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Please also note: The sale is exempt from sales tax whether the retailer is a federally licensed Indian trader or is not so licensed.

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

Either sales tax or use tax applies to sales of merchandise by “on-reservation” non-Indian retailers to non-Indians and Indians who do not reside in Indian country, or if you make any “off-reservation” sales. 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 tribal sales license is not a substitute for a California seller’s permit or a certificate of registration to collect use tax.

Documenting claimed exempt sales

Be sure your records include documents to show the basis for your claim that a particular sale was exempt from tax. For information on documenting sales to Indians who live in Indian country or Indian organizations, please see

Documenting Exempt Transactions. Tribal taxes

Some tribes require “on-reservation” retailers to collect and pay a tribal tax on their sales. The amount of tribal tax you charge your customers for sales you make in Indian country is not subject to California sales or use tax when the following apply:

  • The tax is based on a percentage of the selling price of the merchandise; and

  • You are substantially complying with the requirements of the California Sales and Use Tax Law. (In other words, you have a seller’s permit or a certificate of registration to collect use tax and you are filing your sales and use tax returns on time, reporting all taxable and nontaxable sales, and paying all California taxes due.)

The imposition of a tribal tax does not affect the liability for California sales or use taxes.

Sales for resale

As a registered seller, you may make nontaxable sales for resale to Indian or non-Indian businesses who will sell the merchandise they buy from you or physically include that merchandise in items they make and sell. If you accept a timely, fully completed resale certificate from your customer in good faith, you generally do not owe tax on your sale.

A certificate will be considered timely if you accept it any time before you bill the purchaser for the property, or any time within your normal billing and payment cycle, or any time at or prior to delivery of the property to the pur- chaser. A resale certificate remains valid until it is revoked in writing.

Indian retailers may purchase items for resale regardless of whether they are required to hold a seller’s permit. Indian buyers who are not required to hold a seller’s permit should make note of that fact on their resale certifi- cates. For example, the buyer might state, “I do not hold a California seller’s permit because all of my sales are made in Indian country. None of my sales are subject to California sales or use tax.”

The seller may accept this certificate as a valid resale certificate if it is timely taken and is in the proper form as pro- vided in Regulation 1668, Sales for Resale, and taken in good faith from a person who is engaged in the business of selling the kind of merchandise being purchased. Other evidence to show the purchaser is engaged in the business of selling the kind of merchandise being purchased may include documents such as a business license, business card, or a copy of an advertisement from a newspaper or telephone book.

For more information, see Regulation 1668, Sales for Resale, and our publication 103, Sales for Resale.

APRIL 2014

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SALES TO AMERICAN INDIANS AND SALES IN INDIAN COUNTRY

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