STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

450 N STREET, SACRAMENTO, CALIFORNIA PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0044 800-400-7115 FAX 916-322-0187 www.boe.ca.gov

BETTY T. YEE First District, San Francisco SEN. GEORGE RUNNER (Ret.) Second District, Lancaster MICHELLE STEEL Third District, Orange County JEROME E. HORTON Fourth District, Los Angeles JOHN CHIANG State Controller CYNTHIA BRIDGES Executive Director

Dear Sir or Madam: Our records indicate that you did not report California use tax on your income tax return or directly to us for years 2008, 2009, and 2010, and we would like to provide you with information about when and how use tax should be reported. You may owe use tax if you purchased books, clothing, electronics, artwork, jewelry, or other items from an out-of-state business (for example, through a catalog or Internet retailer) that did not collect California tax. If the out-of-state retailer did not collect California use tax from you at the time of purchase, then you may be responsible for reporting and paying the use tax. What is Use Tax? The use tax, which was created in July 1935, is a companion to California's sales tax. It is designed in part to promote fairness between in-state retailers who are required to report and remit tax, and some out-of-state retailers who are not. Use tax, just like sales tax, goes to fund critical local services such as police, fire, schools, and parks. The use tax is calculated at the same rate as the sales tax. The Board of Equalization (BOE) website has extensive information about use tax that you may find helpful in determining whether use tax is due on your purchases from out-of-state businesses. Please visit our website for more information at www.boe.ca.gov/taxprograms/usetax/index.html. How to Report Use Tax For purchases made before January 1, 2012, you should report and pay your use tax for one-time purchases directly to us using the electronic registration system (eReg) on our website at www.boe.ca.gov/elecsrv/ereg/index.html. On the eReg page, click on the "Get Started" button and select the option "Pay use tax on one-time purchase item(s)" from the Main Menu. For purchases made in 2012 and later, you should be tracking your out-of-state purchases and maintaining complete records to accurately determine and report your use tax due. If you make frequent taxable purchases from out-of-state businesses that do not collect California sales or use tax, you should register with us using the eReg system to obtain a Consumer Use Tax Account. For more information about how to register for a Consumer Use Tax Account, please visit our website at www.boe.ca.gov/info/reg.htm. You may report your use tax for purchases made in 2012 and later directly to us using our eReg system or, for your convenience, you may report and pay your use tax on your California income tax return. If you elect to report your use tax on your income tax return, you may report your actual use tax liability or use the Use Tax Lookup Table provided in the return instructions. Please refer to the instructions booklet for the details on how to report use tax on your income tax return. Please share a copy of this correspondence with your tax return preparer. If you have any questions or concerns regarding this letter or any other sales and use tax matter, please visit our website at www.boe.ca.gov or call our Taxpayer Information Section at 800-400-7115 (TTY:711). Customer service representatives are available weekdays from 8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays. STATE BOARD OF EQUALIZATION

BOE-1295 (8-12)

Board of Equalization

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