Sales & Use Tax

Tax rates

The state sales/ use tax rate for California effective January 1, 2017, is 7.75%, comprising a statewide base tax rate of 7.25% and a transaction (district) tax rate of 0.5%. [The cities of El Cajon, La Mesa, National City, and Vista have additional district taxes. Read more about district taxes (see District Taxes drawer below) when UCSD is the purchaser.]

When UC San Diego is the seller

If your department sells goods outside of the University, you are responsible for making sure that sales tax is applied correctly. For more information, see Sales Tax When UCSD Is the Seller.

When UC San Diego is the purchaser

Vendor categories:

For purposes of sales and use tax, UCSD uses the following definitions internally:

• A California vendor has a business location in California and sells tangible personal property in the state at retail
• An out-of-state vendor is registered with the state Board of Equalization as it has a physical presence (business operations or nexus) in California, but its primary business location is in another state and it sells tangible personal property in California at retail
• A non-California vendor is not located in California and does not have a physical presence in the state and sells tangible personal property delivered to California at retail

When California sales or use tax applies

• Goods or services are taxable according to California State Board of Equalization (SBOE) regulations
• Delivery or acceptance took place in California, or goods brought into California shortly after acceptance in another state

When California sales or use tax does not apply

• Funds being used are within non-taxable guidelines of a contract or award
• Goods or services are tax-exempt (see Tax Exempt drawer below)
• Delivery or acceptance took place outside California
• Items purchased are for resale
• Title of equipment passes directly to the federal government

Exemptions

For more information on when sales or use tax does not apply, see Sales and Use Tax Exemptions (See Exemptions drawer below).

More information

Get more information on rules and regulations from the California State Board of Equalization.

The state sales or use tax rate for the County of San Diego is 7.75%. (The only exceptions are the cities of El Cajon, La Mesa, National City, and Vista.)

Sales tax vs. use tax

Although the rate for California sales and use tax is the same, the way the tax is collected and handled differs.

Sales tax:

• UCSD pays sales tax on taxable purchases directly to California vendors and out-of-state vendors (see Overview drawer above) registered in California to collect sales tax.
• Generally, sales tax on invoices, credit memos, and receipts is listed separately from the price of the goods or service.
• In some cases, vendors might include sales tax in the total amount of an invoice, credit memo, and receipt and not list it separately.

Use tax:

• UCSD pays use tax on taxable purchases from non-California vendors (see Overview drawer above) directly to the state Board of Equalization on a quarterly basis, rather than to the vendor at the time the invoice is paid.
• However, use tax is charged to the department index(es) when the invoice is paid or credit memo applied and for Express Card receipts to/from the vendor (accrued for future remittance to the state Board of Equalization).
• You will not see use tax listed on invoices, credit memos, and receipts.

Transaction (district) taxes

District taxes, a component of sales/ use taxes, are additional taxes imposed by the county where goods or services are delivered. California has many taxing jurisdictions (districts), funded by a transaction rate added to the California statewide base tax rate of 7.25% (as of January 1, 2017).

District taxes can be either the responsibility of the vendor or UCSD, depending on where the vendor is engaged in business. Read more about vendor categories (see Overview drawer above).

Tax rates for districts range from 0.1% to 1.5%. In some districts, there is more than one district tax. In others, there is no district tax at all.

San Diego County rates

Throughout San Diego County, the sales and use tax rate is 7.75%, with the exception of these cities:

• Vista and El Cajon: 8.25%
• La Mesa: 8.50%
• National City: 8.75%

Determining the appropriate tax rate for purchases

What determines the applicable tax rate is the point where the goods or services are delivered or where UCSD takes ownership. For example, if services are rendered or goods are picked up in the city of El Cajon, the local tax rate of 8.25% applies. This means:

• Vendor invoices or credit memos reflecting the local tax rate will be paid (or the credit taken) at the local rate.
• Taxable Express Card transactions should be processed at the local rate.

• Taxable Payment Authorization transactions should be processed at the local rate. For reimbursements, the receipt should reflect the local rate.

Due to the complexities in determining district taxes, vendors might erroneously misapply the tax amount based on where they are in engaged in business.  While Disbursements pays the amount of sales tax included on an invoice/credit memo up to the allowable rate for those vendors responsible for collecting sales tax, you should also refer to Payment of Sales and Use Taxes (See Payment drawer below) for additional information.

Evaluate each item for tax applicability

This information provides department buyers with general guidance on tax-exempt transactions, but is not all-inclusive. Contact one of the parties listed below for more specific information.

Generally, California sales or use tax does not apply to:

• Goods delivered outside California and used in another state for at least 90 days (Note: A vendor can charge the sales tax applicable to the state where the items were delivered) 
• Goods that are purchased in another state and remain there, including consumable goods (Note: A vendor can charge the sales tax applicable to the state where the items were purchased)
• Transactions with these governments/ agencies:
  • State governments/ agencies in all 50 states, (e.g., state universities)
  • U.S. governments/ agencies
  • Foreign governments/ agencies
• Materials/ parts for fabrications, where fabricated items are ultimately used outside California Note: Sales tax applies on fabrications sold within California
• Goods that UCSD buys from a vendor to resell to a consumer; certify this exemption by providing vendors with the University of California Resale Certificate #SXFH-25-610105
• Occasional sales (less than three sales in a 12-month period)

Specifically, do not apply sales or use tax on:

• Remote Internet access
• Advertising
• Consulting services
• Exempt subscriptions*
• Exempt mailing lists*
• Human Subject Express Card retail gift card purchases
• Installation services
• Optional equipment maintenance agreements
• Page charges
• Radiation monitoring services
• Testing services where only data is received
• Training services
• Shipping/ mailing/ freight/ UPS charges/ FedEx charges
• UPS "hazardous charge" (FedEx, etc. may add similar charges for shipping certain materials)
• Laboratory services where only data is received
• Repair labor
• Recalibration labor
• Exempt sutures*
• Maintenance service charges if designated as a separate line item on the purchase order, purchased separately, or the buyer can acquire the services "at will" from any source
• Computer software received electronically
• Computer software maintenance, where upgrades are received electronically
• Human whole blood, plasma, blood products, and blood derivatives, or any human body parts held in a bank (repository for human body parts) for medical purposes (including human stem cells)

*Exempt from tax only in certain situations

Note: Computer software is complicated. For more clarification on software and other exemptions, see the UC Sales and Use Tax Manual.

Other types of exemptions

The California State Board of Equalization Sales and Use Tax Regulations define many conditions when UCSD transactions are exempt from sales and use tax. These exemptions depend on the transaction's nature and require a final determination by the purchasing director.

Sales or use tax

• Sales tax: California sales tax is generally imposed upon a vendor for the opportunity of selling tangible personal property in California at retail. The vendor can be either a California vendor or an out-of-state vendor (see Overview drawer above) and can pass the liability for the sales tax on to UCSD based on an agreement of sale such as a contract, purchase order, and invoice terms and conditions and/or can assume liability of the sales tax and pay it directly to the state.
• Use tax: California use tax is generally imposed upon UCSD by California for the storage and utilization of tangible personal property delivered in California purchased from a non-California vendor (see Overview drawer above).

Purchases subject to sales tax

• A California vendor who does not collect the sales tax from the purchase is simply electing not to reimburse itself for the sales tax.
• The obligation remains with the vendor and cannot be transferred to UCSD in the event the sales tax remains unpaid to the state.
• Only the issuance of a resale certificate by UCSD to the vendor will transfer the liability of the sales tax to UCSD (UCSD then becomes responsible for collecting the sales tax at the time of resale).

For purchase orders, Marketplace is integrated with a software application that calculates sales/use tax on all Marketplace invoices that contain a taxable line item. Account code accuracy, using the taxable indicators correctly, and selecting the right ship-to address are all critical to ensuring the proper application of sales/use tax and ultimately determines if sales/use tax is paid.  

If a vendor contacts you

• Request that the vendor invoice UCSD for the portion of the tax that was not charged on the original invoice

Purchases subject to use tax

Disbursements will pay use tax for a purchase from a non-California vendor at the applicable rate directly to the state. Typically, if delivery is to UCSD proper, this will be at the current rate of 7.75%.