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Tax Codes

Reportable Earnings Tax

Payment for services or rentals, made to an individual, sole proprietor, or company that is not incorporated, is considered reportable income on a 1099. The exception is that all payments related to medical practice are reportable, regardless of incorporation status.   See Codes Below.

Sales and Use Tax

California vendors are required to collect California sales tax at the rate of 8.25%. Vendors in a use tax district are required to collect additional tax on sales within that district.

Sales and use tax is determined by location of vendor and where the university took possession of the merchandise. District tax also applies if the merchandise is received via vendor delivery - delivered by the vendor's truck, as opposed to being shipped via common carrier. In this case the tax is calculated on the vendor's location (e.g. Sears, Sacramento location delivers to Davis; sales tax calculation is Sacramento County).

Vendors outside of California may collect California sales tax only. If an out-of-state vendor does not collect California Sales Tax, the tax will still be paid on the purchase. In this case, tax is paid to the State of California, not to the vendor.

When processing a Vendor Invoice document, if the sales tax code needs to be changed, do not change it on the Accounting Distribution screen(s). Instead, change it on the front screen, in the field titled, "What type of tax did the vendor bill on this invoice?".   See Codes Below.

Reportable Earnings Tax Codes
Tax Code	Description	Purpose
0	Non Taxable/Not Reportable	Non-reportable payments (travel, reimbursements)
2	Misc Services 1099	Services performed in California by a US citizen (including human subject payments and honoraria)
6	Rental 1099	Rental or lease of land or space
7	Death Pmt/Other Income 1099	Death payment
8	Casual Labor W-2	Tax Accounting reporting only
9	Nonresident Alien 1042S	Services performed in California by a nonresident
F	Royalty Pmt 1099	Royalty payments
N	Earnings Reportable to Fed Only - Non US	Services performed outside California by a nonresident
P	Prizes and Awards 1099	Prizes and awards
R	Amount Remitted to State	Used by Accounting for remitting tax to the CA State Board of Equalization
S	CA State Tax Withheld	Tax Accounting reporting only
T	Earnings Reportable to Fed Only - US Res	Services performed outside California by a US citizen
W	Employee Taxable Pmt W-2	Removal expense and uniform allowance to an employee
X	Federal Tax Withheld	Tax Accounting reporting only
Y	Employee Pmt Removals	Tax Accounting reporting only
Sales and Use Tax Codes
Tax Code	Description	Purpose
A	No Use Tax Calculation	No Tax Calculation: vendor has billed tax correctly, item is nontaxable, or item is being paid for with tax-exempt funds
B	Calculate District Tax Only	Calculate District Tax Only: vendor has billed for sales tax only and we must collect the appropriate district tax
C	Calculate Use Tax	Calculate State and/or District Tax: vendor has not billed for state or district taxes on a taxable item

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