Until June 2018 US sales tax was relatively straight forward. States could only charge you sales tax if you had a physical presence in the state, like a shop or a warehouse.

But then came the famous court case South Dakota v Wayfair, and there the Supreme Court decided on the 21st of June 2018 that the states were not limited to physical presence as a nexus, but could also charge sales tax based on an economic nexus. And so today pretty much all states charge sales tax - if they have sales tax - based on physical presence or an economic nexus. And so does California.

California - it has a population of 40m people and the 5th largest economy in the world after the US as a whole, China, Japan and Germany, and more productive than India or the UK.  So when your clients expand into the US, there is a high chance that a large part of their sales will be in California, and that puts Californian sales tax onto the table.

The speaker in this episode is Edwin Antolin of Vallejo Antolin Agarwal Kanter, or in short VAAK, in Walnut Creek, California. Ed will walk through the pitfalls of Californian sales tax.

In this episode we will also discuss the marketplace facilitator rules. 44 of the 50 states have implemented marketplace facilitator rules. And what this does it that it creates another nexus.

So California just like any other state can only charge you sales tax, if there is a nexus to California, a connection between you and California. And this nexus can be a physical presence because you store inventory in California, it can be an economic nexus because your sales in California exceed $500k, but the nexus can also be established when you sell through a marketplace facilitator, like Amazon, Etsy, eBay, Walmart and the lot. Then this facilitator becomes the retailer and is hence liable for sales tax. However, Shopify is not a marketplace facilitator. So the marketplace facilitator rules don’t apply to Shopify and Woocommerce and other platforms where the shopfront is basically yours and the platform just provides the backend.

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