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.