Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2021
Transactions And Use Tax Law
CHAPTER 2 IMPOSITION OF TAX
7262. Required provisions of the use tax. The use tax portion of any transactions and use tax ordinance adopted under this part shall impose a complementary tax upon the storage, use, or other consumption in the district of tangible personal property purchased from any retailer for storage, use, or other consumption in the district. The tax shall be at a rate of one-eighth of 1 percent, or a multiple thereof, of the sales price of the property whose storage, use, or other consumption is subject to the tax, and the ordinance shall include provisions in substance as follows:
(a) Provisions identical to those contained in Part 1 (commencing with Section 6001), insofar as they relate to use taxes and are not inconsistent with this part, except that the name of the district as the taxing agency shall be substituted for that of the state. The name of the district shall be substituted for the word "state" in the phrase "retailer engaged in business in this state" in Section 6203 and in the definition of that phrase.
The following additional provisions shall be included:
(1) "A retailer engaged in business in the district" shall also include any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property in this state or for delivery in the state by the retailer and all persons related to the retailer that exceeds five hundred thousand dollars ($500,000). For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of the Internal Revenue Code and the regulations thereunder.
(2) Except as provided in paragraph (3), a retailer engaged in business in the district shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the district or participates within the district in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the district or through any representative, agent, canvasser, solicitor, subsidiary, or person in the district under the authority of the retailer.
(3) "A retailer engaged in business in the district" shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the district.
(b) A provision that all amendments to the provisions of Part 1 (commencing with Section 6001) relating to the use tax and not inconsistent with this part shall automatically become a part of the ordinance. However, no amendment shall operate so as to affect the rate of tax imposed by the district's board.
(c) A provision that the amount subject to tax shall not include the amount of any sales tax or use tax imposed by the State of California or by any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the amount of any state-administered transactions or use tax.
(d) A provision that any person subject to a use tax under an ordinance adopted pursuant to this part shall be entitled to credit against that tax or any transactions tax, or to reimbursement for a transactions tax, paid to a district or retailer in a district imposing a transactions and use tax pursuant to this part.
(e) A provision that, in addition to the exemptions provided in Sections 6366 and 6366.1, the storage, use, or other consumption of tangible personal property, other than fuel or petroleum products, purchased by operators of aircraft, and used or consumed by the operators directly and exclusively in the use of the aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this state, the United States, or any foreign government, is exempt from the use tax.
(f) A provision that the storage, use, or other consumption in the district of tangible personal property is exempt from the tax if the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of the ordinance. The possession of, or the exercise of any right or power over, tangible personal property under a lease which is a continuing purchase of the property is exempt from tax for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease entered into prior to the operative date of the ordinance. For purposes of this subdivision, the storage, use, or other consumption of, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not the right is exercised.
(g) Any provision in an ordinance that is required to be included pursuant to paragraph (1) of subdivision (a) shall become operative on April 25, 2019.
History.—Added by Stats. 1986, Ch. 216, effective June 30, 1986. Stats. 1987, Ch. 308, operative January 1, 1988, deleted first phrase of second paragraph of subdivision (1), "An additional provision shall be included that" and substituted "The following additional provisions shall be included: (A) Except as provided in subparagraph (B)", and added subparagraph (1)(B). Stats. 1988, Ch. 1029, in effect January 1, 1989, substituted "Division 3.5 (commencing with Section 9840) of the Vehicle Code" for "Article 2 (commencing with Section 680) of Chapter 5 of Division 3 of the Harbors and Navigation Code" following "vessels registered under" in subparagraph (B) of paragraph (1) of subdivision (a). Stats. 1991, Ch. 236, in effect July 29, 1991, substituted "one-quarter" for "one- half" after "at a rate of", added ", or a multiple thereof," after "1 percent" in subdivision (a) and added ", other than fuel or petroleum products," after "tangible personal property" in paragraph (5) of subdivision (a). Stats. 1992, Ch. 905, in effect September 25, 1992, operative January 1, 1993, deleted subdivision letter "(a)" in the first paragraph; lettered former paragraphs (1), (2), (3), (4), (5), and (6) as subdivisions (a), (b), (c), (d), (e), and (f), respectively; substituted "paragraph (2)" for "subparagraph (B)" after "Except as provided in" in paragraph (1) of subdivision (a); lettered former subparagraphs (A) and (B) of subdivision (a) as paragraphs (1) and (2), respectively, in subdivision (a); and deleted former subdivision (b) which stated that "This section shall become operative on January 1, 1988.". Stats. 2012, Ch. 739 (AB 1126), in effect January 1, 2013, substituted "one-eighth" for "one-quarter" after "at a rate of" in the first paragraph. Stats. 2019, ch. 5 (AB 147), in effect April 25, 2019, operative October 1, 2019, inserted paragraph (1) in subdivision (a), redesignated former paragraph (1) as paragraph (2), and therein substituted "paragraph (3)" for "paragraph (2)", and redesignated former paragraph (2) as paragraph (3); and added subdivision (g). Stats. 2019, ch. 34 (SB 92), in effect June 27, 2019, operative October 1, 2019, deleted "Title 26 of" and substituted "Internal Revenue" for "United States" in subdivision (a), paragraph (1); and substituted "25" for "1" after "April" in subdivision (g).
Note.—Section 8 of Stats. 2019, ch. 5 (AB 147) specifies: The amendments made to Sections 6203 and 7262 of the Revenue and Taxation Code by this act shall not have any retroactive effect.