California has always been on the cutting edge, technology-wise, and embracing eCommerce is no exception. Of course, that means that many online sellers have to deal with collecting and filing sales tax in California, which isn’t always easy. Over the past year, California revamped their taxing authority into two different departments, and began pursuing Amazon FBA sellers for past due sales tax. Needless to say, there’s a lot going on in the Golden State when it comes to sales tax right now, so let’s dig in.
The Basics of California State Sales Tax
California sales tax rate: The statewide California sales tax rate is 7.25%. This rate is made up of 6.00% state sales tax rate and an additional 1.25% local rate. You can read a breakdown of California’s statewide tax rate here. This 7.25% total sales tax rate hasn’t changed for 2018.
California local sales tax rates: These vary by district. Find the most up-to-date California sales tax rates here.
How to collect sales tax in California: California is a modified-origin state, which makes figuring out just how much you are supposed to collect in sales tax a little confusing. Long story short, California requires that you collect from buyers the California state sales tax rate of 7.25% plus a district rate. You can find out a whole lot more about collecting sales tax in California here.
Important Note for Amazon sellers: Amazon treats California as a destination-based state when it comes to sales tax collection. If you’re using TaxJar to report how much sales tax you collected in California, you’ll find that it’s easier to set California as a destination state in your TaxJar state settings.
Got Nexus in California?
If you are an online seller and have sales tax nexus in a state, then you are required to collect sales tax from buyers in that state. Here’s what creates nexus in California (via the California tax code).
If you have nexus in California, ensure that you are signed up to collect sales tax. Click here for how to register for a California sales tax permit.
If you sell on FBA and you’re not sure whether you have sales tax nexus in California, check out these resources:
- Does Inventory Give FBA Sellers Nexus in Other States?
- How to Find Where Amazon FBA Gives You Sales Tax Nexus
Or you can sign up for a 30-day free TaxJar trial and we’ll show you from which Amazon fulfillment centers your items have shipped.
What’s New in California Sales Tax for 2018?
Restructuring the California tax authority
Last July, the California Board of Equalization (BOE) split into two departments, and now sales tax filers deal with the California Department of Tax and Fee Administration (CDTFA) instead. For many online sellers, the January 2018 annual sales tax deadline will be the first time you are required to interact with this new agency. Fortunately, while the department has a new name, must of the backend sales tax filing technology stayed roughly the same. Of course, if you’d rather not deal with the CDTFA you can have TaxJar AutoFile your California sales tax return for you.
CDTFA pursuing Amazon FBA sellers
In an ongoing effort, California is also attempting to get online sellers registered to collect California sales tax. Back in September, the CDTFA began sending notifications to Amazon FBA sellers requesting proof that they were collecting and filing sales tax. Here’s one of the letters:
Since then, the state has worked with non-collecting sellers and sales tax experts working on their behalf to ensure all sellers with sales tax nexus in the state are compliant. You can read more about these letters to FBA sellers, and what to do about them, here.
More California Sales Tax Resources
Have questions or something to say about California sales tax? Start the conversation in the comments!