California General Sales Tax Information:
| State Taxing Authority: | California Department of Tax and Fee Administration (CDTFA) |
| Contact Phone Number: | 1-800-400-7115 |
| Audit Risk: | CDTFA audits approximately one percent (1%) of active accounts each year, concentrating on those most likely to be inaccurate in their tax reporting. |
| Tax Rate Lookup: | Sales and Use Tax Rate by Address |
Sales Tax Registration Information for California
Businesses that have a physical presence in California need to register for a sales tax permit with the California Department of Tax and Fee Administration (CDTFA). Additionally, sellers that do not have a physical presence but meet the economic nexus threshold of $500,000 must collect and remit sales tax. Businesses that cross California’s economic nexus threshold must register for a sales tax permit on the date that the threshold was crossed.
- What's California's Economic Nexus Law for Out-of-State Businesses?
- Do You Need to Get a Sales Tax Permit in California?
- How to Register for a Sales Tax Permit in California?
Businesses can register for a permit online through the CDTFA website. The registration process requires basic business information, such as the type of business, ownership information, and estimated monthly sales.
What Products are Subject to Sales Tax in California?
Retail sales of tangible personal property are taxable except those sales specifically exempted by law. Tangible personal property is defined as items that can be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses. Some items that are exempt from sales and use tax include certain food products for human consumption and prescription medications.
Is Clothing Taxable in California?
Yes, clothing is taxable in California. Clothing is considered tangible personal property and is fully taxable.
Is CBD Taxable in California?
Yes, CBD is generally taxable in California unless the law provides a specific exemption. CBD is not only subject to sales and use tax. It is also subject to the local cannabis business tax where applicable and the Cannabis excise tax. For more information, visit the CDTFA Tax Facts for Cannabis Businesses.
Are Dietary Supplements Taxable in California?
Yes, dietary supplements are taxable in California. Dietary supplements are excluded from food products that are generally exempt from sales tax. "Food products" do not include any product for human consumption in liquid, powdered, granular, tablet, capsule, lozenge, or pill form (A) which is described on its package or label as a food supplement, food adjunct, dietary supplement, or dietary adjunct, and to any such product (B) which is prescribed or designed to remedy specific dietary deficiencies or to increase or decrease generally one or more of the following areas of human nutrition: vitamins, proteins, minerals, or caloric intake. (Regulation 1602. Food products)
Are Digital Products Taxable in California?
Digital products are generally taxable in California. Digital products do not meet the definition of tangible personal property as the property cannot be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses. (General Provisions and Definitions - Section 6016)
Are Diapers Taxable in California?
No, children’s diapers are exempt from sales tax in California effective January 1, 2020. (General Exemptions - Section 6363.9)
Are Feminine Hygiene Products Taxable in California?
No, menstrual hygiene products are exempt from sales tax in California effective January 1, 2020. (General Exemptions - Section 6363.10)
Is Food Taxable in California?
Sales of food products are generally exempt from sales tax in California. There are some items that are not considered food products and are taxable. Read more about the taxability of food products in Regulation 1602 - Food Products.
Are Leases and Rentals Taxable in California?
Leases and rentals are generally taxable in California. There are very specific details surrounding the intricacies of leases and rentals that can be read in the CDTFA Leasing Tangible Personal Property publication. You can read a short summary of this publication in the Which States Charge Sales Tax on Rentals and Leases? blog.
Is SaaS Taxable in California?
Software-as-a-Service (SaaS) is generally exempt from sales tax in California. SaaS typically does not meet the definition of tangible personal property as the property cannot be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses per the General Provisions and Definitions - Section 6016. There are some instances where software is considered taxable. CADTFA outlines the taxability of Computers, Programs, and Data Processing in Regulation 1502.Are Services Taxable in California?
Services are generally exempt from sales tax in California. Per the CDTFA Sales and Use Taxes: Tax Expenditures Publication (pg. 26), “the sale of services where no tangible personal property is transferred or where the transfer of property is incidental, are not subject to sales and use taxes.”
Are Shipping & Handling Charges Taxable in California?
Yes, shipping and handling charges are taxable in the state of California. (Regulation 1628. Transportation Charges)
Are Medical Products Taxable in California?
Medical products are generally taxable as they are considered tangible personal property. However, tax does not apply to the sale or use of medication or medical devices when prescribed by or furnished by a licensed physician. Regulation 1591. Medicines and Medical Devices outlines the specific kinds of property and their general exemptions.
Sales Tax Audit Risk in California
What Are the Chances of an Audit in California for Sales Tax?
The Audit Program of CDTFA audits approximately 1% of active accounts each year, concentrating on those most likely to be inaccurate in their tax reporting. The 2021-22 fiscal year audits resulted in $477.3 million in assessments. The top areas of noncompliances were improperly reported sales, unreported sales, and unreported use tax. Read more about sales and use tax audits in the 2021-22 CDTFA Annual Report.
What Are the Penalties of Not Paying Sales Tax in California?
Failing to file and remit sales tax can result in various consequences. The CDTFA will send a Notice of Determination (bill) indicating the amount the business owes, including penalties and interest. According to the CDTFA Interest, Penalties, and Collection Cost Recovery Fee publication, The penalty for failure to file a return is 10% of the tax amount that is due for each bill. An additional 25% penalty applies if the failure to file was due to fraud or intent to evade the tax, and you may be subject to criminal prosecution.
Additional Sales Tax News in California
Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.
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