On June 21, 2018, the United States Supreme Court ruled that a state may impose sales tax collection responsibilities on businesses that have no physical presence in the state (remote sellers). See South Dakota v. Wayfair, 138 S.Ct. 2080 (2018).
Due to this ruling, existing provisions in tax laws in many states immediately became effective and out-of-state businesses became obligated to collect sales taxes (primarily from online sales) and remit them to the states to which the products are shipped.
Following the Supreme Court's decision in South Dakota v. Wayfair, California has updated its regulations regarding sales tax collection responsibilities for out-of-state sellers. As of April 1, 2019, California requires remote sellers with no physical presence in the state to register with the California Department of Tax and Fee Administration (CDTFA) and collect California use tax if, in the preceding or current calendar year, their total combined sales of tangible personal property for delivery into California exceed $500,000. This threshold is based on the total sales price or the total purchase price of tangible personal property sold or purchased for delivery into California, including sales made by the retailer, any of its subsidiaries, and any other related entities. Remote sellers who meet or exceed this threshold are considered engaged in business in California and must collect and remit the appropriate sales tax to the CDTFA.
