California Taxes Sales of Counterfeit Goods

Jan 12th, 2015

The California Board of Equalization released a notice discussing the new law that makes sales for resale of counterfeit goods taxable.

Counterfeit goods are goods that carry a counterfeit mark that is identical to or substantially indistinguishable from a mark registered with the US Patent and Trademark Office. It is illegal to willfully manufacture or intentionally sell, or knowingly possess for sale, counterfeit goods.

Previously, counterfeit goods purchased for resale qualified for the resale exemption. Now, if a person is convicted of trafficking counterfeit goods, all of his or her sales and purchases of counterfeit goods will be considered taxable. Purchases of counterfeit goods for resale are no longer exempt at the time of purchase, and resale deductions cannot be claimed for counterfeit goods sold. The Board may bill the convicted trafficker for unpaid sales or use tax within one year of the conviction.

http://www.boe.ca.gov/news/L394.pdf