Business FinancesQuestion 1190 of 1605
A California contractor who buys materials out of state for use on a California job without paying sales tax generally owes:
a.A federal excise tax only
b.No tax of any kind
c.California use tax on those materials
d.Double the franchise tax
Explanation
Use tax is the counterpart to sales tax. When taxable materials are purchased without California sales tax (for example, out of state) but used in California, the contractor owes use tax at the applicable local rate, self-reported to the CDTFA.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)