California Sales and Use Tax Rate: Increases January 1, 2013

Due to voter approval of Proposition 30, the statewide base sales and use tax rate will increase one quarter of one percent (0.25%) on January 1, 2013. The higher tax rate will apply for four years – January 1, 2013 through December 31, 2016.

Important Questions Regarding The Tax Increases

What rate will I need to charge my customer?

For transactions on or after January 1, 2013, the tax rate(s) will increase by one quarter of one percent (0.25%). In addition to the statewide sales and use tax rate, some cities and counties have voter-approved district taxes. If you are located in a special tax district, your sales or purchases will be subject to the increased statewide rate of 7.50%, plus the applicable district tax rate. For example, San Diego County taxes will increase from 7.75% to 8% on January 1, 2013.

For a listing of tax rates, please visit our California City and County Sales and Use Tax Rates webpage.
Are there also new city and county district taxes?

In addition to the statewide sales and use tax rate increase, voters in some cities and counties approved a number of new or increased district taxes that will go into effect April 1, 2013. Taxpayers in the affected areas will be notified by BOE. In addition, you may find information on these new taxes on our city and county tax rate website. (Note: April 2013 district tax rates will be posted to this webpage in mid-January 2013.)
Is the sales and use tax rate increase permanent?
No. The tax rate increase is effective for four years from January 1, 2013, through December 31, 2016.
If a customer purchases merchandise before January 1, 2013, but returns it after that date, what tax rate should I use to refund the tax payment?

You should refund the customer the tax that you charged and collected at the time of the sale.

I will need to reprogram my cash registers and computers for the new sales and use tax rate. My system breaks out the amounts for state, county, local, and district taxes. Where should I account for the 0.25% tax rate increase?

The 0.25% increase will be allocated to the state portion of the tax rate. For reporting purposes, the statewide base rate of 7.50% is separated as follows: state 6.25%, county 0.25%, and local 1% plus any local district tax.
I file my sales and use tax return on a fiscal yearly basis. The sales and use tax rate increase became effective in the middle of my reporting period. How will I report the two different sales and use tax rates?

You must file a split rate sales and use tax return that allows you to separate your sales made prior to January 1, 2013, and sales made on or after January 1, 2013. You will report the sales or use tax at the two different rates. Let us do the rate calculations for you by efiling your return. The eFile system will allow you to report the transactions using the two different rates on the split rate return.
What if I collect tax at the lower tax rate for sales made after January 1, 2013?

If you collect the sales and use tax at the lower tax rate after January 1, 2013, you will still owe the one quarter percent (0.25%) increase.

If you need help updating the rate in QuickBooks, I’d be happy to help. For more questions, please Contact me, Bridget Beck.
References: Excerpt from The Board of Equalization website:

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