California Sales Tax for Remote Sellers
California Governor, Gavin Newsom, has signed a bill into law which imposes a sales tax registration & collection obligation on remote sellers which exceed $500,000 in sales for delivery in California.
This makes California the latest US state to act following the landmark ‘South Dakota vs Wayfair’ case in which the US Supreme Court ruled that states can require remote sellers to collect sales tax even if they do not have a physical presence there. This retroactively operates from 1st April 2019.
The legislation also stated that if certain conditions are met, the marketplace facilitator is considered the seller and the retailer, meaning that it needs to collect and remit sales & use tax on California-based sales.Marketplaces are defined to include either a physical or electronic place (including websites). .
This resembles legislation which has recently been introduced in a number of EU countries,where there are now additional VAT obligations for the operators of online marketplaces and those who sell on them.