Introductions: Here we will explain what is “Partial Exemption From Sales and Use Tax ” and how this can be implemented in an ecommerce site. The objective was to promote and retain manufacturing and research and development within California State.

What is Partial Exemption From Sales and Use Tax?
In July 2014 California tax department released a partial exemption from Sales and use Tax for tax payers who perform research and development or certain manufacturing equipment activities.

Is there any Tax exemption certificate needed?
Yes.

On which tax is this exemption applicable?
It is applicable only to state wide base rate and not on local taxes.

What is a Partial exemption certificate?
Any document may be regarded as a partial exemption certificate as long as it contains the following:

  1. Signature of the purchaser or agent, or employee of purchaser.
  2. Name, Address, and telephone number of the purchaser.
  3. Purchaser’s seller’s permit number (under very specific case this is not needed).
  4. A statement that the property purchased is:
    • Used primarily for a qualifying activity
    • Used by a contractor for construction contract activity for a qualified person
  5. Description of Property purchased.

Also a few additional details.

Is there any exemption limit?
Yes there is but the value is high so ecommerce store owners don’t need to worry but a purchaser should take care on this.

On what all products can tax exemption be claimed?
We recommend for this do refer to following link; https://www.cdtfa.ca.gov/industry/manufacturing-exemptions.htm#Sellers

What should an ecommerce seller know?
We recommend you refer to below link
https://www.cdtfa.ca.gov/industry/manufacturing-exemptions.htm#Sellers

What are present Partial exemption rate?
As per cdtfa : The partial exemption rate is currently 3.9375 percent.
Example: (7.25 percent current statewide tax rate – 3.9375 percent partial exemption) plus any applicable district taxes.

How oscprofessionals Woocomemrce partial tax exemption module works:

Registered customer checkout:

  1. Install oscprofessionals Woocomemrce partial tax exemption module (contact us to purchase and for demo)
  2. Within My account section customer to upload exemption certificate.
  3. Admin should approve from backend. This will result in customer being treated as eligible for partial exemption.
  4. On checkout page there is a checkbox: Apply tax exemption
  5. On selecting this there will be a popup that will state message regarding certificate validity.
  6. Tax will be recalculated and applied.

Guest checkout:

  1. On checkout page there is a checkbox: Apply tax exemption
  2. On selecting this there will be a popup that will state message regarding certificate submission and validity.
  3. Tax will be recalculated and applied.