California Fast-Tracking Increase of Wayfair Threshold to $500,000


This article is reproduced with permission from Spidell Publishing, Inc.

A bill to increase California’s Wayfair threshold from $100,000 to $500,000 (AB 147) has passed the California Assembly and is now before the California Senate. If passed by the Senate, it will be sent to the Governor.

If enacted, the bill would be effective April 1, 2019, meaning that the California Department of Tax and Fee Administration’s (CDTFA) $100,000 or 200 transaction thresholds scheduled to go into effect April 1, 2019, would not go into effect. Enactment of AB 147 would provide major relief for smaller businesses with no physical presence in the state or in a California district as they will no longer be required to register with the CDTFA or collect state or district use taxes.

AB 147 would:

  • increase California’s Wayfair economic nexus threshold for sales and use taxes to $500,000 in cumulative sales of tangible personal property statewide. AB 147 does not contain a transactional threshold. Sellers would be liable for district taxes in any district if their statewide sales exceed $500,000; and
  • shift most of the responsibility for collecting use taxes to marketplace facilitators such as Amazon rather than putting the onus on retailers selling over the marketplace.

The text of proposed AB 147 may be found here:
http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB147.

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