California Sales Tax Nexus: How it Impacts Business

Charles Maniace
October 26, 2020

It is essential that California businesses – both those operating remotely and that have a physical presence in the state – understand and adhere to all sales tax nexus laws, especially when and if the laws change. Failure to comply with these obligations could impact how businesses properly collect and remit taxes, leading to audits and penalties. Below, we highlight how the California sales tax nexus has evolved following the South Dakota v. Wayfair, Inc. decision.

Enforcement date: April 25, 2019

Sales/transactions threshold:
$500,000

Measurement period:
Threshold applies to the previous or current calendar year.

Included transactions/sales:
Total combined sales of tangible personal property for delivery in California by the retailer and all persons related to the retailer.

When You Need to Register Once You Exceed the Threshold:
If your sales for delivery in California exceed $500,000 during the preceding or current calendar year.

Summary: Remote sellers are required to collect California tax if they have more than $500,000 in sales into California in the current or previous calendar year. Similarly, marketplace facilitators must collect California tax if they make directly or facilitate more than $500,000 in sales into California in the current or previous calendar year. The California Department of Tax and Fee Administration (CDTFA) will notify businesses about their corresponding filling frequency based on the anticipated taxable sales at the moment of registration. The frequency can be on a monthly, quarterly, or annual basis. Businesses that file on a quarterly basis and that have an average tax measure exceeding $17,000 per month, will be required to submit prepayments. Such prepayments will be due on the 24th of the corresponding month.

The filing due date is the last day of the month following the filing period. If the due date falls on a weekend or state holiday, then the due date is the last business day in the month due.

California businesses do not need to fear changes to the sales tax nexus. Instead, it’s important to stay informed on the current law and be aware of how it may impact daily operations.

California Sales Tax Resources

For more information, reach out to our team directly. Our sales and use tax experts can help you fully understand how the California sales tax nexus impacts your business. And for information on additional states, see our interactive sales tax nexus map.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Charles Maniace

Charles Maniace is Vice President – Regulatory Analysis & Design at Sovos, a leading global provider of software that safeguards businesses from the burden and risk of modern tax. An attorney by trade, Chuck leads a team of attorneys and tax professionals responsible for all the tax and regulatory content that keeps Sovos customers continually compliant. Over his 15 year career in tax and regulatory automation, he has provided analysis to the Wall Street Journal, NBC and more.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

November 25, 2020
Audio Blog: Brexit and VAT

Brexit: What are the Implications for VAT Part I Brexit is set to become reality at the end of December. So, what does it mean for organizations doing business in the UK and the European Union? Turns out, there are several tax implications that will need to be accounted for. In this episode of the […]

E-Invoicing Compliance EMEA Tax Compliance Turkey VAT & Fiscal Reporting
November 25, 2020
Turkey’s Digital Tax Transformation: What is E-Arşiv Invoice?

Companies have begun to transfer financial processes to the digital environment as a result of technological developments in recent years. Business efficiency has increased through the financial processes regulated via e-transformation applications. The e-transformation system in Turkey covers applications such as e-invoice, e-ledger, e-arşiv, e-ticket, e-reconciliation, and e-delivery note. Mandate scope of e-arşiv invoice According […]

EMEA IPT
November 24, 2020
Technology Disconnect in Insurance – Why IPT Needs Prioritising

Many insurers still depend on legacy systems to file insurance premium tax (IPT). Whilst cost is sometimes the reason for this decision, some organisations simply don’t prioritise technology upgrades, instead, choosing to focus on initiatives that improve the customer experience or other business workflows. Can this situation continue? Unlikely for much longer, as more tax […]

Sales & Use Tax United States
November 24, 2020
Dissecting the Rhode Island Economic Nexus Sales Tax

Prior to the South Dakota v. Wayfair, Inc. decision, Rhode Island had already enacted legislation related to economic nexus and remote sellers. Effective August 17, 2017, remote sellers needed to comply with certain registration or notice requirements depending on whether the seller qualified as a “non-collecting retailer,” a “retail sale facilitator,” or a “referrer.” Depending […]

Sales & Use Tax United States
November 23, 2020
Yes, there are Sales Taxes, and the Impact on Holiday Shopping is Real

How much can I expect to spend on holiday shopping this year? Well, that may depend on where you live and shop. You see, your location can play a huge role in dictating the final price of an item. This is due to the fluctuation in sales tax rates across the country at both the […]