San Diego Internet Sales Tax Attorney + CPA
The San Diego tax lawyers and CPAs at the Tax Law Office of David W. Klasing have over 20 years of experience providing California sales tax audit representation, business bookkeeping and accounting services, and other tax and legal services designed to simplify compliance with California’s internet sales tax regulations. These regulations were recently overhauled due to a landmark Supreme Court ruling, South Dakota v. Wayfair (2018), enabling states like California to exert more control over how online businesses file and pay sales tax. Following Wayfair, sales tax audits are sharply on the rise – and you need to ensure that your business is prepared. By working with our experienced San Diego sales tax audit attorneys, you may be able to reduce your sales tax liabilities, avoid or mitigate penalties, and identify stronger tax strategies for your business.
Are Online Sales Taxed in California?
The short answer to this question is yes: California transactions may be subject to sales tax, including transactions that are conducted online. As the California Department of Tax and Fee Administration (CDTFA) explains, “Retailers engaged in business in California must… pay the state's sales tax, which applies to all retail sales of goods and merchandise except those sales specifically exempted by law,” such as prescription drugs. Use tax is a tax on “the storage, use, or other consumption in California of goods purchased from retailers in transactions not subject to the sales tax.”
Since there is no federal sales tax, sales tax regulations are controlled by the state of California. Individual municipalities may also have their own sales tax regulations, with varying rates between counties and cities.
To reiterate, both physical and virtual storefronts are subject to sales tax rules in California. In fact, the Supreme Court recently gave states more power to enforce sales tax compliance by internet merchants – in other words, more power to ensure that businesses are properly calculating, collecting, and remitting their sales tax liabilities. Unsurprisingly, this has led to a surge in California sales tax audits among online retailers.
California Sales Tax Rules for Internet Transactions
If you sell products online in California, you may be subject to the state’s sales tax requirements, which are rigorously enforced. We can assist you with all aspects of sales tax compliance, making it easier for your business to avoid costly fines and errors.
Warning: If you ship by common carrier into California (i.e. UPS/Fed Ex etc.…), California is now routinely stopping trucks at border agricultural inspections and taking copies of the bills of lading looking for those shipping into California without collecting and remitting sales tax along with several other methods of detection.
Does Your Business Have Nexus in California?
California’s sales tax laws take effect if “nexus” is established with the state. Your business may have sales tax nexus in California if:
- The entity is “physically present” in San Diego or another city in California. This could mean you have a warehouse, a storefront, or even a sales team located in San Diego.
- The entity is a “retailer engaged in business in this state,” which, under California’s tax code, creates a “substantial nexus” with the state of California through merely economic contact with the state based on the number and dollar amount of sales into California. For this definition to apply, the entity must meet certain financial criteria, such as selling more than $100,000 in personal property to California customers or having 200 transactions with California over a yearlong period. See the Wayfair case.
Sales Tax Rates in San Diego County
Local business owners should be advised that sales tax rates vary throughout San Diego County. For instance, while the city of San Diego has a 7.750% sales tax rate, some cities within the county have a higher rate of 8.250%, including El Cajon and Vista. For a full list, refer to the CDTFA’s current California City and County Sales and Use Tax Rates table.
California Internet Sales Tax Audit Attorneys in San Diego
As noted above, sales tax audits are on the rise in California, exposing small businesses and online retailers to a heightened level of risk if noncompliance occurs – even inadvertently. For example, your business might be chosen for a sales and use tax audit due to issues such as:
- Failing to file sales tax returns
- Failing to register with the CDTFA
- Failing to timely remit sales tax to the state
- Filing delinquent sales tax returns
- Working with other companies or vendors that have been audited due to sales tax issues
No matter why your business has been targeted for auditing, it is vital that you are represented by a skilled attorney or CPA who understands the examination process, common issues in sales tax audits, and how to prepare for them effectively. In addition to practicing as a tax audit lawyer, David W. Klasing is also a former auditor with over 10 years of experience, lending our tax firm invaluable insights into how auditors build their cases – and how to fight back strategically including the possibility of a voluntary disclosure.
Note: Sales tax audits can create simultaneous Federal and California criminal income tax and sales tax exposure if the sales tax audit, often using the markup method, proves that you have unreported sales for income tax and sales tax purposes. Watch out for a sales tax audit becoming your worst nightmare.
San Diego Tax Lawyers and CPAs for Online Businesses
Small businesses and online retailers face a complex and ever-shifting regulatory landscape, where the slightest misstep could result in the imposition of severe financial penalties. But as a business owner, you simply don’t have time for researching tax technicalities. Allow our award-winning business tax attorneys to handle all of your sales tax compliance needs, so that you can devote more of your time to running your company.
For a reduced-rate consultation concerning a sales tax audit, sales and use tax planning, California tax compliance, or other sales tax issues, contact the Tax Law Office of David W. Klasing online, or call our San Diego office at (619) 780-2538. Alternately, you can reach our main office by contacting (800) 681-1295. Please note that all meetings at our San Diego tax office must be scheduled in advance.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here: