Remote retailers selling into California could owe more than sales and use tax
Many out-of-state businesses that sell into California and currently aren’t liable for California sales or use tax will have to start collecting and remitting it starting April 1, 2019, under the state’s new sales tax economic nexus rule. Some remote retailers may have additional tax responsibilities as well.
According to a special notice published by the California Department of Tax and Fee Administration, additional fees may apply to out-of-state retailers that sell the following:
Lead-acid batteries. Retailers and manufacturers must collect a $1 California Lead-Acid Battery fee from retail purchasers of replacement lead-acid batteries.
Lumber products or engineered wood products. Retailers are required to collect the 1 percent Lumber Products Assessment on retail purchases of qualified lumber products and engineered wood products for use in California.
New tires or motor vehicles and equipment that include new tires. Retailers must collect a fee of $1.75 per tire sold or leased to a retail purchaser in California.
Businesses may also have to collect electronic waste recycling fees. Various fees apply to the retail purchase or lease of “covered electronic devices,” such as computer monitors, DVD players, laptop computers, and plasma screens, which are hazardous when discarded.
Additional information is available from the California Department of Tax and Fee Administration.
It’s worth noting that the California Legislature is looking to amend the sales tax economic nexus rule set to take effect April 1. If it does, it may raise the threshold and push back the effective date. The existing threshold of $100,000 in sales or 200 transactions in the state could be increased to $500,000 with no transaction limit. The April 1 start date could be moved to October 1, 2019. Learn more.
More than 30 states already or soon will require out-of-state businesses with a certain degree of economic activity in the state to collect and remit sales tax. As in California, these laws could trigger other tax responsibilities. Both Hawaii and Texas, for example, may apply franchise or income tax to remote vendors with sales tax economic nexus in the state.
Not sure where you’re required to collect and remit sales tax? This state-by-state guide to remote sales tax laws is a good place to start.
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