax

1823 Application of Transactions (Sales) and Use Tax

1827 Collection of Use Tax by Retailers


34 Motor Vehicle Dealers

44 District Taxes (Sales and Use Taxes)

100 Shipping and Delivery Charges

101 Sales Delivered Outside California

105 District Taxes and Sales Delivered in California

107 Do You Need a California Seller's Permit?

109 Internet Sales

110 California Use Tax Basics