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California Sales Tax Guide

By Cristina Garza

Are you a small business owner doing some California dreaming? Cowabunga! 🏄

As the largest state economy in the country, California has a relatively complex set of laws on sales tax. Fret not! It's normal for any new business owner to feel a little overwhelmed when it comes to collecting and remitting sales tax in California. Our team of Small Business Superheroes have prepared this handy guide on this very crucial topic so that business owners can feel confident that they are fulfilling their sales tax obligations in the Golden State.

After reading this guide, you will know:

  • How to contact the California Department of Tax and Fee Administration (aka the CDTFA)
  • How to be prepared for your call with the California Department of Tax and Fee Administration
  • When to charge sales tax in California
  • What goods, products, and services are taxable in California
  • When you establish sales tax nexus with the state of California, and the nuances of various thresholds
  • How to register for a sales tax license in California
  • How to collect sales tax in California
  • How to file and pay sales tax in California

Our California Sales Tax Guide will give you the confidence to effectively manage your California sales tax from beginning to end. If you have any other questions to help you navigate your way through California sales tax, we are here for you.

 

 

 

California Sales Tax Contacts

 

California Sales Tax Contacts

 

✅ Have you wanted to contact the California Department of Tax and Fee Administration?

✅ Are you unsure if you should call them, or email them through their website?

✅ Have you ever wondered what information you should have ready before you contact them?

If you have answered “Yes” to any of these questions, we have the answers for you.

The best way to contact the California Department of Tax and Fee Administration is by telephone:

800-400-7115.

 

If you have time, you can visit your local CDTFA Office which may take a while. To be honest, calling is the best option. They even made a video with other options for contacting CDTFA.

Before you call the California Department of Tax and Fee Administration (CDTFA), make sure that you have the following information easily accessible:

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

I promise, this will expedite your call, giving you more time to spend on building your business.

Are you calling on behalf of someone else or another business? Is so, you need to have a signed California Power of Attorney authorizing the tax authorities in California to legally talk to you about a third party’s taxes. Without it, you will be wasting your time. They will not be able to talk to you unless you have one of these bad boys.

If you have any more questions, please feel free to contact us so we can assist you with your sales tax needs.

 

 

 

California Sales Tax Registration

 

California Sales Tax Registration

As a new business, you need to ask yourself one important question before any others.

Do you sell tangible items?

If the answer is “Yes,” you need to register for a sales tax account in the state of California.

Do not stress because there is good news. You only need to register once!

For your initial registration, the process is quite simple so long as you are prepared. Let's walk you through it right now.

Preparation is key.

You will want to know:

  • How and where to register
  • Information needed
  • Cost
  • Other requirements such as a Tax ID or other agencies you may need to register with.

As our clients frequently ask about these topics, we’re going to give you all the relevant information we can.

So, let’s get to it!

 

 

How do I register to collect sales tax in California?

You can register online for a sales tax license with the California Department of Tax and Fee Administration (CDTFA). In addition to being user-friendly, it is a secure, convenient, fast, and free way to register online for a permit. It will assist you with the different types of permits you may need for your business.

Knowing which one you need depends on the number of business locations you have.

  • If you have more than one place of business (that are located on different premises), you may need a separate permit for each location.
  • In some instances, it is possible to obtain a consolidated permit for multiple business outlets.

At the time you apply for a permit, be sure to provide information for all business locations so that the CDTFA will issue the correct type of permit.

 

 

What if I just need to update my information?

You can fill out a notice of business change form if you need to update your business information or address. You also have the option of calling the Customer Service Center. If you have a seller’s permit or a prepaid MTS account, you will want to also fill out the Notice of Business Change form (PDF), which contains instructions on how to do so.

 

 

What information do I need to register for a California sales tax license?

We encourage this kind of question! 🙌👏🙏 Preparation is key

Be sure that you have this information on hand before you sign up for California Sales Tax Account:

  • Driver License
  • Social Security Number (SSN)
  • Email Address
  • Supplier Name/Address
  • Personal References
  • Bookkeeper/Accountant Address and Phone Number (if applicable)
  • FEIN (Partnership, Association, Organization, Trust, Estate, Joint Venture, Receivership/Fiduciary, Unincorporated Business Organization, Limited Liability Partnership, Limited Partnership, Limited Liability Corporation)
  • California Secretary of State Entity Number (Limited Liability Partnership, Limited Partnership, Limited Liability Corporation)
  • Agency Name (Federal, State, and Local Government)
  • Name, address and phone number of the person(s) who maintains the books and records

Additionally, sellers will need to provide the following information:

  • Projected monthly sales
  • Projected monthly taxable sales
  • Products to be sold

As we’ll delve into more detail about later, the higher you estimate your monthly sales volume, the more frequently you will be required to file sales tax.

Once, you have all this information, you can go online and register for your sales tax license at the CDTFA website. There is even a short video that will walk you through the registration process

 

 

How much does it cost to register for a California sales tax license?

Registering for a sales license in California is free. However, you may need to pay a security deposit to cover any potential unpaid taxes in the event the business closes. There is no way of knowing how much of a security deposit will be required. You will find out at the time you apply for the sales tax license.

 

Do I need a Federal Tax Id Number or EIN to register for a California sales tax license?

Yes, you definitely do need an EIN.

No need to worry, though!

You can easily register for a Federal EIN if you don’t already have one.

 

 

Which agencies in California might I need to additionally register with?

This answer is not one we can definitively answer, as every business is different.

You need to contact the California Department of Tax and Fee Administration to verify which government agencies you are required to register with.

Potential agencies include:

But there could be more based on your unique entity. Be sure to check whether any other California state agencies are relevant to your business.

 

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You’re ready to go!

You are now prepared to register for your sales tax license in California because

  • You know how to register for a sales tax.
  • You know what information you need to have accessible for the registration process.
  • You know how to update your information if you need to.
  • You know there is no need to worry about paying a fee.
  • You also know you may need to provide a security deposit.
  • You know you need a tax ID or EIN, and how to get one.
  • You have determined what other agencies you may also have to register with.

Registering for your sales tax license will be smooth as long as you are prepared. I suggest keeping all the necessary information organized in one place. You should have it saved in hard-copy and soft-copy. And do take advantage of the resources available online and through your tax professional.

 

 

 

 

 

California Sales Tax FAQ

After contacting the California Department of Tax and Fee Administration and registering for a sales tax license, you will want to learn when you are required to collect a sales tax license and from whom.

Let’s first discuss the basics of taxable goods in the state of California by looking at some frequently asked questions from our clients. These will help illustrate the nuances of when a business does or doesn’t need to charge sales taxes in California.

Let’s start with the first question...

 

What products are considered taxable or not taxable in California?

Before we answer this question, we need to discuss what is considered tangible items according to the state of California. Some examples include:

  • Furniture
  • Giftware
  • Toys
  • Antiques
  • Clothing

It is important to also consider the connection between personal property and the concept of tangible products. If tangible personal property are sold in retail, they are generally subject to sales tax. Meanwhile, some services and labor costs may also be taxed if they result in the creation of tangible personal property.

In addition to sales tax, retailers want to keep in mind use tax, rather than sales tax, which retailers must pay to the California Department of Tax and Fee Administration. For example, this happens when the item is purchased out-of-state but will be used in California. Out-of-state retailers must collect the use, rather than sales, tax from the consumer at the point of sale if the product will be used in California.

Retailers do not need to worry about remembering the different rates between the two types of taxes because the tax rates are the same.

There are times when retailers do not have to collect a sales or use tax is the sale or purchase qualifies for an exemption including, but are not limited to, sales of certain food products for human consumption, sales to the U.S. Government, health related items, and sales of prescription medicine. Refer to this list of what is not taxable (PDF) if you want a detailed list as a point of reference.

 

 

The bottom line is …

You need to charge a sales tax if it does not qualify for an exemption.

 

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Now that you know what kinds of goods are taxable, you also need to consider some other factors that trigger a sales tax in the state of California.

 

So, let's go over the following frequently asked questions:

 

  • Is California an Origin or Destination Sales Tax State?
  • What creates Sales Tax Nexus in California?
  • What is the economic threshold in California?
  • Does Amazon have fulfillment centers in California?
  • Does California have Click-Through Nexus?

 

Let’s begin with what kind of sales tax state California is.

 

 

Is California an origin or destination sales tax state?

This is where it can get complicated because California is a little bit of both depending on what kind of taxes you are dealing with.

California is a modified origin sales tax state. What does this mean?

It means that retailers need to keep in mind two addresses: the origin and the destination. The origin is where the product is shipped from. Retailers must charge state, county, and city taxes based on the originating address.

Retailers must also charge district taxes based on the destination of the product. In other words, retailers have to charge district taxes corresponding to where the product is being shipped to.

As far as we can tell, this is the only state where sales tax is charged not just by state but by county, city, and district while at the same time varying whether they charge sales taxes based on origin or destination.

Because this is a such a funky way of collecting sales tax, be sure that your eCommerce software will capture the correct sales tax so that you are in compliance with both city, state, county, and district sales tax laws.

 

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Now that we know what kind of sales tax state California is, we need to also consider other factors that affect whether or not businesses must collect California sales taxes.

California recognizes several thresholds to trigger sales tax requirements.

Let's use four commonly asked questions by our clients that can help me explain these thresholds more efficiently.

  • What creates a sales tax nexus in California?
  • Does Amazon have fulfillment centers in California?
  • Does California have Economic Nexus?
  • Does California have a click-through Nexus?

If you are overwhelmed with determining whether your business has established a nexus with the state of California, you should not worry. By looking at these four questions in more detail, you will feel more confident in recognizing if your business has reached any of these thresholds.

Afterwards, there are ways you can manage your tax needs using some tools and resources we will go over in discussing the variety of thresholds recognized by the state of California that constitute a sales tax nexus.

 

 

What creates sales tax nexus in California?

This is a great question for businesses in the state of California and out-of-state ones. Even if you are an out-of state business, there are many ways a business could create a sales tax nexus with the state of California.

Sales Tax Nexus (also known as a “sufficient business presence”) means a business has created a taxing connection with a state. Once you have created a taxing connection, you have established a sales tax nexus.

What does this mean? This means you must charge sales tax in California, and keep in mind the different types of sales taxes based on state, city, county, and district regulations.

Some businesses are curious if they can avoid sales tax in California if they have established a main head headquarters in another state. This may not be the case. Indeed, businesses may have to charge and pay sales tax in California even if they have never stepped foot in California.

So, how do you create a Sales Tax Nexus in California?

 

 

Copy of Georgia Tax Rates (2)-311932-edited

 

 

You can create nexus in California if you:

  • Have a business location or are engaged in business within the State of California
  • Lease, store, or consume tangible personal property within the State of California
  • Sell or lease vehicles, undocumented vessels, or aircraft that will be registered in the State of California
  • Maintain, occupy, or use any type of office, sales room, warehouse, or other place of business in the State of California, even if it is used temporarily, indirectly, or through an agent.
  • Have any kind of representative operating in the district for the purpose of making sales, making deliveries, or taking orders.

If you want the full scoop on what creates nexus, California has an incredibly detailed document here.

 

Does Amazon have fulfillment centers in California?

Yes, Amazon has 16 fulfillment centers in California. For your convenience, here are the addresses of the Amazon fulfillment centers in California:

 

  • 3575 S Orange Ave Fresno, CA 93725-9588
  • 4590 Goodman Way, Building 1 Eastvale, CA 91752-5088
  • 27517 Pioneer Ave Redlands, CA 92374-1501
  • 20901 Krameria Ave Riverside, CA 92518-1513
  • 255 Park Center Patterson, CA 95363
  • 1555 N Chrisman Rd Tracy, CA 95304
  • 1910 E. Central Ave San Bernardino, CA 92408
  • 24208 San Michele Rd Moreno Valley, CA 92551
  • 2125 San Bernardino Ave Redlands, CA 92375
  • 188 Mountain House Pkwy Tracy, CA 95391
  • 4900 W Elkhorn Blvd, Metro Air Park Sacramento, CA 95835-9505
  • 2496 W Walnut St Rialto, CA 92376
  • 5250 Goodman Rd Eastvale, CA 91752-5088
  • 555 East Orange Show Rd San Bernardino, CA 92408-2453
  • 5250 Goodman Rd Eastvale, CA 91752-5088
  • 1909 Zephyr St Stockton, CA 95206

 

Knowing this is important for two reasons. If you are a business selling your products on Amazon, you want to know this. And if you are recognized as an Amazon FBA (Fulfillment by Amazon) seller, you want to know this. If you fall under one of those categories, this increases your chances of creating nexus in each state that Amazon has a warehouse, including California.

To determine if you created a nexus with California, you need to find out if Amazon is storing your products in a warehouse in California. You also want to consider what other states they may be storing your products in to ensure you complying with any tax laws in those states.

 

PROTIP: You create sales tax nexus by holding your goods in a warehouse (including one of Amazon’s) in the State of California.

 

Considering Amazon has many fulfillment centers throughout the United States, you may feel overwhelmed with determining your tax obligations.

We are here to help.

We often use A2X + Wherestock to find out where our clients’ inventory is currently being held and shipped from. This helps us determine what our clients need to do to be in compliance with any tax laws, including those in California.

 

Does California have economic nexus?

Yes, California recently enacted economic nexus which went into effect April 1, 2019. This law states that if you are a seller outside of California, you create a nexus relationship if during the current or previous year you:

  • Have retail sales into California exceed $100,000, or
  • Made sales into California in two hundred (200) or more separate transactions.

This covers sales of any type of tangible good sold over the telephone, via mail-order catalogs, or ordered online. Whereas before, these conditions wouldn’t require registration for out-of-state businesses, with the new nexus law going into effect they now require relevant retailers to register and pay. The requirement is not retroactive and only covers sales from 4/1/2019 onward.

 

Does California have click-through nexus?

Yes, California recognizes the click-through nexus. This is important for retailers who have made, with the help of affiliate marketers, more than $10,000 in selling tangible personal property to buyers in the state of California.

✅ Did you make sales resulting from agreements with affiliate marketers?

✅ Did these sales take place within the past twelve months?

✅ Did the amount of sales equal more than $10,000?

If you answered “Yes” to all these questions, you need to look at how much you made in total sales to purchasers in California in the preceding twelve months. Total sales includes sales that were made that were not the result of affiliate marketing. If your business sold more than one million dollars worth of tangible personal property to buyers in California, you have established a click-through nexus.

Remember, you need to look at total sales to all buyers in California as well as the amount of sales to California purchasers that were the result of affiliate marketing.

 

Is California a streamlined sales tax state?

Not at this time. Some states have implemented this program, but California is not one of them. At least not yet!

 

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It’s time to wrap it up.

You want to know whether your products are considered taxable goods.

You also want to know if you have reached any thresholds that establish a nexus with the state of California.

Knowing both of these things is key to navigating your tax burden as a business.

Keep this guide handy to help you determine when to charge a buyer sales tax, so you and your business can be better-equipped to avoid negative tax implications such as paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in California.

 

Having this information accessible will help you handle your tax needs more effectively in less time.

 

 

Collecting Sales Tax In California

 

Once you confirm that your business establishes a sales tax nexus with the state, you want to ensure you comply with all regulations regarding collecting sales taxes in California.

Many of our clients ask the following four questions:

  • How do I collect California sales tax?
  • Who is eligible for California Sales Tax Exemptions?
  • What should I do if my customer is exempt from sales tax in California?
  • What happens if I lose a California sales tax exemption certificate?

After reading this, you will have a better sense of what’s needed to collect sales taxes.

 

How do I collect California sales tax?

As we mentioned before, California is a “Hybrid Origin” sales tax state that charges sales taxes depending on the jurisdiction--state, city, county, or district. It is recommended that sellers utilize the Destination-based Sales Tax Collection method.

 

California is a hybrid Origin-Destination tax state. For businesses operating in one district and selling to another district, they do not have to collect the taxes of the second district.

There are four (4) California tax districts.

 

Let’s talk about some examples affecting sellers with businesses located within the state of California.

 

Example1:

Business A

  • Located in District 1
  • Has no business operations in other tax districts
  • Makes retail sales shipped through normal modes (USPS, UPS, FEDEX) to Districts 1, 2, 3, and 4.

Under these circumstances, Business A is required to collect

  • 7.25% plus any local taxes for orders shipped to District 1 addresses.
  • 7.25% from sales shipped to Districts 2, 3, and 4 and the purchaser in those districts is liable for reporting and remitting the remaining use tax (local taxes not collected and remitted by the retailer) to the state.
  • As a courtesy to its customers retailers may choose to collect and remit the taxes due at the other districts but they do not have to do so legally.

For more information, refer to California’s Sales and Use Tax Regulations.

 

Example 2:

Business A

  • Locations (or other business operations) in both District 1 and District 2.

In this situation, Business A is required to collect District 1 taxes for all orders shipped to District 1. They are also responsible for collecting District 2 taxes for all orders shipped to District 2 regardless of which location an order ships from.

 

Staying Informed of Economic Nexus Changes

Businesses are going to want to stay informed on the upcoming economic nexus changes, as this affects whether they are required to collect sales taxes in California.

Starting April 1st 2019, economic nexus laws kicked in. Unlike other state laws affecting state-wide sales, the new law will affect sales within each district only.

In order for Business A to qualify for economic nexus in District 2, they would have to sell over $100,000 (or over 200 transactions) within District 2. It is the same scenario for District 3 sales and District 4 sales. The economic nexus of $100,000 or 200 transactions would have to be met in each district for Business A to be legally required to collect and remit those district taxes.

Out-of-state sellers want to pay attention to the new economic nexus rules. They will be affected by the new regulations as well once .

Protip: Economic nexus for California is $100,000 or 200 transactions. The rate is 7.25%. To qualify for economic nexus in any of the 4 districts, you will need to make $100,000 or 200 transactions in that district. Then an out of state seller would have to collect 7.25% plus that district’s taxes.

All tax remittance goes through the state website.

You may also want to keep the California tax district/rate lookup tool handy.

Sales and Use Tax programs previously administered by the BOE are now administered by the California Department of Tax and Fee Administration (CDTFA). For information on CDTFA's tax programs, see CDTFA's website or call 1-800-400-7115

California Tax District Map

 

 

 

Remember: Businesses with locations or business operations in more than one district must collect and remit sales taxes for all orders delivered to those districts, according to California’s Sales and Use Tax Regulations.

Let’s consider a situation where Business A has locations in District 1 and District 2 but no business operations in District 3 or District 4. Business A collects full sales tax (state + district) for Districts 1 and 2 but only collects 7.25% on sales made into Districts 3 and 4. However, this puts the customer on the hook for use tax reporting.

 

Protip: It’s just simpler to charge sales tax based on the district rate, and your customers are accustomed to paying the full, combined sales tax rate on purchases.

Let’s wrap it up with one more example. Business A has business operations in all Districts 1, 2, 3, and 4. This means that they are responsible for collecting state and district taxes from all districts. They are responsible for collecting taxes for all orders made within California.

 

What are the current California sales tax rates?

Sales Tax Rates change all of the time- and vary by what is being sold!

It's best to check out the California Department of Tax and Fee Administration site here to stay up-to-date.

 

What is exempt from California sales tax?

California has an extensive guide that goes over what is exempt or excluded from sales tax here (PDF). We highly recommend you review the CDTFA’s site to be sure that you are sure what is not taxed, before you begin sales.

Generally, the following are excluded from sales tax in California (and are grouped by category)

 

Necessities of Life- Provisions that exempt property necessary for the sustenance of life.

  • Food- except for heated or prepared foods
  • Animal feed, plant seeds, fertilizer, drugs, and medicine
  • Prescriptions, medical devices, and health care services
  • Housing- Utilities and rental of household furnishings (if included when renting a property)

These items are excluded from sales tax because they are deemed life necessities.

 

General Public Benefit- Provisions that give special tax treatment for items or activities which benefit the general public.

  • Alternative energy
  • Museum and Public Art Exhibits- sales of original artwork when purchases by California or a non-profit.
  • Certain sales to nonprofit, religious, and educational Organizations

These items are excluded from sales tax because they provide a benefit to the general public.

 

Industry Benefit- Exemptions and special tax treatments that benefit various industry groups.

Below are some examples of exemptions based on the type of industry.

  • Transportation industry:
    • Sales of vessels of more than 1,000 tons burden are exempt from tax if sold by the builder.
    • Sale or use of motor vehicle fuel (except aircraft jet fuel) used in propelling aircraft if such fuel is subject to the Motor Vehicle Fuel Tax.
  • Entertainment Industry:
    • Leases of motion pictures, animated motion pictures, and television films and tapes (except video cassettes, tapes, and discs leased for private use under which the lessee does not obtain the right to license or broadcast).
    • When certain persons form partnerships to reduce the cost of producing motion pictures
      • by satisfying these three elements…
        • sharing of equipment and other assets,
        • the furnishing of such property, without the transfer of title,
        • by the partnership to its members
      • This arrangement does not constitute a “sale.”
  • Petroleum Industry:
    • When property purchased for resale is commingled with property not purchased for resale so that specific property can no longer be identified, sales from that commingled property will be considered sales of property purchased for resale until the quantity sold equals the quantity purchased for resale.
  • Manufactured Housing and Buildings
    • Factory built housing
    • New mobile homes
    • Used mobile homes
    • Leases of mobile homes
  • Leasing Industry
    • Mass commuting vehicle such as a bus, subway car, rail car, or similar equipment

Finally, most services are considered exempt from sales tax in the State of California. However, if the service you provide includes creating or manufacturing a product that is recognized as tangible personal property, you may have to collect and remit the sales tax on products born of this service.

 

Who is eligible for California sales tax exemptions?

This is a great question because businesses need to consider not just what is exempt but also who is exempt from paying taxes. This depends on the kind of buyer they are or how the buyer intends on using the goods. For example, a wholesaler can receive a tax exemption since the goods are being purchased with the intention of reselling them.

Additionally sales made to a non-profit, school, religious or government organization are typically exempt from sales tax.

Altogether, the type of buyer and the buyer’s intention for purchasing the goods can qualify for a tax exemption.

 

What should I do if my customer is exempt from sales tax in California?

When you have a buyer who is exempt from paying sales taxes, you should know what is the seller’s responsibility and what is your responsibility as the retailer.

The seller is responsible for filling out any necessary paperwork to enjoy the exemption.

The retailer is responsible for collecting a California sales tax exemption certificate at the point of sale and keeping it on file.

It is very important to remember that you need to not just see it, but keep a copy on file. You will need this in the event of an audit to justify tax-exempt sales.

If you lose the certificate or fail to obtain a copy, you risk having to pay the outstanding taxes yourself.

Want more info? Charmingly, “Greg and Donna” elaborate in this short video made to explain the resale certificate in the state of California.

 

What happens if I lose a California sales tax exemption certificate?

This is a really great question. For retailers, it is very important that you keep a copy of the certificate on file instead of just asking to see a copy of it. Otherwise, you will be unable to verify that the buyer was exempt from paying sales tax. In that case, the tax authorities will put the burden of paying the sales tax on you, the retailer.

If you are working with us, we will be sure to keep your sales tax exemption certificates safe and sound in our shared Box.com account.

 

Does California have a sales tax holiday?

No, California does not have a sales tax holiday.

 

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Now you know should feel prepared to collect the required sales taxes from who you need to and for what you need to. Once again, remember to document anytime you do business with a buyer who has a certificate of exemption. Being prepared and organized makes collecting and sales tax and filing a return in California easy, as well as answering to any potential audits.

 

 

 

 

 

Filing and Paying Sales Tax in California

Time has come to talk about perhaps the most dreaded part. Actually filing and paying your sales taxes in California. In this section, let's cover the following frequently asked questions from our clients:

  • When is California sales tax due?
  • What are the California sales tax thresholds?
  • What if a California sales tax filing date falls on a weekend or holiday?
  • How do I file a California Sales Tax Return?
  • How do I correct a California sales tax return?
  • What happens if I don’t collect sales tax?
  • What happens if I file or pay my sales tax return late?
  • Do I need to file a return if I don’t collect any sales tax in California?
  • If I close my business, do I need to file a final sales tax return?
  • Does the California Department of Tax and Fee Administration offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your California sales tax. We can't say you'll want to, but you'll definitely know how :)

 

When is California sales tax due?

California Sales Tax payments are due the last day of the month following the assigned filing period.

 

What are the California sales tax thresholds?

Monthly Liability Threshold: greater than $1,200.01 average monthly tax liability

Quarterly Liability Threshold: $101.00 - $1,200.00 average monthly tax liability

Annual Liability Threshold: $0.00 - $100.00 average monthly tax liability

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point of Sale Software to see the volume of sales you have generated.

Don't worry though! The state will let you know when your due dates change. :)

Watch your mail for a letter from the State of California so that you don't miss any deadlines.

 

What if a California sales tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday.

 

How do I file a California sales tax return?

No paper returns are accepted- this is becoming a trend that we are noticing with a lot of state agencies.

 

Electronic: File on CDTFA, remit return and payment online.

Here is a short video that shows how to file your sales tax return.

 

 

 

Have multiple locations? This video thoroughly covers how to file sales tax returns with multiple locations using a limited access code.

 

 

 

This last video shows how to make a payment to the CDTFA . 

 

 

 

 

 

How do I correct an California sales tax return?

Amend your original return online and submit payment via EFT (if applicable). Yup, it’s truly that simple :]

 

What happens if I don’t collect sales tax?

If you meet the criteria for collecting sales tax (nexus in California and selling taxable goods or services to taxable residents) and choose not to or failed to collect required sales tax, you will be held responsible for the tax due. As such, it is extremely important that you set up tax collection at the point of sale. Attempting to contact customers to collect sales tax after the fact is time consuming and unlikely to be fruitful.

 

Protip: You still owe The California Department Of Tax and Fee Administration for sales taxes if you did not collect them from the buyer.

 

What happens if I file or pay my sales tax return late?

If filed late, you will be charged a Late Filing Penalty of 10% of sales tax owed.

If you pay late, you will be charged a Late Payment Penalty of 10% of sales tax owed.

If you both file and pay late, your penalty will not exceed 10% of the the amount of taxes due.

 

 

Do I need to file a return if I don’t collect any sales tax in California?

Yes, in California a tax return must be filed even if the tax due is zero. When no return is filed, the department considers that to be a "nonfiler" situation. When you don't file a return, you will receive nonfiler billing notices by mail and automatic account/license closure.

 

If I close my business, do I need to file a final sales tax return?

Yes, file a “final sales tax” return is required. Though you can save a click by following this link to form Pub74(PDF) if you do wish to see all the requirements for a final closure on a California tax entity.

 

Does The California Department Of Tax and Fee Administration offer a discount for filing on time?

Sadly, no, there is no discount for filing and paying on time. Boooo! :)

 

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Now that we covered all our bases for filing and paying sales taxes in the state of California, you should feel more at ease about the process.

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early (such as before a holiday).
  • Determine what payment plan you must follow based on how much sales tax you collect.
  • You can file and pay your taxes, and even amend a return electronically.
  • Do not forget to collect sales taxes from your buyers or to obtain a copy of their exemption certificate. If you fail to do either of these, you (not the buyer) are liable to pay the sales tax to the state of California.
  • Late fees will be applied for filing a tax return late and paying your taxes late.
  • Even if you collect no sales tax, you still need to file a return.
  • You need to file a “Final Sales Tax” when you close your business.

Now, you are ready to file and pay your sales tax in California. If you have any more questions, feel free to contact us.


 

Please note: This blog is for informational purposes only and the information is accurate as of 4/22/2019. If you want legal advice on sales tax law for your business, please contact a Sales and Use Tax professional. Keep in mind that sales tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog may be out date by the time you review it.

Last Updated: 04.22.19