Overview: Sales and Use Tax at Stanford
This document is intended to assist you in the proper application of California Sales and Use tax law to purchases and sales made by Stanford.
- Current Tax Rates
- When Sales and Use Tax Applies
- Goods and Services Subject to Tax
- Taxation of Transportation Charges
- When Buying for Stanford from a California-based Vendor
- When Buying for Stanford from a Vendor Outside of California
- When Selling for Stanford
- Purchases Charged to Federal Grants or Contracts
- Additional Information
Current Tax Rates
Current Sales and Use Tax Rates Applicable to Stanford:
- California state sales tax of 7.25%
- Santa Clara and San Mateo county transit district sales and use tax of 1.25% and 1.5% respectively
The current tax rate for Santa Clara County is 8.5% of the price of the item(s) sold. This is the combined state, county and city sales and use tax rate of 7.25% plus 1.25% district taxes in effect for this county.
The current tax rate for Santa Mateo County is 8.75% of the price of the item(s) sold. This is the combined state, county and city sales and use tax rate of 7.25% plus 1.5% district taxes in effect for this county.
When Sales and Use Tax Applies
State sales tax applies to sales / purchases of tangible personal property that occur in the State. Sales tax is a vendor's liability and California vendors are responsible for collecting and remitting the state sales tax due.
Use tax is due on sales / purchases of tangible personal property when the property originates outside the State of California and is shipped in for "use" in California.
County transit district tax is both a sales and use tax and applies to sales within the State and use within Santa Clara and San Mateo Counties.
Nonprofit organizations, including Stanford, are not exempt from California sales and use tax. The State of California and all of its agencies are subject to sales and use tax. Note that the federal and state governments other than California are exempt from sales and use tax.
Goods and Services Subject to Tax
Most tangible goods are subject to sales and use tax and most services are not. (Note: sales and use tax regulations provide that certain items may be exempt from tax. For example, meals sold to currently registered Stanford students by the University food service are exempt from tax. These regulations may be found at the California State Board of Equalization web site.)
Taxation of Transportation Charges
Tax does not apply to "separately stated" charges for transportation of property from the vendor to the purchaser, when the transportation is carried out by a party other than the vendor, i.e., by United States mail, an independent shipper or common carrier.
Transportation charges are regarded as "separately stated" only if they are separately specified in the contract for sale or invoice. If a separately stated charge is labeled "postage and handling" or "shipping and handling" only that portion of the charge which represents actual postage or actual shipment may be excluded from the tax; handling charges are subject to tax and are not considered a non-taxable transportation charge.
When Buying for Stanford from a California-based Vendor
When you purchase goods or services for Stanford from a California-based vendor, it is the vendor's responsibility to collect the state sales tax.
However, if the rate charged by the vendor is less than 8.5% and the goods are used in Santa Clara (if the goods are used in San Mateo County, the effective rate is 8.75%), Stanford must accrue a use tax to bring the combined sales and use tax rate up to 8.5% (8.75% for San Mateo County), in order to satisfy our transit district tax component. If the vendor is in the same county as where the property is being used, there is no such use tax requirement as the vendor will be responsible for collecting and remitting the county transit district tax.
If the California vendor did not charge sales tax and is not present in the county where the goods are used and the goods are subject to sales tax, Stanford need only accrue the 1.25% for Santa Clara County and 1.5% for San Mateo County transit district use tax.
When Buying for Stanford from a Vendor Outside of California
If the vendor has no California presence and the goods that are provided are taxable, they will be subject to use tax. We must accrue use tax at the combined tax rate applicable to the county where the item is used (8.5% for Santa Clara County and 8.75% for San Mateo County).
Warning: Out of state vendors may attempt to collect California sales and use tax on their invoice. They should not be paid unless they have properly registered with the State of California, State Board of Equalization. Consult the California State Board of Equalization web site.)
When Selling for Stanford
If goods are sold to a point outside the state of California, do not charge California sales tax. Retain any documentation proving the out-of-state delivery (i.e., shipping invoices, delivery affidavits).
For deliveries into Santa Clara and San Mateo Counties of goods and services that are subject to sales tax, charge 8.5% sales tax for Santa Clara County and 8.75% for San Mateo County. This includes sales made at Stanford to visitors who may live outside this county. For goods subject to tax that are delivered to any other California county, the rate to charge is 7.25%.
Purchases Charged to Federal Grants or Contracts
Great care must be taken to determine who actually owns tangible personal property purchased with federal funds. Consult the provisions of the grant or contract for the title clause which determines whether Stanford or the government owns the purchased property. Not all government funded purchases will vest in the government. Sometimes the determination is made based on the purchase price of the item involved. If the government owns the property, no sales tax should be paid and no use tax should be accrued. In this case, the PO should specify that the purchase is exempt from sales tax because title to the property is held by the government.
A more detailed discussion of sales and use tax at Stanford is available at Resources: Sales and Use Tax.
You may also contact the Tax Department for further assistance.
Disclaimer: Stanford University does not offer personal tax advice. Nothing on this web site shall be construed as the offering of tax advice. Stanford recommends seeking professional tax counsel whenever necessary.