April 26, 2019
Authored by: Bryan Cave and Charles Lin
Under a new California law signed by Governor Gavin Newsom on Thursday, out-of-state online retailers that make more than $500,000 from California sales must collect sales tax from their California customers.
Although the largest online retailers already collect California sales tax, smaller retailers that sell through the sites have not paid state taxes until recently. The new law clarifies that online sales platforms must collect tax for products sold on their websites even if they come from so-called third-party retailers, but provides an exemption for out-of-state retailers that make less than $500,000 from California sales.
As we previously reported, the U.S. Supreme Court held in South Dakota v. Wayfair that states can tax purchases from out-of-state sellers. After that ruling, numerous states, including California, took steps to begin collecting sales tax from out-of-state retailers.
On April 1, California started requiring out-of-state retailers to register with the state and begin charging