It’s official. The Governor has signed AB 147, which increases California’s use tax economic nexus threshold to $500,000 of sales of tangible personal property in California, effective April 1, 2019.
The CDTFA previously announced that it would begin enforcing the Wayfair economic nexus threshold of $100,000 of sales or 200 transactions, effective April 1, 2019, but AB 147 supersedes the CDTFA’s threshold.
AB 147 brings welcome relief to some small California businesses because:
- The $500,000 threshold means that a greater number of small businesses are not required to comply with increased district tax collection and reporting requirements (unless, of course, they have physical nexus in the district);
- It does not contain a transactional threshold, so sellers without physical nexus in a district can make an unlimited number of sales without having to collect district taxes as long as its total California sales are below $500,001; and
- It shifts much of the collection requirements to marketplace facilitators such as Amazon.
To view the full text of the bill, go to: