California Sales and Use Tax Collection Requirements

State and Local Tax

By Matthew Dodge

California is the latest state to require out-of-state sellers to collect sales (use) tax if the seller reaches certain sales thresholds. California’s thresholds of $100,000 in sales or 200 separate transactions are consistent with those established in the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. last summer. The thresholds are based on activity in the current or preceding calendar year.  California’s collection requirements on out-of-state sellers are effective on April 1, 2019.

California is also applying the thresholds to a seller’s obligation to collect district sales/use tax. Historically, sellers were only required to collect the district tax if they were “doing business” in the district by way of an office, employee or other nexus creating activity. Effective April 1, 2019, sellers that have $100,000 in sales or 200 separate transactions in a district are required to collect the local sales/use tax. This change will impact in-state and out-of-state sellers alike and may require an update to the seller’s tax collection software or reporting procedures.

More information on California’s sales/use tax requirements can be found on the California Department of Tax and Fee Administration (CDTFA) website at - http://www.cdtfa.ca.gov/industry/wayfair.htm

Please contact our State and Local Tax team if you have any questions concerning your sales and use tax collection obligations.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.