Our company sells drones to various types of customers. Some purchase them for commercial purposes and others do so for recreational uses. Should we be collecting sales tax? Our company is based in California.

Currently, California tax code does not specifically address sales tax in relation to drones or unmanned aerial vehicles (UAV). However, Bill 1326 was recently introduced to the California Assembly to provide a sales tax exemption for the sale of drones as well as the parts and components necessary to manufacture them. Thus, drones are currently not exempt from sales tax in California.

It's important to also note the position that other states have taken on the sales taxation of drones. Specifically, In June 2014, Tennessee's Department of Revenue announced in Notice No. 14-05 that UAVs used for certain agricultural purposes qualify for a sales tax exemption. This may be an indicator of how other states will treats drones from a sales tax perspective.

 

References: California Assembly Bill 1326; Tennessee Notice No. 14-05