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  • The merchandise will be used in tribal self-governance; and

  • The merchandise is delivered to the tribal government and ownership of the merchandise transfers to the tribal

government at the principal place where the tribal government meets to conduct tribal business.

In addition, use tax will not apply, unless the merchandise is used for purposes other than tribal self-governance more than it is used for tribal self-governance during the first 12 months after delivery.

An example of property that qualifies for the exemption is the office equipment used for tribal business at the busi- ness location. However, a laptop used for personal business and only occasionally used for tribal business does not qualify for the exemption.

For purposes of discussion in this publication, references to property delivered in Indian country include property delivered at the tribal business location that qualifies for the exemption described above.

See Reporting and paying use tax for additional information.

Married couples or registered domestic partners

Assuming all other requirements for exemption are met, sales of tangible personal property by an “off-reservation” retailer to an Indian couple are not subject to sales tax. An Indian couple, as defined in Key Definitions, consists of a married couple or registered domestic partnership that consists of two Indians or of an Indian and a non-Indian that have entered into officially recognized family relationships under California law or tribal law.

Please note: An Indian couple may be liable for use tax on the purchase price of the property if the property is used outside of Indian country more than one half of the time during the first 12 months following the date of sale.

Dealer sales of vehicles, vessels, and aircraft

Tax generally applies to a dealer’s sales of vehicles, vessels, and aircraft in the same way it does to sales of other merchandise. However, sales tax generally does not apply to sales to Indians who live in Indian country when the vehicle, vessel, or aircraft is delivered in Indian country and ownership also transfers to the Indian in Indian country. The sale does not qualify for the exemption if the Indian takes possession before delivery in Indian country. The same principles apply to sales to Indian organizations and Indian couples. (Please see Documenting exempt purchases of vehicles, vessels, and aircraft for more information).

Permanent improvements to real property

In general, tax does not apply to your sale of an item that will be permanently attached as an improvement to real property in Indian country, provided all of the following conditions apply:

  • Your customer is an Indian who resides in Indian country (see Purchasers);

  • The merchandise is delivered to the Indian purchaser in Indian country; and

  • Ownership of the item transfers to the purchaser in Indian country (see Transfer of title [ownership] in Indian

country). Improvements to real property include:

  • Buildings, structures, fixtures, and fences erected on or attached to land. For purposes of this sales tax exemption, improvements include trailer coaches that are not registered with the Department of Motor Vehicles (DMV), mobilehomes, manufactured homes, and factory-built housing; and

  • Ornamental trees and vines. (Please note that fruit and nut trees can also be improvements, but their sale may be exempt under another section of the Sales and Use Tax Law.)

For information on construction contractors, please see Sales Related to Construction Contracts.

APRIL 2014



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