Sales & Use Tax

Los Angeles County Tax Rate:  Effective 10/1/2017  9.50%

Sales/Use Tax Partial Exemption Overview

In an effort to promote and keep manufacturing and research and development within the state, Governor Brown and California legislators have enacted SB 90, a partial sales/use tax exemption for property purchased for use in manufacturing and research and development.

The current sales/use tax rate in Los Angeles is 9.50%. A partial sales/use tax exemption of 3.9375% may allow USC to pay sales tax at the rate of 5.5625% for certain sales and purchases of qualified manufacturing and research and development equipment. To be eligible for the partial exemption, a taxpayer must meet three conditions:

  1. The taxpayer must be a “qualified person” who is primarily engaged in manufacturing and certain types of research and development activities;
  2. The taxpayer must purchase “qualified tangible personal property”; and
  3. The taxpayer must use such property for qualified purposes, such as research and development.

Qualified person – In order to qualify for this partial exemption, first, the taxpayer must be primarily engaged in business reasonably described as manufacturing or certain types of research and development in the North American Industry Classification System (NAICS). A qualified person may be a legal entity or an establishment within a legal entity. An establishment must be a separate cost center or economic unit and maintain separate books which records source of funds and expenses. An establishment may qualify if 50% or more of the funds allocated to the entity or establishment are attributable to a qualifying line of business.

Qualified tangible personal property – At a high level, property must have both an expected useful life of at least one year and be primarily used (50% or more of the time) in a qualified activity. Qualified property is not required to be capitalized. A taxpayer is limited to $200M in exempt purchases of qualified property in a calendar year.

Eligibility of USC Departments and Schools

Because USC engages in a wide variety of research and development and manufacturing activity, we have implemented a process to capture the sales tax exemption.

  • Departments are required to complete the SB 90 Questionnaire (see link below) for each account number that will be used for qualified purchases and email to Susan Burbar burbar@usc.edu and Eva Herzing herzing@usc.edu
  • Once reviewed and approved, the account will be added to the “pre-qualified” report and submitted to Purchasing Services.  Notification will be sent to department once approved.
  • Departments are required to complete and sign the partial exemption certificate that will be submitted to the vendor BOE 230-M (see link below).  Department uploads signed certificate to requisition.

Please use the following links: