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New Law: California Sales Tax Collection by Out of State Businesses

California finally announced they will follow the June 2018 Wayfair Supreme Court case and require out of state sellers who have economic nexus in CA to collect sales tax.

I think 38 states now have these rules (out of 45 states with sales tax)

Hopefully more sales tax revenue means California can eventually drop the 10.3% to 12.3% personal tax rates back to a maximum of 9.3%.

Threshold: For out-of-state retailers, the new collection requirement applies if, during the prior or current calendar year:

 ·         the retailer’s sales for delivery into California exceed $100,000; or

·         the retailer makes sales for delivery into California in 200 or more separate transactions.

This requirement applies to retailers that sell tangible goods for delivery into California through the Internet, mail-order catalogs, telephone, or any other means.

Effective date: April 1, 2019. This new law is not retroactive and applies only to sales made on and after April 1, 2019.

Retailers may choose to register and collect the tax prior to April 1, 2019. Retailers can register on the CDTFA website at https://www.cdtfa.ca.gov.

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Richard Pon CPA, CFP