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
Threshold applies to the previous or current calendar year.
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.
Check out our workshop on how to file your California state sales tax return.