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702, 2021

Building for Uncle Sam

By |February 7th, 2021|Categories: Construction Contractors|

How Sales & Use Tax Applies to Construction Contracts with the United States Government Generally speaking, the United States Government is immune from state taxation under the Supremacy Clause of the United States Constitution.  Courts have ruled that states are precluded from taxing activities where the incidence of tax falls directly upon the federal government, its agencies, and instrumentalities.  But what about construction contracts with the federal government where the contractor is the party that is providing and installing items on behalf of the federal government?  This article uses California as an example to briefly explain how tax applies to [...]

702, 2021

Tricks of the Trade

By |February 7th, 2021|Categories: Construction Contractors|

Understanding How Sales and Use Tax Applies to Cabinet Contractors in California Can Save You a Bundle of Tax Sales and use tax rules for the construction industry are complex.  Generally speaking, California construction contractors are considered consumers of materials and retailers of fixtures.  Consumers must pay sales or use tax on the costs of the items they “use,” and retailers owe tax on the sale price of the items they sell.  Like many areas of taxation, however, the devil is in details.  The application of tax may vary depending on the item being installed, the form of the contract [...]

901, 2021

California Department of Tax and Fee Administration Issues Special Notice L-778 and Revokes Special Notice L-698

By |January 9th, 2021|Categories: Tobacco|

In September 2020, the California Department of Tax and Fee Administration (CDTFA) revoked previously issued Special Notice L-698 by issuing Special Notice L-778.  Special Notice L-698 was issued in August 2019 and it attempted to impose an excise tax collection requirement on licensed out-of-state tobacco distributors making sales to licensed tobacco wholesalers located in California.  Special Notice L-698 was controversial when it was issued because the imposition of excise tax on out-of-state distributors required them to collect the excise tax on the non-discounted selling price to its wholesaler customers, contrary to historical practices.  The California Cigarette and Tobacco Products Tax [...]

901, 2021

California Department of Tax and Fee Administration Issues Special Notice L-506

By |January 9th, 2021|Categories: Tobacco|

In September 2017, the California Department of Tax and Fee Administration (CDTFA) issued Special Notice L-506 which provides guidance on the application of excise tax on sales from out-of-state licensed tobacco distributors to in-state licensed tobacco distributors.  In summary, Special Notice L-506 states that the sale from an out-of-state licensed tobacco distributor to an in-state licensed tobacco distributor is not a distribution and therefore does not constitute a taxable transaction for the out-of-state licensed distributor. According to discussions we held with representatives from the CDTFA, the special notice was intended to clarify the long-standing interpretation of the California Cigarette and [...]

505, 2020

California Sales and Use Tax Exemption for PPE and Related Supplies

By |May 5th, 2020|Categories: Exemptions, Medical Industry|

Hopefully you are all staying safe, healthy and sane during this unprecedented time.  We want to make you aware of a new, limited-duration, sales and use tax exemption in California for items such as personal protection equipment (PPE) and the like, when these items are sold to the State during this emergency declaration period. Additional details are included below, but in short, sales to the State of California of PPE and related items are exempt from sales and use tax until Governor Gavin Newsom amends or resends the current State of Emergency order (N-46-20) he issued in response to the [...]