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By: Kassandra Cristobal

Beginning on April 1st of 2019, certain retailers located outside of California that are engaged in business in the state (but with no physical presence in the state) will be required to collect California state and district use tax if their sales of tangible personal property are comprised of either:

  • $100,000 of sales into the state; or
  • 200 separate sales transactions into the state

Retailers will be required to collect the taxes on any sales taking place on or after April 1st and remit them to the California Department of Tax and Fee Administration (CDTFA) through their sales and use tax return.

This new district use tax collection requirement is pursuant to Revenue and Taxation Code section 7262 and the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. (Dock. No.17-494) (Wayfair).

What is the Tax rate?

The current statewide California sales and use tax rate is 7.25 percent. However, total sales and use tax rates are higher in areas where district taxes are imposed. In these areas, the total tax rate includes the statewide tax rate plus the district tax rate(s). You may find the tax rates for each district (city and/or county) by visiting www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax-rates.htm.

What does this mean?

Effective April 1, 2019, if the $100,000 sales or 200 transactions threshold was met in 2018:

  • California retailers must begin collecting and remitting district use taxes for districts in which the threshold was met; and
  • Out-of-state businesses must register with the CDTFA and begin to collect and remit California state and district use taxes if the threshold was met in the state and the district.

If you were already required to be registered to collect California use tax prior to April 1, 2019, there will be no change in your registration and collection requirements.

Out-of-State Business Registration

If your business meets these economic nexus thresholds and you have not previously registered with the CDTFA, you may register by visiting www.cdtfa.ca.gov.

For more information

For more information about the Wayfair decision and the new district use tax collection requirements, see Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision at http://www.cdtfa.ca.gov/industry/wayfair.htm.

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