Use Tax Collection – Wayfair Decision AB147
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Use Tax Collection – Wayfair Decision AB147


[Music] Hello I’m Paul and I’m Michelle. We’re
with the California Department of Tax and Fee Administration or CDTFA.
Michelle and I are going to give a brief overview of use tax for in-state and
out-of-state retailers and discuss some recent law changes. First, let’s define
some common terms. Most people are generally familiar with the sales tax
which applies when a retailer in California sells tangible personal
property to a customer in the state. Use tax is a complimentary tax to the sales
tax and generally applies to a retail sale when the sales tax doesn’t apply.
This typically occurs when a consumer purchases tangible personal property
from an online out-of-state retailer for use in California. Tangible personal
property includes items that can be touched or felt, like shoes or electronic
equipment, but excludes real property like land or buildings. Recent
legislation requires out-of-state retailers to collect use tax beginning
April 1st, 2019, they are required to do so if during the proceeding or current
calendar year their total combined sales of tangible personal property for
delivery in California exceed $500,000. The law also requires all retailers who
meet the statewide threshold whether inside or outside California, to register
with CDTFA and to collect district use tax on all sales made for delivery in
any district that imposes a district tax. District taxes are locally imposed sales
and use taxes that are due on top of the seven and a quarter percent state sales
and use tax rate. If you’re an out-of-state retailer here’s an example. If you sell portable blenders to customers in California and made sales
exceeding the $500,000 threshold in 2018 you are required to register and collect
California use tax effective April 1st, 2019. The district tax rates vary in
California and you’ll need to collect the appropriate rate based on your
customer’s location. If you’re an in-state retailer the same rules apply and here’s how it works. If you have an online store which sells and ships auto parts to
customers throughout California from your warehouse in San Diego, California
and have no physical presence anywhere else in the state, beginning April 1st,
2019 if your sales in the prior year exceeded the
$500,000 threshold in addition to the statewide tax of 7.25%
you are also required to collect the district tax based on your customers
location on all retail sales in California. Paul, if you meet those
thresholds how do you register? If you’re not currently registered with the CDTFA
you may register with us online. Go to our website cdtfa.ca.gov
From our Taxpayer Online Services Portal scroll down to Registration, select
Register a New Business Activity or Location and follow the prompts.
You can find detailed information in our online guide Use Tax Collection Requirements
Based on Sales into California due to the Wayfair Decision, at
cdtfa.ca.gov/industry/wayfair We will keep this guide up-to-date
with the latest updates and resources. If you’re already registered with us we
will send you information by email or mail to make sure you know when there
are updates important to your business. For detailed information due to the
Wayfair decision go to cdtfa.ca.gov/industry/wayfair or cdtfa.ca.gov

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