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Sales & Use Tax at UC Merced

California sales and use tax law, administered by the state Board of Equalization (BOE) applies to the University of California and its campuses, including UC Merced. California sales tax is imposed on sellers for the sale of tangible personal property (TPP) at retail in California. UC Merced collects sales tax from its non-UC customers for the BOE. California use tax is imposed on consumers for the use, storage or consumption of tangible personal property (TPP) in California.

How Sales Tax Applies to UC Merced

  • As a seller, UC Merced charges sales tax on sales to non-UC California customers.
  • As a purchaser, UC Merced pays sales tax to California vendors on taxable purchases made in California unless the item is purchased for resale and/or pays use tax to the state BOE for purchases from out-of-state vendors.
Sales by UC Merced Departments or Other UC Campuses

In general, tax does not apply to sales to UC Merced departments or other UC Campuses since they are part of the same legal entity (you cannot sell to yourself). However, if a department purchases taxable tangible personal property for resale with no tax paid, and then sells that item to another department or UC campus for internal use, tax applies to the sales price. Simply put, there are two scenarios, each with different tax implications:

1. No outside revenue (e.g. registration fees including a meal) is received. Since there is no outside revenue, there is no sale (fees received from UC departments do not count since we cannot sell to ourselves). Sales tax does not apply since the catering department is the consumer rather than the retailer. Use tax applies to taxable items purchased ex-tax by the catering department, which are used internally rather than being resold. For example, use tax would apply to beverages and supplies.

2. Outside revenue is received. In this case the catering department may be considered a retailer and sales tax may apply to a portion of the amounts received by Department which is paying (through recharge) for the catering. For example, if the registration fee is $100 and the cost of the meal is $25, the meal portion of the charge would be subject to sales tax. However, if the $100 fee does not include a meal, but only coffee, the value of the coffee may be considered incidental.

How Use Tax Applies to UC Merced

As a purchaser, UC Merced accrues use tax on taxable purchases from out-of-state vendors who are not doing business in California and who do not charge California sales tax. Use tax is directly remitted to the state BOE.

Exemptions from Sales & Use Tax

The law provides various exemptions from sales and use tax. Among these exemptions are most services and labor charges, items purchased for resale and computer software delivered electronically where no tangible personal property is transferred. For a list of common exemptions applicable to UC Merced, see Related Information for Common Sales & Use Tax Exemptions.

Applicable Tax Rate

The current sales and use tax rate for the City of Merced is 8.00% and for the County of Merced (including the UC Merced campus) the sales and use tax rate is 7.50%. For additional information on California tax rates, see the Sales & Use Tax section of the BOE website. 

Resale Certificates

A sale of tangible personal property made in California for resale is not taxable. If UC Merced purchases an item for resale, a resale certificate should be issued to the vendor. All resale certificates are issued by Tax Services. When the department resells the item, it must then collect sales tax. For guidelines on what information the resale certificate should include, when it is considered timely, and how to verify the seller’s permit number on the certificate, see Publication 103 – Sales for Resale on the BOE website.

Obligation for Collecting Sales & Use Tax: California vs. Out-of-State Vendors

When UC Merced makes a purchase from a California vendor, the sales tax is generally the vendor’s responsibility and is included in the vendor’s invoice.

When UC Merced purchases tangible personal property from an out-of-state vendor who is not “engaged in business” in California (e.g., has no California business location or employees), the vendor is not required to collect California sales tax. UC Merced accrues the correct amount of use tax on the transaction and remits it directly to the state BOE.