California Proposes A Nexus Presumption Standard and Burdensome Notification Requirements!
A California Assembly Bill (AB 2078) has been introduced that would enact a sales tax nexus presumption standard, and burdensome notification requirements on retailers that sell into California, but are not required to collect sales tax. Sound familiar?This proposal is very similar to what Colorado recently enacted. See COLORADO for details on Colorado's new laws which took effect March 1, 2010.
The following is a brief summary of what the bill proposes:
- This bill would provide a rebuttable presumption that any retailer that is part of a controlled group of corporations, and that controlled group of corporations has a component member that is a retailer engaged in business in this state, as described, is presumed to be a retailer engaged in business in this state.
- This bill would also require each retailer that is not required to collect use tax to provide notification on its retail Internet Web site or catalogue that tax is imposed on the storage, use, or other consumption in this state of the tangible personal property purchased from the retailer that is not exempt, and is required to be paid by the purchaser, as provided.
- This bill would add the following language or authority: The Sales and Use Tax Law also authorizes, in administration of the use tax, the State Board of Equalization to require the filing of reports by any person or class of persons having in his or their possession or custody information relating to sales of tangible personal property the storage, use, or other consumption of which is subject to the tax.
- This bill would require every person who sells tangible personal property the storage, use, or other consumption of which is subject to use tax, who is not registered with the board, to file with the board, on or before the last day of the calendar month following each quarterly period of three months, a report that sets forth the names and addresses of purchasers of the tangible personal property, the sales price of the property, the date of sale, and such other information as the board may require. The bill states this requirement would NOT apply to a person whose receipts from sales described above are less than one hundred thousand dollars ($100,000) in the prior year, and are reasonably expected to be less than one hundred thousand dollars ($100,000) in the current year.
This bill has only been proposed and is going through the California legislative process. With that said, since Colorado recently passed laws that are very similar, I could see this bill moving forward and getting signed into law. However, we could also see lawsuits filed against Colorado's laws which may alter the California bill.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at firstname.lastname@example.org.
Because state and local taxes are deceptively simple and endlessly complicated.