California sales and use tax law, administered by the California Department of Tax and Fee Administration (CDTFA) applies to the University of California and its campuses, including UCSB.
California sales tax is imposed on sellers for the sale of tangible personal property at retail in California. The use tax is imposed on consumers for the use, storage or consumption of tangible personal property in California.
How Sales Tax Applies to UCSB
As a purchaser, UCSB pays sales tax to California business nexus suppliers on taxable purchases made in California, unless the item is purchased for resale.
As a seller, UCSB charges sales tax on sales to California resident customers external to the UC system. Sales between UCSB departments or between UC campuses are not subject to sales or use tax since the departments and campuses are part of the same legal entity.
How Use Tax Applies to UCSB
As a purchaser, UCSB accrues use tax on taxable purchases from out-of-state suppliers who are not do not have a California business nexus and who do not charge California sales tax. Use tax is directly remitted by UCSB to the state.
Exemptions from Sales & Use Tax
The law provides various exemptions from sales and use tax. Among these exemptions are most services and labor charges, items purchased for resale and computer software delivered electronically where no tangible personal property is transferred. For a list of common exemptions applicable to UCSB, see Related Information for Common Sales and Use Tax Exemptions. For the tax treatment of computer software licenses and maintenance agreements see the Software License — California Sales Tax Quick Reference Guide and the Software Maintenance — California Sales Tax Quick Reference Guide.
Obligation for Collecting Tax: California vs. Out-of-State Vendors
When UCSB makes a purchase from a supplier that has a California business nexus (as defined in law AB147) the sales tax is generally the supplier's responsibility and is included in the supplier's invoice.
When UCSB purchases tangible personal property from an out-of-state supplier who is not "engaged in business" in California per law AB 147 (e.g., has no California business location or employees or distributors, or does less than $500,000 in deliveries into California through any distribution channel), the supplier is not required to collect California sales tax. UCSB must accrue the correct amount of use tax on the transaction and remit it directly to the state.
Applicable Tax Rate
The tax rate for deliveries made to the UCSB campus is 7.75%. That includes the state and district sales tax. If a delivery is made instead to an address within the City of Santa Barbara then the local rate there is 8.75%. The City of Santa Barbara tax rate also applies when UCSB picks up an item from a store within the city boundaries. Current California sales and use tax rates and additional information on rate changes can be found on the CDTFA (California Department of Tax and Fee Administration) website.
Resale Certificates
A sale of tangible personal property made in California for resale is not taxable. If UCSB purchases an item for resale, a resale certificate should be issued to the vendor. All resale certificates are issued by Tax Services. When a department resells the item, it must then collect sales tax.
If UCSB makes a sale to a reseller, a timely, valid resale certificate should be obtained from the purchaser. For guidelines on what information the resale certificate should include, when it is considered timely and how to verify the seller’s permit number on the certificate, see Publication 103 - Sales for Resale on the CDTFA website www.cdtfa.ca.gov/formspubs/pub103/.
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