Section: 523-2.3.2
Effective: 03/22/1982
Supersedes: 10/02/1972
Next Review Date: TBD
Issuance Date: 03/22/1982
Issuing Office: Procurement & Contracts
I.
REFERENCES
A.
Federal
Laws Relating to State Taxation (4 U.S.C.A., Sections 105-110; 61 STAT. 641, as
amended by 68 STAT. 1227).
B.
California
Sales and Use Tax Law
II.
DEFINITIONS
A.
"Sales
Tax" means the tax imposed by the State of California on the following
transactions:
1. Any transfer of title to the University because
of possession or exchange, conditional or otherwise, of tangible personal
property for a consideration.
2. The producing, fabricating, processing,
printing, or imprinting of tangible personal property for a consideration when
University furnished materials are utilized.
3. A transaction whereby the possession of personal
property is transferred to the University but the seller retains the title as
security for the payment of the price.
4. Any lease, hire, rental or license of tangible
personal property by the University, EXCEPT:
a. Motion picture (including television) films and
tapes;
b. Linen supplies and similar articles when an essential
part of the lease (or rental) agreement is the furnishing of the recurring
service of laundering or cleaning the articles; and
c. Mobile transportation equipment for use in
transportation of University personnel or property; EXCEPT that "one-way rental
trucks", certain passenger vehicles and trailers or baggage containers
designed for hauling by passenger vehicles ARE TAXABLE.
B.
"Use
Tax" means the tax imposed by the State of California upon tangible
personal property purchased or leased outside the State and brought to this
State, OR, to say it another way, the "use" tax rather
than the "sales" tax applies where the property purchased is shipped
from an out-of-state point to a University delivery point within the State of
California.
C.
"Tangible
Personal Property" means personal property which may be seen, weighed,
measured, felt, or touched, or which is in any other manner perceptible to the
senses.
D.
"Purchases
for the Purpose of Resale" means that the seller must secure from the
University a certificate of resale bearing the University's seller's permit
number or have other evidence to show that the purchase was, in fact, for
resale.
III.
POLICY
The State of California Sales and Use Tax applies to purchases of tangible personal property made by the University of California with the exception of certain items excluded in paragraph IV.A. below.
Ordering departments are, therefore, to include sufficient lien authorization in purchase requisitions, sub-orders under specific blanket purchase orders, and in releases under Low Value Purchase Orders to pay invoices in accordance with the tax law of the State of California.
IV.
PROCEDURE
A.
Exclusions
to Sales / Use Tax
Sales tax or the use tax should note be included in budgeted amounts for the purchase of the following categories of tangible personnel property
1. For the purpose of RESALE
2. For property purchased with Federal funds where
title to the property vests in the Federal government. Generally, Federal
contracts, fund numbers 25000-28999, are tax exempt while Federal grants, fund
numbers 21100-24999 and 29000-33999, are not exempt.
A constitutional exemption prohibits the State from taxing the Federal government.
3. For gas, electricity, and water delivered
through mains, lines, or pipes;
4. For gold and silver bullion, gold concentrates,
or precipitates sold by the producer or refiner;
5. For animal life and animal feed, seeds, annual
plants, and fertilizer, the products of which are to be used as FOOD FOR HUMAN
CONSUMPTION;
6. For food products FOR HUMAN CONSUMPTION. The
term "food products" DOES NOT include bottled water, spirituous, malt
or vinous liquors; carbonated beverages; medicines, tonics, and preparations in
liquid, powdered, granular, tablet, capsule, lozenge, and pill form sold as
dietary supplements or adjuncts;
7. For newspapers and periodicals regularly issued
at intervals not exceeding three months;
8. For containers when sold with the contents if
the sales price of the contents is NOT required to be included in the measure of
the taxes;
9. For non-returnable containers when sold without
the contents to persons who place the contents in the container and sell the
contents TOGETHER with the container;
10. For certain medicines for human use;
11. For property purchased solely for use outside
the State of California and delivered to a forwarding agent or export packer
and actually delivered to a port outside the United States prior to making any
use thereof; and
12. For property loaned by a retailer to the
University for an educational program.
B.
Lease
of Tangible Personal Property
See definition of "Sales Tax", paragraph II.A.4. above.
C.
Resale
Certificates
The burden of proof is on the University for establishing eligibility for exemption from sales or use tax when acquisition is for resale. When placing orders for such tax exempt tangible personal property, the normal practice is to inform the vendor, "this order is for resale". Should the vendor ask for the University's "resale number" (State of California Board of Equalization Seller's Permit Number), it is SXFH 25-610105. Contact the Purchasing Division, Materiel Management Department, should the vendor ask for written certification of the permit.
V.
RESPONSIBILITY
A.
Department
Chair/Heads
1. Make these instructions available to
departmental personnel delegated authority to place orders with commercial
sources under LVPO/Specific Blanket Purchase Orders.
B.
Materiel
Management
1. Provide advice and assistance in sales-use tax
matters to departmental personnel as required.
2. Furnish certificates of resale upon request and
when appropriate.
C.
Accounting
Officer
Pay the correct California Sales and Use Tax, amounts shown on purchase orders or on invoices notwithstanding.