California

California

Standard rate: 

7.25% – 10.25%

Reduced rate:

5%

Sales tax-free products and services:

Food; Health Related; Housing (Gas, electricity, water, steam, telephone lines, and poles).

Who must register sales tax:

If you are selling in California, have an economic nexus to California, your buyers are required to pay sales tax and you meet the $500,000 threshold in the preceding or current calendar year, you must register to collect and pay sales tax in California

Threshold:

Starting October 1, 2019, out-of-state dealers with economic presence or nexus in California must register to collect sales tax. This includes online retailers or remote sellers that meet the $500,000 threshold in the preceding or current calendar year, including all sales facilitated through a marketplace facilitator’s marketplace as defined above.

Merchant thresholds by state

Marketplace thresholds by state

The special rules are applicable for the SAAS business.

Software as Service Tax Thresholds by state

Online Marketplaces:

If all of your sales in California are through a marketplace reseller platform, you can not register for paying California sales tax. Your marketplace facilitator pays the sales tax itself.

If you are selling through your own website, then you will need to register for paying sales tax if you meet the $500,000 threshold in the preceding or current calendar year. This includes all sales facilitated through a marketplace facilitator’s marketplace as defined above.

Registration procedure:

You can register online through the California Department of Tax and Fee Administration.

Sales tax payment and filing date: 

Based on your tax liability, determine your filing frequency – either, quarterly, quarterly prepaid or annual (Fiscal annual):

Annual or Fiscal Annual – $0 to $100
Quarterly – $101.00 to $1200.00
Quarterly Prepaid – $1,200.01 and up

Returns are due the last day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is due the next day.

Some high-volume dealers file on a quarterly basis, but make monthly sales tax prepayments. If this applies to you, you will have monthly prepayments due the 24th of the month following every month in which you do not have a sales tax filing and payment due.

Penalty and interest:

  • Late Filing Penalty – 10% of sales tax incurred
  • Late Payment Penalty – 10% of sales tax incurred