The California Department of Tax and Fees Administration (“CDFTA”) (California’s Sales and Use Tax Agency) is aggressively pursuing enforcement of its new law. The CDFTA has issued thousands of letters notifying non-California retailers of the new law. This is what you need to know about the law:
Beginning April 1, 2019, all retailers registered or required to be registered with the CDTFA will be responsible for collecting use tax under certain conditions. Specifically, if during the preceding or current calendar year, you are a retailer and your sales for delivery into California are more than $100,000 or you make sales for delivery into California in 200 or more separate transactions, you must register with the CDTFA. If you are an out-of-state retailer reaching either of the above sales thresholds, you are considered to be engaged in business in California pursuant to Revenue and Taxation Code section 6203 and the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc.
If you are an out-of-state retailer and meet the above requirements, you must collect use tax from your customers on taxable sales of tangible personal property delivered into California and pay the tax over to the CDTFA.
Also beginning April 1, 2019, all retailers registered or required to be registered with the CDTFA are responsible for collecting and paying a district’s use tax if during the preceding or current calendar year, your sales for delivery into the district are greater than $100,000 or you make sales for delivery into the district in 200 or more separate transactions. This new requirement to collect the district use tax applies to all retailers required to be registered with CDTFA, whether located inside or outside of California.
If you have any questions regarding registering and complying with these new CDTFA rules, please call Leslie van der Wal at Holtz, Slavett & Drabkin, ALPC, at (310) 550-6200.
Leslie van der Wal is a Tax Attorney and Of Counsel at Holtz, Slavett & Drabkin, APLC. Leslie was an IRS Attorney in the Office of Associate Chief Counsel (International) in Washington DC. She also worked in the Office of Chief Counsel of the Internal Revenue Service in Thousand Oaks, California. Her practice focuses on Corporate Tax matters such as Corporate Compliance and Tax Audits.