AB 147 Implements Wayfair and Improves Tax Collection
March 14, 2019
The court’s decision in South Dakota v. Wayfair, Inc. opened new pathways for California to collect use tax, specifically the ability to impose new requirements on out-of-state retailers with no physical presence in the state. This is important to counties and other local government agencies because use tax revenues fund a wide variety of both local and state services, including public safety, transportation, health, and human services.
AB 147, by Assembly Member Autumn Burke, would change the state’s tax collection rules to exercise the authority granted by the U.S. Supreme Court’s decision. The bill includes provisions to both collect taxes from those who owe it and ease the transition for retailers and marketplace facilitators.
Most notably, AB 147 would require online marketplaces to collect use tax on behalf of their third-party retailers, eliminate the requirement for retailers to track sales in each tax district, and increase the sales threshold that triggers collection requirements. This is a thoughtful approach that recognizes the structure of the modern marketplace and successfully balances the competing priorities of government and retailers.
The bill includes an urgency clause because the California Department of Tax and Fee Administration is set to begin enforcing current law on April 1. Quick passage of AB 147 will prevent confusion and provide certainty for everyone involved.
AB 147 passed the Assembly Appropriations Committee last Wednesday and could be taken up on the Assembly floor as early as today.