In the beginning of what may become a national rollout of the landmark South Dakota v. Wayfair Supreme Court decision from this past June, the state of California Department of Tax and Fee Administration (CDTFA) has announced its intention to use the Wayfair thresholds beginning April 1, 2019. “We know the legislature is also looking closely at this issue and we look forward to working with them as we proceed,†said Nick Maduros, CDTFA Director.
Starting April 1, out-of-state retailers selling above certain economic thresholds into California will be required to collect California use taxes on their sales into California.
The tax collection requirement is not retroactive and applies only to sales made on and after April 1, 2019. For out-of-state retailers, the new collection requirement applies if, during the preceding 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.
For local taxes, the same obligation to collect and remit district use taxes will apply. Any retailer whose sales into a district exceed $100,000 or who makes sales into a district in 200 or more transactions in the preceding or current calendar year is considered to be engaged in business in that district and is required to collect that district’s use tax on sales made for delivery in that district.
These thresholds match exactly those set by South Dakota. By adopting the same thresholds, California is taking a position that will face little if any challenge. Below is a map of all states and their current positions:
Click to enlarge
We also maintain a web page that tracks the economic nexus status of all 50 states, including enforcement dates and specific threshold information.
California is one of the first large economy states to announce its new policy. Texas, Florida and New York are expected to respond in the coming year.
For additional information on the CDTFA announcement, please see their online guide.
Contact James Ortiz to discuss the impact of this change on your business.
