California Sales Tax Overview
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California Sales Tax Rates
- Statewide rate: 7.25%
- Average after local surtaxes: 8.44%
- Total rates range from 7.25% to 10.25%
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Sales Tax Collection
- All businesses need to register to collect and remit sales tax
- Use software or manual calculation
Sales Tax Nexus in California
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Nexus Criteria
- Physical presence like store, warehouse, or office
- Exceeding $500,000 in sales in California
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Responsibilities
- Calculate and pay correct amount of sales tax
- Obtain sales tax license if nexus exists
Wholesalers and Sales Tax in California
- Wholesalers’ Obligations
- Required to collect and remit sales tax if sales exceed $500,000
- Add 10% to wholesale cost and charge applicable sales tax
- Remit sales tax to state authorities
Use Tax in California
- Overview
- Charged at the same rate as sales tax
- Applies when sales tax is not charged
- Paid along with income tax filing
Exemptions and Non-Taxable Sales
- Exemptions
- Groceries and prescription drugs
- Taxable Sales Criteria
- Retail sales of tangible personal property
- Attendance at trade shows leading to sales
- No Sales Tax on Use Tax Payment
Conclusion
- Compliance
- Retailers and wholesalers must understand and adhere to sales tax laws
- Proper calculation, collection, and remittance of sales tax are essential