On April 25, 2019, Governor Gavin Newsom signed Assembly Bill 147 (AB-147) into law. AB-147 was originally filed as an "urgency statute" so that it would become effective immediately upon passage.
Accordingly, effective April 1, 2019, the law imposes a sales tax collection requirement on remote sellers by expanding the legal definition of "retailer" to include businesses who have total combined sales of tangible personal property for delivery in the State that exceed $500,000 in the preceding calendar year or the current calendar year regardless of the number of sales transactions. Previously, the California Department Of Tax And Fee Administration issued Special Notice L-565 in December of 2018 that, effective April 1, 2019, required retailers located outside the State to collect use tax if during the preceding or current year a retailer's sales into California exceeded $100,000 or consisted of 200 or more separate transactions.
The law also treats marketplace facilitators (e.g., Amazon, Etsy, eBay, etc.) as the seller and retailer for each sale facilitated through its marketplace and requires those who meet the $500,000 threshold to begin collecting sales tax effective October 1, 2019.
In order for a marketplace facilitator to be relieved of liability for the tax on a retail sale, the marketplace facilitator must demonstrate that it has made a reasonable effort to obtain accurate and complete information from an unrelated marketplace seller about a retail sale and failure to remit the correct amount of tax was due to incorrect or incomplete information provided by the unrelated marketplace seller.
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