Sales & Use Tax Guideline. Table of Contents. University’s Tax Status University’s Roles & Responsibilities Tangible Personal Property (TPP) Sales Tax vs. Use Tax Accounts Payable Process How to Determine The Taxability on a Purchase. University’s Tax Status .
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Federal Income Tax Purposes:
1) an Internal Revenue Code (IRC) Section 115 organization, and
2) an IRC Section 501(c)(3) organization.
State Income Tax Purposes:
Sales & Use Tax Purposes:
The University as Seller:
The University as Purchaser:
Examples: Furniture, equipment, books,
canned software programs, office supplies
Vendor Invoices – Tangible Personal Property (TPP) for Self- Consumption or Usage:
Example: If a purchase is ordered from an out-of-state vendor or from an internet vendor and no sales tax was charged on invoice, the University is responsible for accruing the use tax.
Example: If a purchase is shipped to San Francisco and a vendor charged only 7.50% of (SCL)state, county and local taxes, but the good will be consumed or utilized in San Francisco where the sales & use tax rate is 8.75%, UCSF must accrue the San Francisco district use tax of 1.25% for the difference to make up 8.75%.
Note: The above rule must be applied to all California & out-of-state invoices.
Vendor Invoices – Tangible Personal Property (TPP) for Resale:
Note:Departments engaged in resale business are not exempt from sales and use tax when purchasing merchandises for self-consumption or usage.
Reimbursement – Tax Does Not Apply:
Reimbursement – TPP for Self-Consumption or Usage:
Note: To avoid unnecessary penalty and interest charges by the tax authority, recording sales tax when reimbursing employees is highly recommended.
Questions to ask when determining the taxability on a purchase: