Quoted directly from
http://www.boe.ca.gov/pdf/pub44.pdf.
"The following example illustrates when retailers should collect and report district use tax:
A retailer in Santa Clara County makes a taxable sale of property which is delivered to and used by the purchaser in Alameda County. Even though it is subject to the general sales tax, the sale would be exempt from Santa Clara County district taxes because the property was delivered outside the county. However, use of the property in Alameda County makes the sale subject to the district use tax in Alameda County. If the retailer is engaged in business in Alameda County and delivers the property to the Alameda County location, he or she is responsible for reporting district use tax. If the retailer is not engaged in business in the county, the purchaser is responsible for reporting district use tax."
How I interpret this:
If the purchaser is in your tax area, charge your area's tax rate.
If the purchaser is in CA but out of your tax area, charge 7.25%. The consumer is then required to report and pay their district's use tax. (By the way, has anyone as a consumer EVER reported your tax-free internet purchases to the BOE? lol)
And we know, if the sale is outside CA, no tax is charged.
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