CDTFA Planning to Move Ahead with Wayfair Implementation

In an informational meeting held on October 24, CDTFA made clear its plan to move forward with the implementation of the Wayfair v. South Dakota Supreme Court decision without input from the California Legislature.
Several issues may arise out of the CDTFA’s premature response to Wayfair, including the Legislature’s most likely decision to weigh in on the Wayfair thresholds for out-of-state businesses to collect and remit tax (set at $100k in sales or 200 or more transactions). The specific concern for businesses is that CDTFA will implement the Wayfair threshold, businesses will buy software and try to comply with that threshold, and then in 2019 the legislature will change the threshold. While any new threshold could be better for businesses, it would nonetheless be very difficult and costly for them to then change their software to adjust to a new threshold.
Additionally, CDTFA indicates they plan to apply these new sales tax rules to in-state sellers as well! This aspect of implementation could catch a lot of your clients by surprise, as they may not have been charging California’s different district rates appropriate to the customer’s location. While companies like Amazon have already been assisting sellers in collecting the correct taxes, it is possible that others who self-report haven’t had the same information.
According to Jennifer Tannehill of Aaron Reed & Associates, “CDTFA will be accepting written comments emailed to until November 7, and this is likely the only opportunity to weigh in. CDTFA will not be following the normal Administrative Procedures Act (APA) regulatory processes to implement the Wayfair changes. Instead, CDTFA will simply issue an announcement when they decide what the new rules will be."
We will keep our Members apprised of details as they become available.