The California Department of Tax and Fee Administration (CDTFA) will begin requiring out-of-state sellers to start collecting California use taxes on their sales in California as of April 1.
CDTFA will require online retailers that do not have a physical presence in the state to collect sales tax if they generate more than $100,000 of gross sales or services and at least 200 transactions annually in the state. The requirement is not retroactive and applies only to sales made on and after April 1, 2019. Retailers that exceed those thresholds in any of California’s 28 taxing jurisdictions also will have to collect and remit that area’s taxes.
“Today’s announcement does not increase or create any tax,” says Nick Maduros, CDTFA’s director. “Rather, California will now require more out-of-state retailers to collect and remit taxes just as brick-and-mortar retailers have done for decades.”
The move comes in the wake of the U.S. Supreme Court in June ruling in the South Dakota v. Wayfair Inc. case that, for the first time, states and local governments could require online retailers to collect sales tax even if they don’t have a physical presence, or nexus, in the state or local tax jurisdiction.
CDTFA has been relatively slow to act as 23 states currently have online sales tax laws in effect and seven more will have their laws go into effect on Jan. 1.
Read about how e-retailers are navigating the hodgepodge of state laws and regulations in Internet Retailer’s October issue cover story, “The Supreme Court overturned Quill. Now what?” or listen to an Internet Retailer webinar on the topic here. You can find additional resources and research available here.