California Enacts New Economic Nexus and Marketplace Facilitator Legislation

Daniel Kostrzewa
April 26, 2019

On April 25, 2019, the governor of California approved Assembly Bill No. 147. The bill requires remote sellers to collect and remit California sales and use tax if the seller had over $500,000 in sales of tangible personal property for delivery into California in the preceding or current calendar year.  The California Department of Tax and Fee Administration (CDTFA) had previously issued a special notice, in December 2018, which set the economic thresholds for remote sellers at 200 or more separate transactions or retail sales in excess of $100,000. While the CDTFA has not yet published guidance on the new legislation, it appears that the legislation supersedes the CDTFA’s prior guidance by raising the economic threshold for remote sellers to $500,000 and eliminating the transaction threshold.

Assembly Bill No. 147 also requires marketplace facilitators to collect and remit California sales and use tax on all sales made through the marketplace, provided the marketplace has nexus with California. When determining whether a remote marketplace facilitator has surpassed the $500,000 threshold discussed above, the marketplace must include all sales made on the marketplace’s own behalf and all sales facilitated through the marketplace on behalf of third-party sellers. These new marketplace requirements go into effect on October 1, 2019.

View Assembly Bill No. 147 in its entirety.

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Daniel Kostrzewa

Daniel Kostrzewa is a Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Daniel focuses on domestic sales tax issues. Prior to joining Sovos in 2018, he worked as an attorney in Boston. Daniel received his B.A. in Economics from Boston College and J.D. from Boston College Law School. He is a member of the Massachusetts Bar.
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