California Sales Tax collection from out-of-state customers on California exempt transactions
The California Office of Tax Appeals has ruled that a weight loss and nutritional products retailer must remit tax collected from out-of-state customers on California exempt or nontaxable transactions. The retailer accepts customer orders through its California call center and website and ships the property to end-use consumers from a California warehouse. The retailer’s tax software was mistakenly programmed to charge a “tax amount” on all sales including sales to customers located in states where the retailer was not registered to charge or collect a sales or use tax. In California, a retailer that sells tangible personal property and charges the purchaser an amount for sales tax reimbursement on a document of sale is presumed to have collected an excess tax reimbursement. Further, when an amount constituting a reimbursement for taxes is computed upon an amount that is not taxable or is in excess of the taxable amount and is actually paid by the customer, the amount paid must be refunded to the customer or remitted to the California Department of Tax and Fee Administration (CDTFA). Here, the retailer is liable for the erroneous collection of sales tax reimbursement in jurisdictions in which the retailer is not registered or authorized to collect sales or use tax. Also, the retailer completed its performance with respect to delivery of the property in California upon delivery to a common carrier; holds a California seller’s permit; and did not refund its customers. Therefore, the evidence shows that the tax amount collected is an excess sales tax reimbursement that must be remitted to the CDTFA. (In the Matter of the Appeal of Body Wise International, LLC, Cal. Office of Tax Appeals, 2022-OTA-340P, 08/11/2022 (Precedential) (released November 2022).)
California Sales Tax collection from out-of-state customers on California exempt transactions
