California~Sales and Use Tax: Assessment Imposed on Purchasers of Lumber Products or Engineered Wood Products

Operative January 1, 2013, in addition to any other California sales and use taxes imposed by law, an assessment is imposed on a person who purchases a lumber product, as defined, or an engineered wood product, as defined, for storage, use, or other consumption in California, at the rate of 1% of the sales price. The assessment is administered by the California State Board of Equalization (BOE), as prescribed. The retailer is required to collect the assessment from the purchaser and remit the amounts collected pursuant to the procedures in the Fee Collection Procedures Law. A retailer is required to charge the purchaser the amount of the assessment as a charge that is separate from, and not included in, any other fee, charge, or other amount paid by the purchaser. The retailer is also required to separately state the amount of the assessment on the sales receipt given by the retailer to the person at the time of sale.

Every person who purchases a lumber product or an engineered wood product for storage, use, or other consumption in California is liable for the assessment until it has been paid to the state, except that payment to a retailer relieves the person from further liability for the assessment. Any assessment collected from a person that has not been remitted to the BOE shall be a debt owed to the state by the retailer required to collect and remit the assessment.

The lumber products assessment is due and payable to the BOE quarterly on or before the last day of the month next succeeding each quarterly period. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period is required to be filed with the BOE using electronic media, in the form prescribed by the BOE.

Every person required to pay the lumber products assessment is required to register with the BOE. Every application for registration must be made in a form prescribed by the BOE and must provide the name under which the applicant transacts or intends to transact business, the location of his or her place or places of business, and such other information as the BOE may require.

“Engineered wood product” is defined as a building product, including but not limited to veneer-based sheeting material, plywood, laminated veneer lumber (LVL), parallel-laminated veneer (PLV), laminated beams, I-joists, edge-glued material, or composite material such as cellulosic fiberboard, hardboard, decking, particleboard, waferboard, flakeboard, oriented strand board (OSB), or any other panel or composite product where wood is a component part, that is identified in regulations adopted by the board. The definition only includes products that consist of at least 10% wood.

A “lumber product” is defined as a product in which wood or wood fiber is a principal component part, including but not limited to a solid wood product, or an engineered wood product, that is identified in regulations adopted by the board. The definition does not include furniture, paper products, indoor flooring products such as hardwood or laminated flooring, bark or cork products, firewood, or other products not typically regarded as lumber products.

On or before October 1, 2012, the BOE is required to adopt a regulation that interprets and makes specific the lumber products and engineered wood products that the BOE determines will be subject to the lumber products assessment. The BOE is further required to annually update the regulation. The lumber products identified in the annually updated regulation that is adopted will become subject to the assessment on the first day of the calendar quarter commencing more than 60 days after adoption of the updated regulation.

Ch. 289 (A.B. 1492 ), Laws 2012, effective September 11, 2012, operative as noted

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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