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Sales by “on-reservation” Indian retailers to non-Indians and Indians who do not reside in Indian country

Sales tax generally does not apply to sales of tangible personal property by Indian retailers made to non-Indians and Indians who do not reside in Indian country when:

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

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

However, use tax generally applies to sales by “on-reservation” Indian retailers made to non-Indians and Indians who do not live in Indian country. These sales are presumed to be for use by the purchaser in California, and Indian retailers are required to collect use tax from such purchasers and must register with the BOE for that purpose. In circumstances where you are required to collect use tax from any of your purchasers, you must hold 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. Once you have registered, you can pay any use tax due by filing your return. 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). As previously explained, a sale generally takes place outside Indian country when an “on-reservation” retailer delivers the items sold to the purchaser outside Indian country.

If the tangible personal property is purchased by an Indian not residing in Indian country, the property is presumed to be purchased for use outside of Indian country, and the retailer must collect use tax, even though the transaction may be exempt from sales tax. In the event the nonresident Indian purchaser is ultimately able to demonstrate or document that the use of the property occurred in Indian country one-half or more of the time during the first 12 months following the sale, the Indian purchaser would be entitled to a refund of the use tax paid. The Indian purchaser may request a refund of the use tax paid by completing BOE-101, Claim for Refund, and submitting the completed form along with supporting documentation to the BOE. Nonresident Indian purchasers may contact our Consumer Use Tax Section at 916-445-9524 for further assistance with regard to maintaining and providing the documentation necessary to establish that a refund should be granted for use tax paid.

Sales by Indian retailers of meals, food or beverages at eating and drinking establishments

Indian retailers selling meals, food or beverages, including alcoholic beverages, at “on-reservation” eating and drinking establishments are not required to collect sales tax or use tax on the sale of meals, food or beverages that are sold for consumption in Indian country, whether they are sold to Indians who reside in Indian country, Indians

who do not reside in Indian country, or to non-Indians.

Sales by “on-reservation” non-Indian retailers: basic application of tax

If you are a non-Indian retailer located in Indian country, some of your sales may be exempt from California sales tax, but others may be taxable. In some cases, use tax will apply (see Use tax).

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

  • 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 Indian 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.

SALES TO AMERICAN INDIANS AND SALES IN INDIAN COUNTRY

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APRIL 2014

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