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Tax Law

California Introduces Marketplace Facilitator Regulations

The California Department of Tax and Fee Administration has introduced clarifying proposed regulations for its marketplace facilitator regime. The regulations include definitions of statutory terms and clarify that: the $500,000 sales threshold for a marketplace facilitator includes both facilitated sales and direct sales; marketplace facilitators are required to register for a sellers permit or use tax registration; a registered marketplace facilitator is the “retailer” for California tax purposes; and delivery network companies, defined as a website or application used to facilitate delivery for the sale of local products, may elect to be treated as a marketplace facilitator. The proposed regulations also contain examples for application of the law and proposed rules.

In order to provide guidance as quickly as possible, the regulations were introduced as emergency regulations. Generally, emergency regulations are effective for two years unless amended or repealed earlier.