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This section describes how sales and use tax generally apply to sales to Indians when the retailer is not located in Indian country (“off-reservation” retailer). Please be sure to read Key Definitions before you read this section.

Sales to Indian customers, in general

If you are a California retailer who is not located in Indian country, your sales to Indian customers are generally subject to tax, unless specific requirements for exemption are met.

This chapter discusses the general rules that apply to your sales to Indian customers. The chapter also discusses specific rules that apply to dealer sales of vehicles, vessels, and aircraft, and to leases.

Transfer of ownership in Indian country

Sales tax generally applies to sales by “off-reservation” retailers to Indian purchasers unless all of the following conditions are met:

  • You transfer ownership of the merchandise to an Indian purchaser in Indian country;

  • You deliver the merchandise in Indian country; and

  • The Indian purchaser lives in Indian country.

When the Indian purchaser is an Indian organization, the requirement that the Indian purchaser reside in Indian country must still be met. An Indian organization will be deemed to reside in Indian country if the Indian organiza- tion is located in Indian country or otherwise conducts the business of the Indian organization in 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 transac- tion 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.

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

(For a more complete definition, please see Transfer of title [ownership] in Indian country.)

Property used in tribal self-governance by tribes without reservation facilities

Sales tax generally applies to sales by “off-reservation” retailers when ownership of the merchandise is transferred to an Indian purchaser outside Indian country. However, sales tax does not apply to sales of merchandise to the tribal government of a federally recognized Indian tribe for delivery outside of Indian country if all the following criteria are met:

  • The tribe does not have a reservation or the principal place where the tribal government meets to conduct tribal business cannot be its Indian tribe’s reservation because the reservation does not have a building in which the tribal government can meet or the reservation lacks one or more essential utility services, such as water, electricity, gas, sewage, or telephone, or mail service from the United States Postal Service;



APRIL 2014

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