California is now the 30th state to adopt economic nexus as a result of the South Dakota v. Wayfair, Inc. decision by the Supreme Court. Effective April 1, 2019, the State of California will require sellers, whether they have a physical presence in California or not, to pay sales tax on retail sales in California. Starting this April, out-of-state sellers must register with the California Department of Tax and Fee Administration (CDTFA) and collect and remit sales tax if they meet the following criteria:
- More than $100,000 in taxable sales in California, OR
- 200 or more separate transactions for delivery into California
Important Notes:
- This change will impact a majority of online retailers, as California has the largest economy in the U.S. and is one of the largest in the world. It is important that everyone is aware of these changes and take action accordingly. If a business had retail sales in California in 2018 and met the above criteria, they are required to register with the CDTFA to collect and remit sales tax effective April 1, 2019. If you did not meet the sales or transaction threshold in 2018, but you meet either threshold in 2019, you are required to register and start collecting and remitting immediately.
- All taxable sales in California will be subject to the current statewide sales tax of 7.25 percent; this includes a mandatory local sales and use tax rate. However, you may ALSO be subject to district sales taxes; which vary by location.
- Some 3rd party marketplaces (such as Amazon) collect and remit the taxes on behalf of their sellers; however a business would still need to register if sales through their website, or other channels, meet the criteria above.
To learn more about this important development, please review the following resources: