There’s been considerable confusion surrounding California’s new online sales tax law (AB 155), and Cyber Monday was no exception.
Some media reports have suggested that all online sellers must now collect California sales tax. That’s a gross overstatement that creates needless confusion for both taxpayers and consumers.
Even under this new law most major out-of-state online retailers, like L.L. Bean and Overstock.com, are not required to collect sales tax as long as they don’t have a presence in California.
The new law, which became effective September 15, requires out-of-state sellers to collect tax if they make more than $1 million in annual sales to California consumers and at least $10,000 of those sales come through referrals from California-based affiliates.
Earlier this year the Board of Equalization mailed letters to more than 200 out-of-state retailers notifying them of the new law. To date, only a handful have responded by beginning to collect sales tax.
When out-of-state retailers do not collect tax, California consumers are still required to… Read More