Choosing Destination or Modified Origin for California Reports
You can decide whether you want to view your TaxJar Reports for California with tax collection estimates using either Modified Origin or Destination sourcing by editing the sourcing rules for the state in your State Settings.
The minimum requirement in CA is Modified-Origin.
- If you, as the Seller, choose this option, this will end up leaving some responsibility on the customer to remit a use tax in addition to the minimum sales tax you charge.
- Modified Origin sourcing means you won't be paying the state the full sales tax rate for each item you sold.
If you select Destination sourcing for CA in your State Settings, the Expected Sales Tax Due Report will show the full rate you should have collected in all zip codes when you file so your customer isn’t on the hook to submit use tax to the state.
- If you're selling via FBA, we recommend choosing Destination sourcing in your Reports because this aligns with the way Amazon collects sales taxes in California for FBA sellers.
- If you're selling via Shopify, your tax setting for California defaults to destination if you're a remote seller.
If you have a physical location in California, your tax setting defaults to Modified-Origin sourcing. You would need to update this in your Shopify tax settings in order to be fully supported by our AutoFile service.
Please note: If you have met California's economic nexus thresholds, you are required to collect the district use tax on taxable sales made for delivery in those districts that impose a district tax and should therefore choose Destination-based sourcing. (CDTFA State Guidance)