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SALES BY INDIAN AND NONINDIAN RETAILERS LOCATED IN INDIAN COUNTRY

This section describes how sales and use tax generally apply to sales made by retailers located in Indian country. It addresses sales by Indian and non-Indian retailers, as well as purchases by Indians and non-Indians. Please be sure to read Key Definitions before you read this section.

Permit requirements

In general, you must hold a seller’s permit if you make sales in California. This is true whether you are an Indian, an Indian organization, or a non-Indian.

However, as explained later in this chapter, certain sales made only in Indian country by Indian retailers, including federally licensed Indian traders, are subject to use tax but not sales tax. Indian sellers who only make sales of this type do not need a seller’s permit which is used for the collection of sales tax reimbursement and reporting and paying sales tax. Instead, they must obtain a California Certificate of Registration—Use Tax. You can register on our website at www.boe.ca.gov, by selecting New Registration, and then select Register a business activity with BOE. You can also register to report use tax in person at any of our field offices.

Please contact our Customer Service Center for assistance at 1-800-400-7115 (TTY:711).

A retailer operating in Indian country may be required to obtain a tribal sales license. For more information regard- ing the requirement to obtain a tribal sales license and the proper application of tribal tax laws, please contact the tribal government in whose jurisdiction you are operating.

Please note: A tribal sales license is not a legal substitute for a California seller’s permit or a certificate of registration to collect use tax.

Sales by “on-reservation” Indians: basic application of tax

If you are an Indian retailer located in Indian country, many of your sales may be exempt from California sales tax. Others may be taxable. In some cases, use tax will apply.

The discussion below explains the basic rules on how tax applies to your sales. Please remember, if any of your sales are subject to sales tax, you need a California seller’s permit.

Sales by “on-reservation” Indian retailers to Indians who reside in Indian country Sales tax does not apply to sales of tangible personal property made to Indians by Indian retailers if:

  • The sales are negotiated at places of business located in Indian country;

  • The Indian purchaser resides in Indian country; and

  • The property is delivered to the purchaser in Indian country.

In such an instance, the Indian purchaser may be required to pay use tax, but only if the property is used outside Indian country more than one-half of the time during the first 12 months after the sale.

Please note: The Indian purchaser is not required to live in the specific part of Indian country where ownership transfers. In other words, a resident of Reservation A could qualify for the exemption when taking ownership of merchandise on Reservation B.

APRIL 2014

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SALES TO AMERICAN INDIANS AND SALES IN INDIAN COUNTRY

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