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Grosz v. California Dept. of Tax & Fee Administration … (2023)

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Determining Who Is The Retailer Under the Sales and Use Tax Law Is Discretionary and Not a Ministerial Task

Plaintiff, a California taxpayer, filed a complaint for injunctive and declarative relief pursuant to California Code of Civil Procedure § 526a, and sought to compel CDTFA to collect sales and use taxes from Amazon.com, Inc. and/or its affiliates ("Amazon") for sales of products supplied by Amazon’s third-party vendors and sold through its Fulfillment by Amazon ("FBA") program.

Plaintiff alleged that Amazon met the requirements of being a consignment retailer under California Code of Regulations, title 18, section 1569, and CDTFA had a mandatory, not a discretionary, duty to collect sales tax from Amazon for sales made through its website. The district court sustained CDTFA and Amazon’s demurrers holding that CDTFA’s determination as to which party is the retailer was discretionary and thus plaintiff lacked standing under California Code of Civil Procedure § 526a to bring this action. The Court of Appeal affirmed the decision, holding that the CDTFA’s determination of who is a retailer under the Sales and Use Tax Law is discretionary and not a ministerial task. Grosz v. California Dept. of Tax & Fee Administration (2023) 87 Cal.App.5th 428, as modified on denial of reh'g (Jan. 23, 2023), review denied (Apr. 26, 2023).