Implementation of New Requirements for Certain Out-of-State Retailers to Register and Collect Use Tax Has Been Postponed by Assembly Bill 155 (AB 155) – Frequently Asked Questions
Assembly Bill x1 28 (ABx1 28) was enacted on June 28, 2011, and expanded the types of out-of-state retailers that are required to register with the Board of Equalization (BOE) to collect and remit California use tax on their sales of tangible personal property to California customers. On September 23, 2011, Assembly Bill 155 (AB 155) was signed into law and: (1) retroactively repealed the expanded registration requirements of ABx1 28; (2) reenacted the expanded registration requirements of ABx1 28 (with one change); and (3) postponed the implementation (or operative date) of the expanded registration requirements until either September 15, 2012, or January 1, 2013, depending on the status of federal and state legislation.
- What did Assembly Bill 155 (AB 155) do?
- What did Assembly Bill x1 28 (ABx1 28) do ?
- How do the provisions of AB 155, which reenact the provisions of ABx1 28, differ from ABx1 28's provisions?
- When will the operative date of AB 155 be known?
- If I am currently registered with California to collect use tax, do I have to continue collecting use tax?
- Can I close out my certificate if I registered to collect use tax before ABx1 28 was repealed by AB 155?
- What are the current registration requirements for out-of-state retailers making sales to California customers until the new requirements reenacted by AB 155 become operative on September 15, 2012, or January 1, 2013?
- How does a business register to collect use tax?
- Where can I go for more information?
1. What did Assembly Bill 155 (AB 155) do?
AB 155 retroactively repealed the amendments made to section 6203 of the Revenue and Taxation Code by ABx1 28 and restored section 6203 to the way it read on June 27, 2011.
AB 155 also reenacted the provisions of ABx1 28 that amended section 6203 (with one additional change discussed below), but provided that the reenacted provisions will not become operative until either September 15, 2012, or January 1, 2013, depending on the status of federal and state legislation.
2. What did Assembly Bill x1 28 (ABx1 28) do?
ABx1 28, which was enacted on June 28, 2011, but was retroactively repealed by AB 155, expanded the use tax registration requirements so that they apply to some out-of-state retailers, including Internet retailers, that were previously not required to register with the BOE to collect and remit use tax on their sales to California customers.
Among other things, ABx1 28 provided that a retailer is considered engaged in business in California and required to register with the BOE to collect and remit use tax if the retailer has a specified agreement or agreements with a California affiliate or affiliates and the retailer, within the preceding 12 months, has: (1) total cumulative sales of tangible personal property to customers in California that were referred to the retailer under the terms of its affiliate agreements in excess of ten thousand dollars ($10,000); and (2) total cumulative sales of tangible personal property to customers in California in excess of $500,000.
3. How do the provisions of AB 155, which reenact the provisions of ABx1 28, differ from ABx1 28's provisions?
AB 155 not only postponed the operative date of the expanded registration requirements of ABx1 28, AB 155 also increased the second total cumulative sales threshold amount (discussed above) from $500,000 to $1,000,000. This is the only change made to the provisions of ABx1 28 that were reenacted by the passage of AB 155.
4. When will the operative date of AB 155 be known?
If a federal law is not enacted on or before July 31, 2012, authorizing the states to require a retailer to collect use taxes on sales of goods to in-state purchasers without regard to the location of the retailer, then the provisions of AB 155 that reenacted the provisions of ABx1 28 will become operative September 15, 2012. If such federal law is enacted on or before July 31, 2012, and California does not elect to implement that law on or before September 14, 2012, then the provisions of AB 155 that reenacted the provisions of ABx1 28 will become operative January 1, 2013.
5. If I am currently registered with California to collect use tax, do I have to continue collecting use tax?
If you currently hold a California Certificate of Registration—Use Tax, you are required to continue collecting use tax from your California customers and remitting the tax to the BOE until you are no longer engaged in business in California, as defined in Revenue and Taxation Code section 6203, and you request that the BOE close out your certificate.
6. Can I close out my certificate if I registered to collect use tax before ABx1 28 was repealed by AB 155?
If you are not engaged in business in California as defined in Revenue and Taxation Code section 6203 as it read on June 27, 2011, then you may request that the BOE close out your certificate.
7. What are the current registration requirements for out-of-state retailers making sales to California customers until the new requirements reenacted by AB 155 become operative on September 15, 2012, or January 1, 2013?
The registration requirements remain the same as they were on June 27, 2011 (prior to June 28, 2011, when ABx1 28 was enacted). If you were required to be registered to collect use tax on June 27, 2011, and there has been no change in your connections to California, then there has been and there will be no change in your registration and reporting obligations as a result of recent legislative activity.
Currently, Section 6203 of the Revenue and Taxation Code provides that an out-of-state retailer making sales of tangible personal property to California customers is engaged in business in California and required to register with the BOE to collect California use tax if:
- The retailer is maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business in California;
- The retailer has any representative, agent, salesperson, canvasser, independent contractor, or solicitor operating in California under the authority of the retailer or its subsidiary for the purpose of selling, delivering, installing, assembling, or the taking of orders for any tangible personal property; or
- The retailer derives rentals from a lease of tangible personal property in California.
8. How does a business register to collect use tax?
Business entities (partnership, corporations, etc.) and sole proprietors who are required to register to collect use tax should apply for a California Certificate of Registration – Use Tax using BOE-400-CSC, California Certificate of Registration – Use Tax. There is no charge for obtaining a California Certificate of Registration – Use Tax.
9. Where can I go for more information?
For more information regarding the use tax registration requirements see California Use Tax Information. For more information regarding AB 155 and ABx1 28 see our Special Notice, Implementation of New Requirements for Certain Out of State Retailers to Collect Tax Has Been Postponed, dated October 2011, or you may call our Taxpayer Information Section at 800-400-7115 (TTY:711), Monday through Friday 8:00 a.m. to 5:00 p.m., Pacific time, excluding state holidays.