California Implements Wayfair “Economic Nexus” Thresholds


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

The California Department of Tax and Fee Administration (CDTFA) has announced that effective April 1, 2019, it will begin to impose the sales and use tax economic nexus thresholds approved by the U.S. Supreme Court in Wayfair, Inc. v. South Dakota. The CDTFA is applying these standards to both state and district taxes.

Retailers with no physical presence in the state or in a district during the current or preceding calendar year must collect and remit the state and district use taxes to California if their sales of tangible personal property is comprised:

  • $100,000 of sales into the state/district; or
  • 200 separate transactions.

This means, effective April 1, 2019, if the $100,000 sales or 200 transactions threshold was met in 2018:

  • California retailers must begin collecting and remitting district use taxes for districts in which the threshold was met; and
  • Out-of-state businesses must register with the CDTFA and begin to collect and remit the state and district use taxes to California if the threshold was met in the state and the district.

The CDTFA’s Special Notices announcing these developments can be accessed below:

www.cdtfa.ca.gov/taxes-and-fees/L565.pdf
www.cdtfa.ca.gov/taxes-and-fees/L591.pdf

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