Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision
New Information – On April 25, 2019, California passed Assembly Bill No. (AB) 147 (Stats. 2019, ch. 5). AB 147 amended Revenue and Taxation Code (RTC) section 6203 to require retailers located outside of California (remote sellers, including foreign sellers located outside of the United States) to register with the California Department of Tax and Fee Administration (CDTFA) and collect California use tax if, during the preceding or current calendar year, the total combined sales of tangible personal property for delivery in California by the retailer and all persons related to the retailer exceed $500,000. A person is related to a retailer if they have a relationship with the retailer described in section 267(b) of title 26 of the United States Code and the related regulations.
- IMPORTANT NOTE – In general, the requirements to register and collect California use tax prior to AB 147 remain in effect. That is, retailers with a physical presence in California are still generally required to be registered with CDTFA. Examples of a physical presence in this state include, but are not limited to:
- Maintaining inventory or office locations in California.
- Having representatives in California for purposes of taking orders, making sales or deliveries, or installing or assembling tangible personal property.
- Leasing equipment, including a computer server in California.
AB 147 also amended RTC section 7262 to require all retailers, whether located inside or outside of California, to collect district use tax on all sales made for delivery in any district that imposes a district tax if, during the preceding or current calendar year, the total combined sales of tangible personal property in California or for delivery in California by the retailer and all persons related to the retailer exceed $500,000. This new collection requirement is operative April 25, 2019 (see Special Notice L-684). Please see the General Info and Collection Requirement section for additional information about district tax and the new district use tax collection requirement.
The new use tax collection requirement for remote sellers will apply to taxable sales of tangible personal property to California consumers on and after April 1, 2019, and is not otherwise retroactive. Retailers that exceed the $500,000 sales threshold in the preceding or current calendar year are now required to register with CDTFA to collect the California use tax even if they were not previously required to register. These retailers include retailers that sell tangible goods for delivery into California through the Internet, mail-order catalogs, telephone, or any other means.
This guide contains information about the Wayfair decision and AB 147 and describes their effect on the requirements to collect California state, local and district use tax, and on the collection of special taxes and fees.
California Tax Matrix for Remote Sellers
To assist remote sellers in determining the application of tax to many items and transactions, please see our California Tax Matrix for Remote Sellers.
How to Use This Guide
Please note – we will continually update this Guide as more information becomes available.
See the Getting Started section for information on registration, filing and payments, and about our Voluntary Disclosure Program.
See the General Info and Collection Requirements section for general information about the California Sales and Use Tax Law and tax collection requirements, including those resulting from the Wayfair decision and AB 147.
See the Tax Matrix and Common Transactions section for some basic definitions and the application of tax to common transactions, including transactions in which additional fees may be due.
See the FAQs section for some frequently asked questions and answers about how the Wayfair decision and AB 147 may affect you.
See the Resources section for links to additional information and references.
Get it in Writing
Our tax and fee laws can be complex and difficult to understand. If you have specific questions, we recommend that you get answers in writing from us. This will enable us to give you the best advice and will protect you from tax, penalties and interest in case we give you erroneous information.
Requests for written advice can be emailed to CDTFA or mailed directly to the CDTFA office nearest you.
For more details, please see publication 8, Get It in Writing!.
If You Need Help
If at any time you need assistance with topics included in this guide – or with topics not included – feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section.
If you have suggestions for improving this guide, please contact us via email.