If your business is located in California, your Internet sales of physical products are generally taxable unless they qualify for a specific sales tax exemption or exclusion. For sales tax purposes, Internet sales are treated just like sales you make at retail stores or other outlets, through sales representatives, over the telephone, or by mail order. Sales tax will generally apply when a retailer makes a sale of tangible personal property in California via the Internet for delivery to a California customer. The sales tax exemption for sales to states outside California and foreign countries will generally apply when a California retailer makes a sale of tangible personal property via the Internet for delivery to a customer in another state or country and thus these types of sales are not subject to sales tax.

If your business is located outside of California, your sales of physical products delivered to California locations are generally subject to California’s use tax where your business has a permanent or temporary business location in California, including a warehouse, sales room, or office; or has any kind of representative or agent in the state, even temporarily, who makes sales, takes orders, installs or assembles merchandise, or makes deliveries are required to register with the BOE and collect use tax from California customers that are making out of state purchases (usually in an attempt to avoid California Sales Tax).

California customers must report and pay their own use taxes when they purchase tangible personal property from an out-of-state retailer for storage, use, or other consumption in California, and the out of state retailer does not collect their use taxes.