Like most states, California imposes a sales tax on the sale of tangible personal property – but relatively few enumerated services. As you might expect, California is rather attractive for software companies; electronic downloads of software and cloud computing are not taxable in California.
California local sales and use taxes are administered by the state. That means, there is a single sales and use tax return filed for all state and local sales and use taxes – rather than having to file a separate return for each local jurisdiction.
Sales and use tax compliance made easy - right? Not so fast…
The combined state and local sales and use tax rate can reach 10% in California.
Registration for sales tax purposes can be exhausting in California – while listing a corporate officer and a social security number is standard in all states, California requires a list of all corporate officers, social security numbers and driver license numbers.
Prepayments of California sales tax are required of certain taxpayers as follows:
On written notification by the State Board of Equalization (SBE), any person whose estimated measure of tax liability averages $17,000 or more per month, must make the following prepayments:
(1) in the first, third and fourth calendar quarters, prepay not less than 90% of the state and local tax liability for each of the first two monthly periods of each quarterly period; and
(2) in the second calendar quarter, prepay a first prepayment of 90% of the total tax for the first monthly period of each quarterly period, and a second prepayment of either (a) 90% of the amount of such liability for the second monthly period of the quarterly period plus 90% of such liability for the first 15 days of the third monthly period of the quarterly period, or (b) 90% of the amount of state and local tax liability for the second monthly period plus 50% of 90% of the liability for the second monthly period. [Cal. Rev. & Tax. Cd. §6471(a).]
“Easy” – right? Wouldn’t you like to have heard Arnold S. explain this?