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Who must obtain a seller's permit?
You must obtain a seller's permit if you:
- Are engaged in business in California and
- Intend to sell or lease tangible personal property that would ordinarily be subject to sales tax if sold at retail.
The requirement to obtain a seller's permit applies to individuals as well as corporations, partnerships, and limited liability companies. Both wholesalers and retailers must apply for a permit.
If you do not hold a seller's permit and will make sales during temporary periods, such as Christmas tree sales and rummage sales, you must apply for a temporary seller's permit. Such permits are normally issued to selling operations lasting no longer than 90 days at one location.
What does engaged in business mean?
You are engaged in business in California if you:
- Have an office, sales room, warehouse, or other place of business in this state (even if the location is only temporary).
- Have a sales representative, agent, or canvasser operating in this state.
- Receive rental payments from the lease of tangible personal property in this state.
There are other activities that may qualify a selling operation as being engaged in business in California. Due to the various rules that apply, you should contact our Customer Service Center to determine if you must obtain a permit.
What is meant by ordinarily subject to sales tax?
In general, retail sales of tangible personal property in California are subject to sales tax. Examples of tangible personal property include such items as furniture, giftware, toys, antiques, clothing, and so forth.
In addition, some service and labor costs are taxable if they result in the creation of tangible personal property. For example, if you make a ring for a specific customer, you are creating tangible personal property. Therefore, the total amount you charge for the ring (including the charge for labor) would be taxable. This would also be the case if the customer provided the materials for making the ring.
However, labor costs for making repairs (resetting a diamond, for example) are not taxable since they do not result in the creation of tangible personal property. You are only repairing or reconditioning existing property.
Likewise, labor charges to install or apply property which has been sold is not ordinarily subject to sales tax (note: the labor charge should be stated separately on the bill).
There are many rules governing what is taxable. You are encouraged to contact our Customer Service Center.
How do I apply for a permit?
The CDTFA has a secure, convenient, fast, and free way to register online for a permit. The system guides you through the process and will assist you with the types of permits you may need for your business.
If I apply for a permit, what information is needed to complete an application?
You will be asked to furnish the required information when registering for a permit.
If you have a business partner, or if the business is managed by corporate officers or limited liability company managers, members or officers, those persons will also be asked to furnish some of the required information.
Is information regarding my account subject to disclosure?
Yes. While most of the information you provide to the CDTFA is confidential, some is subject to public disclosure, such as the information on your seller's permit and the closeout date of your business, if applicable. Under certain conditions, your account information, including underreporting and outstanding liabilities, may be shared with the other government agencies.
Do I need more than one permit?
If you have more than one place of business (located on different premises), you may need a separate permit for each location. In some instances it is possible to obtain a consolidated permit for multiple business outlets. At the time you apply for a permit, be sure to provide information for all business locations so that the CDTFA will issue the correct type of permit.
Is there a fee charged for a seller's permit?
No. However, the CDTFA may require a security deposit to cover any unpaid taxes that may be owed if, at a later date, the business closes. The amount of the security will be determined at the time you apply.
If I am no longer in business, can I keep my seller's permit?
Your permit is valid only as long as you are actively engaged in business as a seller. If you are no longer conducting business, you should return your permit to the CDTFA for cancellation. For more information, please see publication 73, Your California Seller's Permit. Likewise, the CDTFA may cancel your permit if it finds that you are no longer engaged in business as a seller.
Should I tell the CDTFA if I change my business address or mailing address?
Yes. If your business information or address has changed, you may complete a notice of business change form or contact our Customer Service Center.
Seller's permit or prepaid MTS account holders should fill out the Notice of Business Change form (CDTFA-345) and follow the instructions.
Special Taxes and Fees Department account holders should fill out the Notice of Business Change form (CDTFA-345-SP) and follow the instructions.
State-Assessed Property Tax assessees should contact the State-Assessed Properties Division at 1-916-274-3270, to report a change of business information or address.
If the ownership of my business changes, do I need to let you know?
Yes. Whenever you buy, sell, or discontinue a business, you will need to contact the California Department of Tax and Fee Administration (CDTFA).
If I am a spousal partner and divorce or withdraw from the partnership, do I need to notify the CDTFA?
Yes. This is considered the same as a change of ownership and must be reported. You must let us know in writing that you are no longer involved in the operation of the business. A legal separation or divorce decree awarding the business to one spouse, without notification to the CDTFA of the change, is not sufficient notice.
Is my seller's permit the same as a business license?
No. You should contact your city and/or county business license department to obtain a separate business license. To locate the department, check the government pages of your telephone directory (for example, look for the terms license or business license under City Government Offices and County Government Offices).
Should I be registered to pay other taxes?
Check with other state, federal, and local taxing and licensing authorities about any registration requirements they may have (for example, do you need to be registered with the Franchise Tax Board or the Employment Development Department).
The Governor's Office of Business and Economic Development (GO-Biz) offers extensive information on state, local, and federal permit requirements. For a listing of their assistance centers, visit their website at http://business.ca.gov/. See also California's Tax Information Center, http://www.taxes.ca.gov.
You may want to consult a tax professional for assistance with other agencies' requirements.
Are my business records subject to audit?
Yes. Your records may be audited to determine whether you have paid the correct amount of tax. The audit may determine that you owe tax, that you are entitled to a refund, or that you have paid the correct amount. In general, you may be audited in three-year intervals, at the time you close out your permit, or in connection with an audit on another permit you hold. Audits may also be initiated as a result of information received from outside sources.
What are my obligations as a permit holder?
As a permit holder, you are required to:
- Report and pay sales and use taxes
- Keep adequate records
You are also required to notify the CDTFA if you:
- Change your business address
- Change the ownership of your business
- Add or drop a partner
- Sell your business
- Buy another business
- Discontinue your business
