Awards & Recognition
At the Tax Law Office of David W. Klasing, we are Los Angeles online sales tax attorneys and CPAs with more than 20 years of experience helping business owners navigate the complex requirements around internet sales tax in California. We understand how landmark court rulings like South Dakota v. Wayfair, Inc. (2018) are changing the regulatory landscape for online merchants and apply our unparalleled tax knowledge to help your business comply with the law and avoid penalties. We also provide aggressive sales tax audit representation for businesses in Los Angeles. Contact us online to discuss your sales tax needs in a confidential, reduced-rate consultation, or call our Los Angeles tax office at (310) 492-5583 today.
Is There a Tax on Internet Sales?
A sales tax is a tax imposed on the sale of products. Because there is no generalized federal sales tax, each state follows its own unique system of regulations, which can create confusion for taxpayers. To make matters more complicated, individual counties or cities can also impose their own rules. For example, though both are located in Los Angeles County, the cities of San Fernando and Santa Monica have different sales and use tax rates.
Sales tax applies not only to goods that are sold in person at brick-and-mortar stores, but also to products that are sold online through websites like Amazon, eBay, Etsy, Apple.com, Walmart.com, Wayfair.com, and other internet retailers. In June 2018, the United States Supreme Court issued a landmark 5-4 ruling, South Dakota v. Wayfair, Inc., reversing long-held precedents, set by Quill Corporation v. North Dakota (1992) and National Bellas Hess v. Illinois (1967), which had effectively shielded online retailers, like Wayfair, from the duty to calculate, collect, and pay sales tax.
As a result of the Wayfair ruling, online retailers of all sizes – from vast corporations, to individuals who occasionally sell handmade crafts online – may now be required, subject to each state’s laws, to collect sales tax on internet sales. While many of the larger e-commerce retailers, such as Amazon, were already subject to special sales tax regulations prior to Wayfair, the ruling will likely prove burdensome for smaller merchants. With the U.S. Census Bureau reporting that e-commerce sales represented nearly 10% of total retail sales during the third quarter of 2018, it is clear that the Wayfair decision affects countless men and women who sell products online to purchasers in California.
California Sales Tax Requirements for Online Transactions
As stated above, every state follows different sales tax rules for internet transactions. If you are an online seller, you must therefore familiarize yourself with California’s intricate sales tax regulations.
What Establishes Nexus in California?
The first step is simply to determine whether you are subject to California sales tax laws, which may apply if:
- Your business is physically present in Los Angeles, or elsewhere in California. That could mean you have office buildings, warehouses, retail shops, or other locations in California.
- Your business, regardless of its location or headquarters, has a “nexus” or “economic nexus” with the state of California. A seller with a “substantial nexus” is considered to be a “retailer engaged in business in this state” under Section 6203(c) of the California Revenue and Taxation Code. A seller fits this criteria if, among other factors, the merchant’s total sales of “tangible personal property” to California buyers exceed $10,000 during a 12-month period.
Los Angeles Sales Tax Rates
Online sellers must take care to remember that sales tax rates can vary – not only from state to state, but also among different counties and cities. Moreover, California sales tax rates can change from year to year, making it essential for merchants to periodically revisit the regulations. As of October 1, 2018, the California sales and use tax rates are as follows in Los Angeles County:
- Avalon – 10%
- Commerce – 10%
- Compton – 10.25%
- Culver City – 10%
- Downey – 10%
- El Monte – 10%
- Hawthorne – 10.25%
- Huntington Park – 10.25%
- Inglewood – 10%
- Long Beach – 10.25%
- Los Angeles (County) – 9.5%
- Lynwood – 10.25%
- Pico Rivera – 10.25%
- San Fernando – 10%
- Santa Monica – 10.25%
- South El Monte – 10%
- South Gate – 10.25%
California Sales Tax Audit Attorneys in Los Angeles
Sales and use tax is collected by the California Department of Tax and Fee Administration (CDTFA). If the CDTFA detects financial anomalies, missing records, or other apparent errors or omissions, the business will likely be chosen for a sales tax audit. As is true of IRS audits, there are numerous triggers for CDTFA sales tax audits. Factors that may cause your small business or online business to be chosen for an internet sales tax audit in California include, but are not limited to:
- Failing to collect sales tax
- Failing to file tax returns
- Failing to register with the CDTFA or obtain a seller’s permit
- Failing to remit the sales tax collected
- Filing delinquent tax returns
Our Los Angeles sales tax audit lawyers represent business owners in CDTFA audits, including providing appeals representation. We work with small, midsize, and large organizations to negotiate aggressively with the CDTFA, including S corporations, C corporations, limited liability companies (LLCs), partnerships, and sole proprietorships.
Los Angeles Internet Sales Tax Lawyer and CPA for Online Retailers
Online transactions can trigger sales tax requirements for e-commerce businesses and internet retailers. If you sell products online in California, or if you sell products to California residents, you may be required to collect and remit sales tax, depending on whether you have a physical presence in or economic nexus with the state. With decades of experience in all areas of business and corporate tax law, the knowledgeable sales tax lawyers at the Tax Law Office of David W. Klasing can help you determine and fulfill your responsibilities as a business owner or online retailer. To arrange a reduced-rate consultation, call our Los Angeles tax office at (310) 492-5583, or contact our tax firm online to get started.
