California Sales Tax Registration

Just a reminder for you "big" online sellers that California sales tax requirements kick in on April 1, among other states.

I had to register for CA since I have to conclude that I will do over 200 transactions this year (easy to hit in a big state like CA). You can do it online but it's a very detailed, time consuming application that requires you to identify a supplier, various EIN and secretary of state business numbers, provide monthly estimated sales, and so on. Make sure you leave yourself some time to get it done!

Happily, CA appears to be the only state I'll have to deal with other than my home state (Ohio), at least for now. And there's a silver lining - it appears that we out of state sellers are only required to collect the state tax for CA (7.25%) and not any local or district tax, though you can do that as a courtesy to your customers if you want to. I think I'll stick at the state tax!

Do you know why ebay isn't collecting CA tax for us like they do with other states?

It's a matter of state law. Some states are basically taking the position that marketplaces (such as ebay) are the sellers rather than the actual sellers, and requiring the marketplaces to collect and remit. California is, so far, not one of those states.

Those other states (IA, WA, etc.) are irksome to me since they are now getting tax collected on sales where I would have had no option to collect the tax.

Is that '200' number for sales limited to within the Californian borders or for 200 sales anywhere?

Sales within the border of the state (with or without regard to whether you as seller have a physical nexus with the state). Many states use this same test (200 transactions or $100,000 which ever comes first).

California is $1.3 trillion in debt. More taxes and they will still be in debt.

Matt, the other thing to watch out for is CA's income tax filing requirement, even for non-residents. They pull information from the sales tax filings (and they assume that sales = income unless proven otherwise) and refuse to accept double-taxation relief treaties from other states or countries. The income tax filing thresholds are not very high and they base it on nights spent in CA, even on vacation. If you never set foot in CA, you might not have a filing requirement. Good luck, Steve
https://stephentaylor.co.uk

Haven't been to CA in several years. :) Looks like the income tax threshold is about $18k for a single filer or about $35k for a married couple. I should be under that at least...

Very messy stuff.

Selling in Califosrnia for 15 or more days will create a physical nexus and trigger the income tax requirement. Show dealers form near by states have complained about this requirement for years.

California income tax would not be required from remote sellers who have an economic nexus triggered by the 200 orders or $100,000 Wayfair criteria but have no physical nexus.

How many larger ebay sellers will start compliance on April 1st? Will failure comply correlate with bad behavior reported in the past? I wonder what would happen if unhappy customers report disliked sellers to the CDATFA. How will they compel sellers to comply?

Other tha paperhistory, who on ebay not already doing business in California will comply? I already have California tax registration, so collection starts Monday. I hope others will start on Monday also.

Also of note, ebay will start collecting sales tax for Connecticut transactions on Monday (April 1).

So far, ebay has not provided enough information about Washington State sales tax amounts collected to be useful when filing a sales tax return. Washington imposes a B&O tax on in-state sellers on gross sales including ebay sales. Connecticut will also be a problem, because if I read it correctly, sellers who have taxes collected by ebay as a market facilitator must also report amounts collected by ebay on their CT sales tax return. Since I file in both states, I am now monitoring ebay sales to capture sales tax amounts collected for reporting. Promised changes to the Seller Hub have not materialized when I checked in mid-March. I found the amounts when drilling down from the My ebay All Selling page, but the information disappears after 90 days. I am not impressed by ebay's cavalier approach to reporting sales tax collection. Also, I don't know how buyers would get refunds of sales tax paid to ebay of they choose to use PayPal to obtain a refund or ebay more than 60 days after the sale. I saw no indication on PayPal that ebay had collected sales tax on Washington State sales after the first of January.

I am still baffled by how the Feds can require sellers to 'guess' at the home state of a buyer. I collected my state sales tax for years at my brick and mortar on each sale and did not have to know what state the buyer lived in; I made sales to customers in dozens of states as they passed through town.

Shipping to an address does not verify a buyer's actual address or a physical presence of any kind. For example, if I setup a reshipper account in a state that I actually do not live in the seller would not be collecting the correct tax (or perhaps not have to collect any tax at all).
Don

Don,

The problem you pose is one for buyers to sort out. It is difficult enough for sellers to comply with rules imposed by multiple jurisdictions and remain honest and ethical. If someone in Vancouver, WA opens a post office box in Oregon, that is for Washington State to sort out. Accommodations already exist for Oregon based buyers to shop in border areas adjacent to Washington State. I suppose that buyers from Canada who flock to shows in Bellingham, Sequim or Seattle have to report purchases and pay GST. If not, it is Canada's problem. Since dealers at shows often include sales tax in the price, some out-of-state buyers may be taxed at the wrong rate or taxed twice. It is unfortunate that sales tax is applied to used goods of any kind.

Another issue for stamp dealers is sales tax on postage. Whether spelled out or not (it is spelled out in Kansas), postage intended for use to mail letters sold at or below face (and sometimes above face) is not considered by stamp dealers to be taxable. Tax collection has always been a pain for show dealers. Now Internet dealers will share their pain and stamp collectors will pay more or will receive less when they sell.