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If you are a DE corporation qualified in CA, how do you deal with use tax?

Hi all. This question goes to all who have filed taxes as a Delaware or other corporation and are qualified to do business in California.

Technically, you are supposed to file use tax for any merchandise purchased out of state. How have you handled this in past CA tax fillings?

7 Replies

Hamid Farzaneh
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Hamid Farzaneh Entrepreneur
CEO and Co-Founder at Alea Labs, Inc.
Stefan,

The owner/excecutive of the S-Corp is personnally liable if the company doesnt remit the taxes collected to the State. I strongly recommend to tightly follow the rule. Just charge the customers and remit them to the state monthly or quarterly.
Stefan Broda
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Stefan Broda Entrepreneur
Partner Program Manager at Atlassian
Thanks. and to be clear, use tax / sales tax needs to be paid both for:
  • Any sales made online to any customer of your corporation over the internet
  • On any purchases of merchandise your corporation made from any out of state seller who did not already charge you the CA sales tax

Correct?
Richard Rosen
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Richard Rosen Entrepreneur
Founder of FastCall --​> #1 Phone Sales Productivity app in the Salesforce AppExchange
These are sales taxes? When you say merchandise purchased.. you mean by clients purchasing your goods?

Not goods purchased by the Corp?
Richard Rosen
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Richard Rosen Entrepreneur
Founder of FastCall --​> #1 Phone Sales Productivity app in the Salesforce AppExchange
These are sales taxes? When you say merchandise purchased.. you mean by clients purchasing your goods?

Not goods purchased by the Corp?
Stefan Broda
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Stefan Broda Entrepreneur
Partner Program Manager at Atlassian
@Richard, Both
  • My startup that is qualified in CA sells anything physical over the internet --> I need to pay CA sales tax. CorrecT?
  • My startupthat is qualified in CAbuysany merchandise from US non-CA vendors over the internet -> I need to pay CA use tax for these items.
Hamid Farzaneh
0
0
Hamid Farzaneh Entrepreneur
CEO and Co-Founder at Alea Labs, Inc.
Yes, to the first point, except if your customer is a foreign company and your ship your product outside of the US.

If you are buying products (components, etc.) to use in your product manufactured in CA (ie for resale), you should give your resale # to the vendor in CA or other states so as not to be charged for sales tax.

If you are buying product NOT for resale and if your vendor does not charge you for their state's sales tax, I believe that you have to pay the use tax (but I suggest you verify with a CPA).
Hamid Farzaneh
0
0
Hamid Farzaneh Entrepreneur
CEO and Co-Founder at Alea Labs, Inc.
Yes, to the first point, except if your customer is a foreign company and your ship your product outside of the US.

If you are buying products (components, etc.) to use in your product manufactured in CA (ie for resale), you should give your resale # to the vendor in CA or other states so as not to be charged for sales tax.

If you are buying product NOT for resale and if your vendor does not charge you for their state's sales tax, I believe that you have to pay the use tax (but I suggest you verify with a CPA).
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