The California (CA) state sales tax rate is currently 6.5%. However, California adds a mandatory local rate of 1% that increases the total state sales and use tax base to 7.5%. Depending on local municipalities, the total tax rate can be as high at 10.0%.
State and local taxes can reach 9.25% in many cities. Food and prescription drugs are exempt from sales tax.
Amazon.com owns and operates a number of fulfillment centers in California. This physical presence, or nexus, creates a sales tax obligation for Amazon and many sellers participating in Amazon’s Seller Central and Fulfillment By Amazon (FBA) programs.
Most companies that do business in California are required to register with the state.
How to Register
Every individual, firm, partnership, or a corporation, engaged in the business of selling or leasing tangible personal property must obtain a permit from the State Board of Equalization. This includes wholesalers as well.
All business owners must register their business prior to conducting any business in California. To register, business owners have two options:
Register for a Seller’s Permit by visiting the BOE Online Registration System.
Register in Person
Business owners may register for a seller’s permit or use tax account in person or at a BOE field office.
Registration Cost: There is no charge to obtain a Seller’s Permit however; a security deposit may be required.
Renewal Requirements: California does not require renewal on sales and use tax permits.
How to File and Pay
Businesses must file California sales and use tax returns online. The Board of Equalization offers a free online filing option that can be accessed directly through the BOE website. Most retail sales of tangible personal property (such furniture, giftware, toys, or clothing) are subject to sales tax in California.
Tax returns are due after the close of the reporting period. For example, if the period closes on June 30, you must file and pay by July 31.
Multiple Business Filing Options: A return must be filed for each place of business located on different premises. In some instances, it is possible for a business to obtain a consolidated permit for multiple business outlets reducing the number of returns, which must be filed.
Zero Payment Filing: All businesses operating in California are required to file sales and use tax returns even if they do not owe sales and use tax.
Businesses may pay directly from their bank account, or with a credit card, check, or money order.
Pay Direct From Your Bank Account: You can authorize the BOE to have the funds transferred directly from your checking or savings account to the BOE’s bank account by supplying your account number and bank routing number.
Credit Card Payments: A service fee of 2.3% of the transaction amount will be charged by the credit card processing vendor, Official Payments Corporation (OPC). This service fee is charged by OPC and is not revenue to the BOE. Accepted credit cards include American Express, Discover, MasterCard, and Visa.
Electronic Funds Transfer (EFT): This is a method for financial institutions to transfer funds from one account to another, eliminating the use of paper checks. It is required by law if your average monthly sales tax payments over a 12 month period are of $10,000 or more ($20,000 or more for other tax and fee programs). You can also make payments by EFT on a voluntary basis.
Check or Money Order: A check or money order can be made payable to the State Board of Equalization and mailed to the following address.Board of Equalization
PO Box 942879
Sacramento, CA 94279-7072
Prompt Payment Discount: When you electronically file and pay on time, businesses can claim a collection allowance of 2.5% of the first $1,200 of tax due up to $30.
The BOE assigns a filing frequency (quarterly prepay, quarterly, monthly, fiscal yearly, yearly) based on your reported sales tax or your anticipated taxable sales at the time of registration. Find your filing frequency below for your due dates.
Late Payment Penalties
Businesses who file a late return and/or make a late sales tax payment are liable for interest and penalties. If you pay your full tax liability on time but do not file your return on time, you are still liable for a penalty for filing a late return. For more information on California sales tax late payment penalties, consult Publication 75, Interest and Penalty Charges or call 1-800-400-7115.
Change of Ownership or Change of Business Type: Businesses owners who are no longer actively engaged in their business, sell their business or stock of goods, or change the type of ownership for the business must immediately notify the California Board of Equalization regarding changes by completing and filing form BOE-65 along with the necessary supporting documents to the following address.Board of Equalization Customer Service Center
P.O. Box 942879
Sacramento, CA 94279-0090
Important Contact Info
By MailState Board of Equalization
P.O. Box 942879
Sacramento, CA 94279
- Toll-free: 1-800-400-7115
- Outside the US: 1-916-445-6362
- California Relay Service (CRS): 711 (for hearing and speech disabilities)
Hours of Operation: Monday – Friday (except state holidays) 8:00 a.m. – 5:00 p.m, PST.