New California District Tax Collection Requirements

Following the U.S. Supreme Court decision in South Dakota v. Wayfair, Inc., the California Department of Tax and Fee Administration (CDTFA) announced requirements for both in-state and out-of-state retailers to begin collecting voter-approved sales and use taxes imposed by cities, counties and other local jurisdictions if during the preceding or current calendar year the retailer’s sales into the district exceed $100,000 or the retailer made sales into the district in 200 or more separate transactions. In an attempt to simplify the rule, Governor Newsom signed legislation last week changing the requirement so that all retailers must collect local district taxes if their sales in the state exceeded $500,000 annually. The revised rule also struck the 200 separate transactions requirement.

Effective April 1, 2019, this legislation means if a winery’s sales in the state exceeds $500,000, the winery will be required to collect and remit to CDTFA the local jurisdiction’s sales and use tax for all of the cities, counties and other local jurisdictions the winery sells into. This new rule does not change the collection requirements for retailers that were already required to collect a local sales and use tax. Members are advised to work with their tax accountants to ensure they are collecting the appropriate taxes. For more information see CDFTA’s special notice and contact Wine Institute Staff with any questions.

The May 2 News Briefs asserted that the $500,000 threshold applied to sales in the specific local taxing district. This correction clarifies that the sales threshold in fact applies to all sales within the state.