California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 17 - Payment and Collection of Use Tax › Section 1684 - Collection of Use Tax by Retailers. [Effective 9-15-2012]

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  Collection of Use Tax by Retailers Engaged in Business in this State. Retailers
				  engaged in business in this state as defined in section
				  6203
				  of the Revenue and Taxation Code and making sales of tangible personal
				  property, the storage, use, or other consumption of which is subject to the use
				  tax must register with the Department and, at the time of making the sales, or,
				  if the storage, use or other consumption of the tangible personal property is
				  not then taxable, at the time it becomes taxable, collect the use tax from the
				  purchaser and give the purchaser a receipt therefor.
(b) Definitions and Rebuttable Presumption.
(1) On and after September 15, 2012, a
				  retailer is engaged in business in this state as defined in section
				  6203
				  of the Revenue and Taxation Code if the retailer has a substantial nexus with
				  this state for purposes of the Commerce Clause (art. I, §
											8, cl. 3) of the United States
				  Constitution or federal law otherwise permits this state to impose a use tax
				  collection duty on the retailer. Retailers engaged in business in this state
				  include, but are not limited to, retailers described in subdivision (b)(4), on
				  and after April 1, 2019, retailers described in subdivision (c)(1), on and
				  after September 15, 2012, and retailers described in subdivision (c)(2) and
				  (3), from September 15, 2012, through March 31, 2019.
(2) Except as otherwise provided in this
				  regulation, on and after September 15, 2012, there is a presumption that a
				  retailer is engaged in business in this state as defined in section
				  6203
				  of the Revenue and Taxation Code if the retailer has any physical presence in
				  California. A retailer may rebut the presumption if the retailer can
				  substantiate that its physical presence is so slight that the United States
				  Constitution prohibits this state from imposing a use tax collection duty on
				  the retailer.
(3) A retailer does
				  not have a physical presence in California solely because the retailer engages
				  in interstate communications with customers in California via common carrier,
				  the United States mail, or interstate telecommunication, including, but not
				  limited to, interstate telephone calls and emails. The rebuttable presumption
				  in subdivision (b)(2) does not apply to a retailer that does not have a
				  physical presence in California.
(4) On and after April 1, 2019, a retailer is
				  engaged in business in this state as defined in section
				  6203
				  of the Revenue and Taxation Code if the total combined sales of tangible
				  personal property for delivery in California by the retailer and all persons
				  related to the retailer exceed five hundred thousand dollars ($500,000) in the
				  preceding or current calendar year. For purposes of this subdivision, a person
				  is related to another person if both persons are related to each other pursuant
				  to Internal Revenue Code section
				  267(b) and the
				  regulations thereunder.
(A) If the total
				  combined sales of tangible personal property for delivery in California by a
				  retailer and all persons related to the retailer exceeded five hundred thousand
				  dollars ($500,000) during calendar year 2018, or the first quarter of calendar
				  year 2019, then the retailer is required to be registered with the Department
				  and is required to begin collecting use tax on April 1, 2019.
Example 1: Retailer A has no physical presence in
					 California, and uses its own website to sell goods at retail. Retailer A's
					 gross revenue from sales of goods for delivery in California during calendar
					 year 2018 e ceeded $500,000. Therefore, on April 1, 2019, retailer A is a
					 retailer engaged in business in this state. Retailer A is required to be
					 registered with the Department on April 1, 2019, and is required to collect use
					 tax on its retail sales to California customers on and after April 1,
					 2019.
Example 2: Retailer B has no physical presence in
					 California, and uses its own website to sell goods at retail. Retailer B's
					 gross revenue from sales of goods for delivery in California did not exceed
					 $500,000 during calendar year 2018, but did exceed $500,000 during the period
					 from January 1, 2019 through March 31, 2019. Therefore, on April 1, 2019,
					 Retailer B is a retailer engaged in business in this state. Retailer B is
					 required to be registered with the Department on April 1, 2019, and is required
					 to collect use tax on its retail sales to California customers on and after
					 April 1, 2019.
(B) If the
				  total combined sales of tangible personal property for delivery in California
				  by a retailer and all persons related to the retailer exceeded five hundred
				  thousand dollars ($500,000) during calendar year 2019, but after March 31,
				  2019, or during any subsequent calendar year, the retailer is required to
				  register with the Department and begin collecting use tax immediately after the
				  sale was made that exceeded the five hundred thousand dollar ($500,000)
				  threshold.
Example: Retailer C has no physical presence in California
					 and uses its own website to sell goods at retail. Retailer C's gross revenue
					 from sales for delivery in California was less than $500,000 during calendar
					 year 2018 and during the period from January 1 through March 31, 2019.
					 Therefore, on April 1, 2019, Retailer C was not a retailer engaged in business
					 in this state and was not required to be registered with the Department or to
					 collect use tax. However, on August 1, 2019, Retailer C made a retail sale of
					 jewelry for $900 that brought its total sales for delivery into California to
					 $500,400 for calendar year 2019. Therefore, Retailer C is a retailer engaged in
					 business in this state immediately after the sale and is required to register
					 with the Department and begin collecting use tax on its retail sales to
					 California customers made after the $900 sale of jewelry on August 1,
					 2019.