Assembly Bill 147 was authored by Assemblymember Autumn Burke, the Chair of the Assembly Committee on Revenue and Taxation, and is the California Legislature’s effort at dealing with the US Supreme Court decision in Wayfair. The bill was an urgency statute and went into effect when it was signed by Governor Newsom on April 25, 2019.
Essentially, the bill provides that starting October 1, 2019, a marketplace facilitator is considered the seller and retailer for each sale that was facilitated through its marketplace for determining whether that marketplace facilitator is required to register with California’s Department of Tax and Fee Administration, otherwise known as CDTFA, pursuant to California’s sales and use tax law.
AB 147 also provides that any marketplace facilitator that’s registered, or required to register, with CDTFA under the sales and use tax law and who facilitates a retail sale of tangible personal property, TPP, by a marketplace seller is in fact a retailer selling or making the sale of the TPP sold through its marketplace for purposes of paying any sales tax and for collecting any use tax.
The bill adds a brand-new chapter, beginning with Section 6040, to the California Revenue and Taxation Code. It also defines marketplace, marketplace facilitator, and marketplace seller and excludes a delivery network company as a marketplace facilitator for purposes of this new chapter of the Rev and Tax Code. It then goes on to define terms such as delivery network company, delivery network courier, delivery services, local merchant, and local product.
Existing law has also been amended to redefine “retailer engaged in business in this state” to essentially include any retailer that has substantial nexus with this state for purposes of the Commerce Clause of the United States Constitution and any retailer upon whom federal law permits the state of California to impose a use tax collection duty. It also further specifies retailers who are included in this definition, which, the law notes, is not meant to be exhaustive.
You can find the full transcript of today’s podcast here.