Current California Tax Issues: New Sales Tax Nexus Thresholds, Market-Based Sourcing Rules, Pass-Through Entities, and Local Taxes

California sales and use, income and franchise, and local tax laws have recently undergone significant changes. Our panel will discuss these changes and address the issues businesses face to comply with California’s ever-changing tax laws.

In the wake of Wayfair, California has now adopted an economic nexus threshold for use tax registration, reporting, and remittance obligations. After the California Department of Tax and Fee Administration (CDTFA) adopted a $100,000 sales or more than 200 transaction threshold on December 2018, the California legislature enacted legislation overriding the CDTFA, increasing the threshold to $500,000 and eliminating the transactions threshold. The legislation also created use tax collection obligations for marketplace facilitators, and various reporting rules for marketplace sellers.

For income and franchise tax purposes, California generally requires multistate businesses to apportion income with a single-sales factor. For sales of other than tangible personal property, California assigns sales under market-based sourcing regulations. Whether a business even has a California filing requirement often turns on the application of these regulations. The California Franchise Tax Board recently held its fourth interested-parties meeting on proposed amendments to the market-based sourcing regulations. The proposed changes could have a significant impact on California income and franchise tax liabilities.

Listen as our panel of experts explains the complex compliance demands of California's business tax requirements, including filing and remitting sales tax, applying the market-based sourcing rules, filing returns for pass-through entities, and other current developments in California business taxation.

1. Doing business in California
2. Use tax collection after Wayfair
3. Market-based sourcing rules
4. Pass-through entity taxation
5. Other current developments

The panel will cover these and other essential issues:

• When is a business liable for use tax collection in California?
• What if a business registered for use tax collection under the lower threshold?
• What constitutes nexus for a service-based business in California?
• What are the California filing requirements for pass-through entities?
• When is an LLC required to pay the LLC tax and fee?

Learning Objectives

After completing this course, you will be able to:

• Recognize when a business may have nexus in California

• Determine whether a company is required to remit sales tax in California

• Discern whether market-based sourced income may be subject to tax in California

• Identify LLCs that may have filing obligations in California

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.