Do I Have Sales Tax Nexus in California?
- Sales Tax
- February 9, 2016 | Avalara
Online sellers need to keep track of where they have nexus in order to know which transactions they should be taxing and to which states they need to remit taxes.
Sales tax nexus, in a nutshell, is having a physical presence in a state, whether due to having an employee there, warehousing inventory there, or having some other connections. When you have nexus in a state, you are required to pay taxes on sales made to residents of that state.
In California, there are a few ways to trigger sales tax nexus:
- having a physical location, such as an office or warehouse, in the state
- having employees in the state
- actively conduct marketing within the state
Amazon sellers who use Fulfillment by Amazon (FBA) have to be especially vigilant about keeping tabs on where they have nexus. The thing that triggers nexus for most FBA sellers is having inventory located within the state -- this is counted as a physical presence and thus triggers nexus. Amazon maintains fulfillment centers in California. Does that mean you have nexus in California? It is important to understand how to look up where you inventory is and to know where you are required to report sales tax. We have a great post on how to find where your Amazon FBA inventory is triggering nexus.
If you look at where your inventory is located and you have none in California, and do not have a physical presence or employees in California, you don't have to pay sales taxes to California. However, if you do have inventory located there, or have other types of physical presence that is trigger nexus, you should be taxing your sales to California residents and remitting those taxes to the state. Feel free to bookmark our page about California sales tax nexus for future reference.