Tag Archive for Use Tax Collection

California Department Of Tax Fee Administration Amends its “Collection of Use” Tax Regulation (Part 2)

California Department Of Tax Fee Administration Amends its “Collection of Use” Tax Regulation (Part 2)

If you’ve been following along with our blogs, you know that we talked about some new amendments taking place under California Sales and Use Tax Regulation 1684, “Collection of Use Tax by Retailers”. In the first part of our blog, we discussed how California implemented on April 1, 2019 an economic nexus threshold for retailers in addition to the longstanding physical nexus threshold. The State now requires out of state sellers to register and collect use tax in California as soon as they exceed $500,000 of sales of tangible personal property in either the preceding or current calendar year.

In the first blog we focused on three examples from the amended regulation for when economic nexus would be triggered for an out-of-state retailer. In this second part of the blog we will talk about the circumstances that will allow out-of-state retailers to discontinue their obligation to collect and report use tax to California. In other words, when will California no longer require an out-of-state retailer to hold a Certificate of Registration – Use Tax and to collect and report use tax?
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California Department Of Tax And Fee Administration Amends Its Collection Of Use Tax Regulation (Part 1)

MONIKA MILES

The CDTFA (California Department Of Tax And Fee Administration) has updated an important regulation; one that affects all out of state retailers selling to customers in California. California Regulation 1684, “Collection of Use Tax by Retailers,” is not a new regulation, but it is one that needed many updates due to the Wayfair case. The CDTFA recently received approval from the Office of Administrative Law to publish the revised regulation.

In this two-part blog we will address the most important changes to the regulation. In this first blog we will discuss an out-of-state retailer’s registration and collection requirements in California. In the second blog we will discuss when an out-of-state retailer is no longer required to hold a California use tax permit (Certificate of Registration – Use Tax).

Let’s start with what hasn’t changed in Regulation 1684 (“R1684”). Any out of state retailer that has a physical nexus in California (an office, employees or representatives in the state, inventory, etc.) is required to obtain a use tax permit and collect use tax for their sales of tangible personal property into the state from their out of state location. When you have a physical nexus you are required to register for a Certificate of Registration – Use Tax and to collect and report the use tax to the state.
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