California Sales Tax Filing Update September 2019: Marketplace Facilitator Laws
California passed a law requiring Marketplaces to collect and remit sales tax on sales facilitated through the marketplace effective October 1, 2019.
• Amazon, eBay, Etsy and Walmart began this collection on October 1, 2019.
Please review general information regarding Marketplace Facilitators and how your TaxJar Sales Tax Reports support these changes here in our FAQ.
In this article, we summarize California's state guidance on the following questions:
- Do I need to register for a sales tax license in California?
- Should I cancel my existing registration if all my sales are marketplace-collected?
- Do I need to collect sales tax on California sales on non-marketplace platforms?
- Do I still need to file returns in California?
- How do I file without paying double tax on the sales that were collected and remitted by my Marketplace?
I've never registered for a California license. Do I need to register for a sales tax license in California now?
If you are engaged in business in this state under Revenue and Taxation Code section 6203 and you have a sufficient physical presence in California or economic nexus with California, then you will need to register for a sales tax license.
- Please note, if you’re out of state and your only physical presence in the state is inventory in the marketplace facilitator warehouse and all of your sales are through the facilitator then registration is not required.
- If you do not have a physical presence in California, and as a remote seller exceed $500,000 in gross sales to California including marketplace sales, you are required to register.
- If you've imported your sales across all platforms into your TaxJar account, you can determine if you have economic nexus in the state by running the Sales & Transactions Checker.
- If you do not meet any of the criteria that creates nexus in California, you won't need to register for a sales tax license in this state.
I have already registered for a license in California and all of my sales are Marketplace-only sales. Should I cancel my existing registration?
If your only sales are marketplace sales, then registration may not be necessary.
It is up to the taxpayer if the account should be closed. Please contact CA Department of Tax and Fee Administration directly for further assistance.
- We always recommend checking directly with the state or a sales tax consultant who can provide more detailed advice specific to your business scenario prior to canceling your registration.
Do I need to collect taxes on my California sales on other platforms?
Yes--if you have nexus in the state (physical or economic) and you make sales to customers in California on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the California orders that are processed on the other platforms.
Do I still need to file returns in California?
Yes--once you register for a license, you will be required to file a return based on the frequency the state has assigned you.
- If you've previously registered, the state expects you to remain registered and continue to file returns including zero returns.
I still need to file returns in California. How do I do this without paying double tax on the sales that were collected and remitted by my Marketplace?
When you file, you will include the Marketplace sales in the total gross sales.
- Then, enter the Marketplace sales as "other deductions" using the "other" selection.
- Finally, enter the description "Sales through marketplace facilitator":
If you make sales on other platforms in addition to the Marketplace, you'll need to make sure you remit the tax you collected for those sales when you file.
- If you have both marketplace and non-marketplace sales, our Report will show the jurisdictional breakdown for only the non-marketplace sales.
- If you're enrolled in AutoFile for California, our system will handle the Marketplace sales deduction process automatically.