California AB 147 (Burke) was unanimously passed by the California Assembly with an urgency vote and now moves on to the Senate for its deliberation. Previously, California announced that beginning April 1, 2019, retailers located outside of California are required to register with the California Department of Tax and Fee Administration (the “Department”), collect the California use tax, and pay the tax to the Department if during the preceding or current calendar year the retailer’s sales into California exceed $100,000, or the retailer made sales into California in 200 or more separate transactions.1 To determine the thresholds, sales included nontaxable sales.
However, AB 147 is more restrictive and implements an economic nexus threshold that includes any retailer that, in the preceding calendar year or the current calendar year, has a cumulative sales price from the sale of tangible personal property for delivery in California that exceeds $500,000. AB 147 eliminates the requirement of 200 or more separate transactions.
In addition to the economic nexus provisions, AB 147 enacts the Marketplace Facilitator Act, which becomes enforced on October 1, 2019. AB 147 specifically states that provisions will not be applied retroactively. This contrasts with the Department’s current efforts to force some companies to pay past liabilities.
For up-to-date information on all things Wayfair in California, as well as other states, please refer to the Ryan Wayfair Nexus Chart.
1 NR 18-59, California Announces New Use Tax Collection Requirements for In-State and Out-of-State Retailers (December 11, 2018) located at: https://www.cdtfa.ca.gov/news/18-59.htm; see also, Cal. Rev. & Tax. Code § 6203(c).
TECHNICAL INFORMATION CONTACTS:
Mark L. Nachbar
Principal
Ryan
630.515.0477
mark.nachbar@ryan.com
Susan Bittick
Principal
Ryan
916.414.0400
susan.bittick@ryan.com