California: Illegal and Taxable
- Sep 26, 2014 | Gail Cole
Updated, 2.9.2015: The California State Board of Equalization has released a special notice regarding the new law that makes all sales of counterfeit goods subject to sales tax.
All sales are taxable in California, unless the transaction is specifically exempted or excluded by law. California law defines the terms “retail sale,” “sale at retail,” “storage” and “use” and outlines when and how sales and use tax applies under those conditions. Now, under a new law, even illegal sales are subject to California sales and use tax.
Assembly Bill No. 2681, filed as Chapter 477 on September 19, 2014, includes in the definition of retail sale or sale at retail “any sale by a convicted seller of tangible personal property with a counterfeit mark on, or in connection with, that sale, regardless of whether the sale is for resale in the regular course of business.”
Convicted seller is defined as “a person convicted of a violation under Section 350 or 653w of the Penal Code or Section 2320 of Title 18 of the United States code on or after the date of sale.”
Convicted sellers who do not pay tax on those sales will receive a notice of deficiency determination, which will be “mailed within one year after the last day of the calendar month following the date of conviction.”
Automated sales tax software simplifies the collection and remittance of sales tax—for law abiding citizens. Learn more.