California May Be Coming for You

[GURPS]

The newly created California Department of Tax and Fee Administration (CDTFA) has been sending collection letters to small businesses that sell products via online retail platforms such as Fulfillment by Amazon. The agency claims that such third-party sellers owe eight years of back taxes because they are considered to have a physical presence in the Golden State. The agency threatens tens of thousands of dollars in fines and imprisonment of up to three years.

It’s a frightening proposition. As California Treasurer Fiona Ma noted in a recent letter to Gov. Gavin Newsom, she’s heard from a Washington state third-party seller who is “distraught and frightened” after receiving a letter from California telling her that she’s “facing tens of thousands of dollars in back taxes, penalties and interest” — something that “will force us out of business and into bankruptcy.” The seller has complied with California tax rules and signed up for a California business license, but now our state wants uncollected sales taxes going back eight years.

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How can a Washington business potentially be forced into bankruptcy by Sacramento taxing authorities?
Well, the entire online tax-collection issue is complicated and unresolved. In 2018, the U.S. Supreme Court ruled in the South Dakota v. Wayfair decision that states can collect sales taxes from online businesses even if they do not have a physical presence in the state, and California (like many other states) begin collecting those this week. But California isn’t content collecting such taxes from that date going forward. It wants to get every cent it can from businesses going back years before that.


https://spectator.org/california-may-be-coming-for-you/


you can always tell how badly a city / county / state is being run, by how aggressive their tax offices are ...

[poorly as in there is never enough MONEY to give away in social programs]

 

[This_person]

Makes me wonder what authority they have to go into those businesses' states and charge them. Certainly they can claim that taxes need to be collected, but what can they do - can they extradite them from those states to bring them into CA courtrooms? Will a Delaware court try to get fees and fines for California?

What enforcement do they really have?

 

[GURPS]

what authority they have to go into those businesses' states and charge them.

the type of business talked about in the article is 'drop' ship business .... they do not actually 'stock' the merch sold locally, that Merch is stored / warehoused by amazon ... Cali-FU is claiming since this stock was retained in an Amazon Warehouse in CA somewhere, this entity based in Washington State had a 'foot print' in Cali and is thereby required to pay taxes in Cali as if they had a store front on Hollywood Blvd.

it seems to me Cali could double dip on taxes for the same 'stock' of Merch held by Amazon but in fact sold by multiple entities nationwide

 

[GURPS]

In other words, California is saying that businesses in Washington, Mississippi, and elsewhere actually had a presence in California because — unbeknownst to them — the Amazon fulfillment service may have stored their product in a warehouse somewhere in, say, the San Joaquin Valley or the Inland Empire. Treasurer Ma, who is one of the few statewide officials with a history of standing up for California’s taxpayers, calls this action “unlawful, unconstitutional and impractical.”

 

[This_person]

the type of business talked about in the article is 'drop' ship business .... they do not actually 'stock' the merch sold locally, that Merch is stored / warehoused by amazon ... Cali-FU is claiming since this stock was retained in an Amazon Warehouse in CA somewhere, this entity based in Washington State had a 'foot print' in Cali and is thereby required to pay taxes in Cali as if they had a store front on Hollywood Blvd.

it seems to me Cali could double dip on taxes for the same 'stock' of Merch held by Amazon but in fact sold by multiple entities nationwide

I get it, but they're not going after Amazon. They're going after Mom & Pop, Inc.

What can they do to Mom & Pop, Inc.?

 

[GURPS]

What can they do to Mom & Pop, Inc.?

according to the Article Nightmares ...... so far the freaked out owner has acquired a Cali business license

beyond that, spend 100,000's of thousands defending themselves in court or pay the fines

 

[This_person]

according to the Article Nightmares ...... so far the freaked out owner has acquired a Cali business license

beyond that, spend 100,000's of thousands defending themselves in court or pay the fines

My point is, what happens if they don't? What can CA do to a business in Washington?

 

[stgislander]

My point is, what happens if they don't? What can CA do to a business in Washington?

My 2 cents... I guess that depends on how sympathic the authorities in WA are to the authorities in CA. Both are blue states that think along the same lines.

 

[Hijinx]

I am no tax person, but just off the top of my head I would say they haven't gone after Amazon, because Amazon has the big bucks to fight them.
They go after the little guy who doesn't have the wherewithal to make a fight.

Not being happy to charge them with a tax they never knew they had to pay they want to threaten them with jail.

 

[GURPS]

What can CA do to a business in Washington?

FFS DRAG them into California Court

 

[vraiblonde]

What enforcement do they really have?

None. California has pandered itself into insolvency, so it's just trying to fill the coffers. If some dummy falls for it and pays, CHA CHING! But most small businesses have at least an accountant, if not a lawyer, that they work with who will tell them that this is aggressive panhandling and to throw their junk mail away.

 

[This_person]

FFS DRAG them into California Court

That's my question - can they do that? Will they send armed CA agents to Washington state to take these guys in? Will they force extradite them if Washington picks these people up at gunpoint?

I don't think they can do either of those things. I think the worst they can do is say, "If you ever come to CA...."

 

[This_person]

None. California has pandered itself into insolvency, so it's just trying to fill the coffers. If some dummy falls for it and pays, CHA CHING! But most small businesses have at least an accountant, if not a lawyer, that they work with who will tell them that this is aggressive panhandling and to throw their junk mail away.

I think this is the truth.

 

[GURPS]

I don't think they can do either of those things.

What YOU Think is NOT Relevant .....
What California Courts does, is .....

Until the matter is settled in the Legislature or the Courts or reigned in administratively you are going to be on the Hook for what the CDTFA thinks it can get away with.


Well .... California thinks it has a RIGHT to YOUR Money ... they already sent out the letters demanding payment,

Option A: fail to appear for a California Summons then see what happens ?

You get a FTA Warrant issued that goes in the national data base ... then next time you get pulled over you are arrested and hauled of to Jail ... what happens next depends on the local ... you could be released if promise to appear in Cali Court or extradited to face a judge there for determination


Option B: ... you respond, calling into question the legality of the California tax code now you are spending money on lawyers to defend yourself from unjust taxation.

after receiving a letter from California telling her that she’s “facing tens of thousands of dollars in back taxes, penalties and interest” — something that “will force us out of business and into bankruptcy.” The seller has complied with California tax rules and signed up for a California business license, but now our state wants uncollected sales taxes going back eight years.

E-Commerce | TechRepublic

www.techrepublic.com

The letter cites Revenue and Taxation Code 6203, subdivision (c)(1), which states:

Any retailer maintaining, occupying, or using, permanently or temporarily, directly or indirectly, or through a subsidiary, or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business.

The contention is the definition of retailer, defined in the Business Taxes Law Guide, Title 18, section 1569:

A person who has possession of property owned by another, and also the power to cause title to that property to be transferred to a third person without any further action on the part of its owner, and who exercises such power, is a retailer when the party to whom title is transferred is a consumer. Tax applies to his gross receipts from such a sale.

This passage is cited by California State Treasurer Fiona Ma, in a letter to Governor Gavin Newsom, demanding that collections against out-of-state, third-party sellers using FBA stop, claiming that "CDTFA is ignoring the plain reading of California law," and noting that the sellers were not informed in advance of where their inventory would be placed, and "the shifting of goods to various warehouses was solely at the online retail platform's discretion."

 

[vraiblonde]

Gavin Newsome will put the scotch on this, positioning himself as a good guy, then run for President in 2020. It's a political scam.

 

[black dog]

None. California has pandered itself into insolvency, so it's just trying to fill the coffers. If some dummy falls for it and pays, CHA CHING! But most small businesses have at least an accountant, if not a lawyer, that they work with who will tell them that this is aggressive panhandling and to throw their junk mail away.

It would be interesting to see what the Federal Intercommerce laws have to say.

 

[GURPS]

It would be interesting to see what the Federal Intercommerce laws have to say.

 

[This_person]

What YOU Think is NOT Relevant .....
What California Courts does, is .....

Until the matter is settled in the Legislature or the Courts or reigned in administratively you are going to be on the Hook for what the CDTFA thinks it can get away with.


Well .... California thinks it has a RIGHT to YOUR Money ... they already sent out the letters demanding payment,

Option A: fail to appear for a California Summons then see what happens ?

You get a FTA Warrant issued that goes in the national data base ... then next time you get pulled over you are arrested and hauled of to Jail ... what happens next depends on the local ... you could be released if promise to appear in Cali Court or extradited to face a judge there for determination


Option B: ... you respond, calling into question the legality of the California tax code now you are spending money on lawyers to defend yourself from unjust taxation.

E-Commerce | TechRepublic

www.techrepublic.com

The letter cites Revenue and Taxation Code 6203, subdivision (c)(1), which states:


The contention is the definition of retailer, defined in the Business Taxes Law Guide, Title 18, section 1569:


This passage is cited by California State Treasurer Fiona Ma, in a letter to Governor Gavin Newsom, demanding that collections against out-of-state, third-party sellers using FBA stop, claiming that "CDTFA is ignoring the plain reading of California law," and noting that the sellers were not informed in advance of where their inventory would be placed, and "the shifting of goods to various warehouses was solely at the online retail platform's discretion."

Option A. Then what? Washington would have to be willing to hold you for California, and California has to be willing to pay them to come get you.

Interesting to see what happens.

 

[Rommey]

I am no tax person, but just off the top of my head I would say they haven't gone after Amazon, because Amazon has the big bucks to fight them.
They go after the little guy who doesn't have the wherewithal to make a fight.

Ask any lawyer and they would prefer to sue the big corporations because they are collectable...Mom & Pop Inc. are much less likely to be collectable. Sure, you sue Mom & Pop Inc. and they might not be able to fight it as hard as Amazon, but if (or when) they lose, there's not going to be much to collect. If Amazon loses, they are collectable and not likely to be going out of business anytime soon...

 

[Bobwhite]

I'm not real knowledgeable about this tax stuff, so I may be way off base, but couldn't all those M&Ps just quit doing business in California?