Sacramento, CA – Sunscreen: check. Passport: check. Support for vital California public services: check. The California State Board of Equalization (BOE) reminds summer travelers that use tax may be due on items brought back from trips abroad. Use tax helps support essential services like public safety, healthcare, and education.
Use tax, which has been California law since 1935, is similar to sales tax. Generally, it is owed when items are purchased while traveling and carried or shipped back into California. The first $800 of hand-carried property is exempt from the use tax.
The use tax rate is generally the same as the sales tax rate where the traveler will use the item in California. This is usually the home address of the traveler or a person receiving a gift from the traveler.
"Use tax may not be a common daily conversation topic, but as Californians, we rely on the indispensable community services that use tax funds every single day," BOE Executive Director Cynthia Bridges said.
The BOE estimates about $1 billion in use tax goes uncollected each year: That would pay the annual salaries of 11,000 teachers, 7,000 police officers, or 6,000 firefighters. The amount of use tax paid on California income tax returns grew steadily over the past five years, exceeding $17.4 million from July 2013 to May 2014, but the use tax gap persists.
Travelers can do their part to fund California services by reporting use tax on their California State Income Tax returns, using the BOE's ePay mobile app, or on the BOE website. Travelers and consumers who forget to save their receipts can use the BOE's convenient Use Tax Lookup Table to estimate the amount owed for purchases less than $1,000.