Special Notice L 591 New District Use Tax Collection Requirements for All Retailers

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1 INFORMATION UPDATE

2 Information Update Please note the following update to Special Notice L-591, published in December 2018, regarding new district use tax collection 9, all retailers registered or required to be registered requirements for all retailers. The notice stated that beginning April 1, 201 FA) are responsible for collecting and paying a district ’s with the California Department of Tax and Fee Administration (CDT use tax to the CDT FA if, during the preceding or current calendar year, the retailer ’s sales into the district exceed $100,000, or the retailer made sales into the district in two hundred (200) or more separate transactions. The new district use tax collection pursuant to the U.S. Supreme Court’ s South Dakota v. Wayfair, Inc. decision and Revenue and Taxation Code requirement was section 7262. Assembly Bill No. (AB) 1 (Stats. 2019, ch. 5) which provides that all retailers required to On April 25, 2019, California passed 47 be registered with the CDTFA, whether located inside or outside of California, are required to collect district use tax on all sales made for delivery in any district that imposes a district tax if, during the preceding or current calendar year, the total combined sales of tangible personal property in California or for delivery in California by the retailer and all persons related to the retailer . AB 147 is operative April 1, 2019, and supersedes the prior direction provided in Special Notice L-591. A exceed $500,000 separate notice was also published notifying taxpayers of the information update. L-591 (4-19)

3 Special Notice CALIFORNIA DEPARTMENT New District Use Tax Collection Requirements OF TAX AND FEE ADMINISTRATION Retailers for All 450 N STREET SACRAMENTO, CA 95814 Effective April 1, 2019 EDMUND G. BROWN JR. Beginning April 1, 2019, all retailers registered or those required to be registered with Governor the California Department of Tax and Fee Administration (CDTFA) are responsible for collecting and paying a district’s use tax to the CDTFA if during the preceding or MARYBEL BATJER Secretary current calendar year: Government Operations Agency • The retailer’s sales into the district exceed $100,000, or NICOLAS MADUROS • The retailer made sales into the district in two hundred (200) or more separate Director transactions. CDTFA WEBSITE Taxation This new district use tax collection requirement is pursuant to Revenue and www.cdtfa.ca.gov Code section 7262 and the U.S. Supreme Court’s decision in South Dakota v. Wayfair, 17-494) (Wayfair) . Inc. (Dock. No. CUSTOMER SERVICE CENTER 1-800-400-7115 This new requirement applies to all retailers required to be registered with the TTY 711 CDT FA, whether located inside or outside of California. The new collection requirement is not retroactive and is in addition to the requirements for retailers to , collect district use tax that applied prior to April 1 2019. What is district tax? District taxes are voter-approved sales s) and use taxes imposed by (transaction ties, counties, and other local jurisdictions. The current statewide California sales ci 7.25 percent. Howeve r, total sales and use tax rates are higher in and use tax rate is ar eas where district taxes are imposed. In these areas, the total tax rate includes the s). statewide tax rate plus the district tax rate( W h o is responsible for paying the district tax? District sales taxes are due from retailers on their sales of tangible personal propert y. District use taxes are due from purchasers for their use of tangible personal property in a district. Howeve r, a retailer that is “engaged in business” in a district is generally n sales of tangible equired to collect the district ’s use tax and pay it to the CDT FA o r roperty d elivered i n the d istrict. personal p G enerall y, if you are a retailer and your business is located in a taxing district, you are considered “engaged in business” in that district. In addition, a retailer is also co “engaged in business in a district” if, for example, the retailer: nsidered • Maintains, occupies, or uses any type of office, sales room, warehouse, or other place of business in the district, whether the use is temporary or permanent, direct or indirect, or through an agent, • Has any representative, agent, salesperson, canvasser, etc., operating in the district for the purpose of taking orders, making sales or deliveries, installing, or assembling tangible personal property, • Receives rentals from a lease of tangible personal property located in the district, or • Sells or leases vehicles or undocumented vessels which will be registered in a DECEMBER 2018 district. L- 591

4 California New requirement for collection of district use tax effective April 1, 2019 Department Beginning April 1, 2019, in addition to the above conditions that require a retailer to of Tax and Fee collect a district use tax from their customers, any retailer whose sales into a district Administration exceed either $100,000 or 200 or more separate transactions in the preceding or current New District calendar year, is considered to be “engaged in business” in the district and is required Use Tax to collect that district’s use tax on sales made for delivery in that district. Retailers are Collection required to report and pay any collected district tax to the CDTFA on their sales and use tax return. Requirements for All Retailers Courtesy collection of district use tax Effective Generally, if you are not “engaged in business” in a district, then your customers are the April 1, 2019 persons liable for the district use tax on tangible personal property purchased from you for storage, use, or other consumption in that district. As a courtesy to your customers, you may choose to collect the district use tax from them and report and pay it to the CDTFA. Tax rates for California You may find the tax rates for each district (city and/or county) on our website at www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax-rates.htm . This webpage includes a look-up tool, Find a Sales and Use Tax Rate by Addres s , located under the Current Tax Rates section, which allows you to find a tax rate based on an address. To further assist you in finding the correct tax rate, our rate look-up service may also be integrated into your sales software to compute the tax rate for each of your sales. To see if our service will work with your application, select the Looking for the Tax Rate API? link at the bottom of the Find a Sales and Use Tax Rate by Address page. For more information For more information about the Wayfair decision and the new district use tax collection requirements, see our online guide, Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision www.cdtfa.ca.gov/industry / . listed on our website at You may also call our Customer Service Center at 1-800-400-7115 (TTY:711). Customer service representatives are available Monday through Friday from 8:00 a.m. to 5:00 p.m. (Pacific time), except state holidays. Page 2 DECEMBER 2018 L- 591

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