john_k - 7:36 pm on Sep 4, 2009 (gmt 0)

First - I am not a tax attorney or tax accountant. So this is for general info only - Don't rely on this to make your own tax decisions.
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As another poster stated, this is not new and is a requirement in all/most states that have a sales tax. If you purchase something to use (not to resell and not to consume in the manufacturing of something you sell) then the purchase is subject to sales & usage tax. If you don't pay sales tax on it when you buy it, then you are supposed to pay usage tax on it.

Generally usage tax is equal to the sales tax you would pay for local purchases. This applies to businesses as well as private/individual taxpayers.

Example 1: You live in California and order a widget from Chicago. The seller does NOT charge Illinois + Cook County sales tax. You are liable to pay usage tax to the state of California. If you bought it for your business, then the business owes the tax. If you bought it for personal use, then you owe the tax.

Example 2: You live in California and order a wonket from Ohio. The total paid DOES INCLUDE Ohio sales tax. You do not owe sales or usage tax to California.

Example 3: You live in California and buy 100 widgets from New York to resell on your web site. You were not charged sales tax when you purchased them. You do not owe usage tax because you are reselling them and not using them yourself.

Example 4: Still in California, you buy 1000 screws from the local Fastenal for use in making a widget that you sell. You should have a state tax id. Fill out a tax-exempt form to give to Fastenal so that you do not pay state sales tax. You do not owe usage tax either.

Example 5: You haven't moved. You buy 2000 washers from Missouri. These are also to be used to make the widget you sell. You did not give the seller a CA state tax id and you were NOT charged sales tax when you bought them. You do not owe usage tax because it is a component of the item you are selling.