Sales Tax Updates in California

Tax Professionals' Resource
December 10, 2012 — 1,501 views  
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California sales tax rates are calculated from a combination of state-wide rates, county rates, and local district rates. The rates for the counties and for the local districts each vary from 0.1% to 1% and together can add as much as 2% to the sales tax rate in some cities in California. One example of a city with the maximum local and county rates in effect is the tourist destination of Avalon city on Catalina Island, located in Los Angeles County, each of which charge sales tax at a 1% rate, which is added to the base California sales tax rate.

The base California sales tax rate changed on July 1, 2011 to 7.25% with a 1% decrease from the previous rate of 8.25% after the expiration of a sales tax law. With the passage of Proposition 30, the base California sales tax rate changes again on January 1, 2013 with an increase of 0.25% to the rate passed by voters. This makes the base California sales tax rate 7.5% in 2013 and puts the highest sales tax rates in the state of California at 9.5% in 2013. The base California sales tax rate actually includes a component called the uniform local tax, which allocates 0.25% sales tax to the county's transportation funds and 0.75% to the county's operational funds.

Internet companies, mail order companies, and other companies that send their products within California by standard carriers such as UPS, FedEx, and USPS do not have to collect sales tax for every district within California. These companies need to collect sales tax only in the districts in which they have a physical presence. They are considered to have a physical presence in locations where they have offices or where their employees work. If they do not use standard carriers, they have a physical presence where their delivery trucks drive. For each district where the company has a physical presence, sales tax must be collected for orders delivered to customers in that district. For orders from other districts in California, where the company has no presence, sales tax should be collected, but the point of sale should be considered the location of the business from which the item is being mailed. This means, for example, that an order mailed from a store in Orange County to an address in Los Angeles can be assessed at the tax rates in Orange County.


Tax Professionals' Resource