On September 30, 2022, Governor Gavin Newsom signed SB 301 into law in an effort to reduce organized retail theft and resale of stolen goods. Effective July 1, 2023, the bill requires online marketplace facilitators to collect the name, taxpayer identification number, and contact and payment information of their third-party sellers. Third -party sellers are those with 200 or more sales to California residents in a 12-month period and at least $5,000 in gross revenue from those sales. This California version of the federal INFORM Consumers Act pending in Congress passed the Legislature unanimously with support from the California Retailers Association.
The purpose of the bill is to disrupt the flow of stolen goods into online marketplaces where they can be sold to unwitting consumers. This bill limits the ability of thieves to employ phony business names and accounts and enables law enforcement in the pursuit of these thieves.
Under this bill, the marketplace facilitator must obtain and retain for five years the required identifying information from third-party sellers. After qualifying as a high-volume third-party seller, the following information must be provided within 10 days:
- A bank account number or the name of the payee in the event the seller has no bank account,
- The seller’s name or a copy of a valid government-issued identification (or a copy of a valid government record or tax document that includes the business name and physical address of the seller) for an individual acting on behalf of the seller,
- A business tax identification number or taxpayer identification number, and
- A valid email address and telephone number for the seller.
Higher-volume marketplace sellers with at least $20,000 of gross annual revenues in California derived from the online marketplace platform are subject to additional requirements. Such sellers must disclose the following information to the marketplace platform provider and consumers:
- The seller’s full name or company name, physical address, and direct contact information, and
- Whether the seller used a different seller to supply the product to the consumer upon purchase.
Although California is the first state to enact legislation to reduce marketplace sales of stolen and counterfeit goods, it probably won’t be the last. Similar bills are currently under consideration in Florida, Massachusetts, New Hampshire, Ohio, and Washington.
We will keep you updated as other states address this issue.
TECHNICAL INFORMATION CONTACTS:
Mark L. Nachbar
Principal
Ryan
630.515.0477
mark.nachbar@ryan.com
Mary Bernard
Manager
Ryan
401.272.3363
mary.bernard@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.