Dive Brief:
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The California Department of Tax and Fee Administration (CDTFA) this week announced new tax requirements for in-state and out-of-state sellers as a response to the U.S. Supreme Court's decision in South Dakota v. Wayfair this summer, according to a press release.
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The new law, which goes into effect April 1 and does not apply retroactively, will require out-of-state retailers selling above a threshold of $100,000 or processing more than 200 separate transactions in the state, to collect California use tax.
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It's not a new tax, CDTFA Director Nick Maduros clarified in a statement. "Rather, California will now require more out-of-state retailers to collect and remit taxes just as brick-and-mortar retailers have done for decades. With the Supreme Court's decision in Wayfair, California is able to help level the playing field for California businesses."
Dive Insight:
In a narrow 5-4 ruling this June, the Supreme Court of the United States overturned a landmark precedent in the e-commerce sales tax debate, thereby striking down a law that previously only mandated that companies with a physical presence in a state must collect and remit sales tax. The court, however, did not rule on the case at hand, instead pushing it back to the South Dakota Supreme Court to decide whether a 2016 law was constitutional.
That law set a threshold on sales tax collection for out-of-state sellers who do more than $100,000 worth of business or process more than 200 transactions in the state.
In the months since that decision came down, the issue has played out in various ways state by state. Some trade organizations like the American Catalog Mailers Association and NetChoice continue to push local and federal lawmakers to carve out protections for small businesses, which may be negatively affected by the burden of sales tax collection across the country.
