Remote Tax Bill Receives Support from the California Senate

The California Senate last week voted 36-0 to approve the A.B. 147 legislation that would supersede a California regulate for remote sellers that took effect last week. This new bill, A.B. 147 establishes a $500,000 threshold for remote collection and remittance of sales and use tax and also includes a marketplace provision. The marketplace provision, which affects platform companies like Amazon and eBay, would force the platform companies to collect and remit tax on behalf of vendors that sell on their platforms. This new provision would take effect on October 1, 2019. The bill is expected to have minor revisions before heading to Gov. Gavin Newsom shortly. And this legislation is tagged as an emergency so that it can take effect immediately upon enactment. This newest legislation by California is in response to the US Supreme Court’s landmark decision in the South Dakota v. Wayfair case. That decision eliminated the physical presence requirement for mandated collection and remittance of sales and use tax. Many other states were quick to pass legislation after the landmark decision last June. Last December, the California Department of Tax and Fee Administration (“CDTFA”) issued a notice regarding the Wayfair decision. The department notice said that existing California law gave the department the authority to impose sales and use tax collection on out of state sellers. The department also said it would adopt the same thresholds as South Dakota that were affirmed by the high court.