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SALES AND USE TAX
UCSF is subject to California sales or use tax imposed by the State of California upon the consumption of tangible personal property in California. The sales tax is imposed on the retailer for the privilege of making sales at retail and the use tax is imposed on the purchaser for consuming tangible personal property in California, therefore no Exemption Certificate should be issued to vendor . The tax rate for sales and use taxes is the same.
Sales Tax - Sales tax is imposed on California vendors or out-of-state vendors who have a business location in California and engage in selling tangible personal property. UCSF is not exempt from sales tax in most cases. The sales tax r ate is determined by the point of delivery. Vendors should be charging UCSF sales tax on purchases of tangible personal property and f orwarding the collected payment of sales tax to the State of California Board of Equalization (SBE).
Use Tax - Use tax is a tax assessed against the purchaser of tangible personal property for the use of the property in California when California sales tax has not been charged. The use tax r ate is determined by the final destination where the good is consumed or utilized. UCSF is responsible for accruing use tax on purchases of tangible personal property from vendors when sales tax has not been charged on the invoices. UCSF is also responsible for accruing use tax for using any purchases of tangible personal property originally purchased for resale with Resale Certificate. The use tax accrued is paid directly to the State Board of Equalization (BOE) rather than to the vendor. Use tax generally applies to out-of-state vendors who are not registered with the California State Board of Equalization. Use tax is accumulated in the use tax natural class account (NCA) and paid to Board of Equalization (BOE) quarterly. http://www.boe.ca.gov/ .
When does Sales or Use Tax apply?
Sales or use tax applies when:
UCSF sells or purchases tangible personal property. Tangible personal property is "personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses."
Examples: Furniture, equipment, canned software programs, books, office supplies.- The funds being used are not specifically exempt from sales tax, as with some federal funds
- The goods or services are taxable according to California State Board of Equalization (SBOE) regulations
- The ship to location and receiving of goods took place in California
Where would I see sales or use tax on Weblinks Reports?
Weblinks Accounts Payable Report - Sales tax charged on an invoice is generally listed as a separate item. Weblinks users can see sales tax listed separately in the Accounts Payable report for the voucher. If sales tax is not charged on an invoice and use tax is accrued, the use tax amount will be listed separately; and the use tax amount will be included in the total charged to the department Fund and DPA on the GL Transaction Detail report. Additional use tax will be accrued to the sales tax charged by a vendor to equal 8.5% if delivery of goods takes place in San Francisco.
Weblinks GL Transaction Detail Report (Ledger) - The invoice gross amount will be charged to the department Fund and DPA on the Ledger when sales tax is charged on the invoice. If sales tax is not charged on an invoice for purchases of personal tangible property, use tax will be accrued and the amount is included in the total charged to the department Fund and DPA on the Ledger. If the sales tax charged is under the tax rate of 8.5% for goods delivered in San
Francisco, use tax will be accrued to arrive at the 8.5% tax rate. A department Weblinks user may see the use tax amount (difference between the ledger amount and the invoice amount) by accessing the Accounts Payable report page by clicking on Source Code 426 in the first column of the report.
My department purchases tangible personal property for resale to external (non-UC) customers, should my department pay sales or use tax?
No, if your department purchases tangible personal property for resale to external (non-UC) customers, your department is acting as a seller, therefore your department should obtain the Resale Certificate from the Controller’s Office before placing the order with the vendor. Once the Resale Certificate is presented to the vendor, the vendor will not charge sales tax on the invoice. The Controller’s Office – Accounts Payable Unit also should not be accruing use tax on invoice when process payment for any purchases for resale. However, your department has the responsibility to collect the sales tax from the external (non-UC) customers and record the sales tax liability in general ledger.
To record the sale tax collected, please credit the following natural class account (NCA):
- NCA # 115510 – San Francisco Sales Tax Liability if the sale takes place in San Francisco.
- NCA # 115519 – San Mateo Sales Tax Liability if the sale takes place in San Mateo.
The Controller’s Office will forward the sales tax collected to the California State Board of Equalization when filing quarterly Sales and Use Tax return.
My department purchases tangible personal property for resale to internal (other UCSF Departments) customers, should my department pay sales or use tax?
Yes, if your department purchases tangible personal property for resale to internal (other UC Department) customers, your department is acting as a purchaser for the other UC Department. If vendor does not charge sales tax on invoice, the Controller’s Office – Accounts Payable Unit will accrue use tax when processing payment for any purchases of tangible personal properties that will be utilized by the University.
Pursuant to the University of California Sales & Use Tax Manual, Section 2-The University as Seller, Sales within UC, (http://www.ucop.edu/ucophome/policies/sutm/sutm.pdf ) all internal transfers of merchandises between various departments within the UC are not deemed sales. UC is considered the consumer of these items. Sales tax applies to the purchase of the materials and supplies used in the production of goods by UC for transfers within the UC system. Sales tax doesnot apply to any mark-up charges or labor associated with the final products.
My department receives federal grants to purchase tangible personal property for the department’s operation, should my department pay sales or use tax?
Yes, if your department receives federal grants to purchase tangible personal property for the department’s usage, and when the title to the item vests in the University at the time of purchase, then the purchase becomes subject to state sales or use tax.
Use tax was accrued for my employee reimbursement of books I ordered and paid online and was charged to my department financial statement, should I be reimbursed for the use tax charged to my department?
No. Use tax accrued and charged to the department will not be reimbursed to employee since the employee never paid the use tax. Use tax accrued will be paid to the State Board of Equalization.
Are shipping & delivery charges taxable?
No, for the State of California, if shipping & delivery charges are separately stated from handling charges.
Yes, for most of other States.
Yes.
Are lump sum charges for shipping and handling taxable?
Yes, when a vendor lumps the charges for shipping and handling into one line item, the charges for shipping and handling are taxable. However, if the shipping and handling charges pertain to a purchase which is not subject to the sales or use tax, the shipping and handling charges are exempt as well.
For additional information of how to apply sales or use tax to delivery-related charges in the State of California, please see the State Board of Equalization link: http://www.boe.ca.gov/pdf/pub100.pdf
Are food products exempt from sales and use tax?
Yes, food products for human consumption are generally exempt from tax unless they are served or catered as meals or consumed at or on the seller’s facilities.
Are services exempt from sales and tax?
Yes, where no tangible personal property is received.
Policies & Other Frequently Asked Questions:
University of California Sales and Use Tax Manual:
http://www.ucop.edu/ucophome/policies/sutm/sutm.pdf
(Reference p.138-145)
State Board of Equalization:
http://www.boe.ca.gov/
http://www.boe.ca.gov/sutax/faqscont.htm
Additional Assistance:
To help determine the taxability by product description, please consult the University of California Sales & Use Tax Manual at http://www.ucop.edu/ucophome/policies/sutm/sutm.pdf . The “Taxability By Product Description – Table” locates on pages 138 – 145 of Section 3: The University As Purchaser.
Also please contact Lihua Gu at lihua.gu@ucsf.edu, or at (415) 476–0818
Presentations
Sales & Use Tax Guideline
This page last updated on: Wednesday June 04 2008