Beware: California retailers may be required to collect district taxes if they sell more than $100,000 in tangible personal property or have 200 transactions in a district.
Here’s an example:
Shelly’s Seashells sells shell-encrusted candles, which she ships by mail for her company in Laguna Beach, California. If she ships candles to customers in Laguna Beach, she pays the Orange County sales tax rate of 7.75%. However, under the CDTFA’s current practice, if she ships the candles by common carrier to a customer in San Francisco, she is only required to charge the statewide rate of 7.25%.
As a result of the CDTFA’s interpretation of the Wayfair decision, in the future, if she made sales to San Francisco customers over the threshold amount, she could be required to charge the customer the San Francisco rate of 8.50%. If the CDTFA implements this new policy, Shelly’s will be required to track all their sales throughout California to determine how many sales (in terms of total number and total revenue) are made to each district and what different district tax rates will apply.