California’s Board of Equalization no longer administers sales tax. Since July 2017, the California Department of Tax and Fee Administration (CDTFA) has handled seller’s permits, returns, audits, and collections, while the Board of Equalization kept only the three duties the state constitution assigns it. If you searched for the Board of Equalization sales tax, your actual destination is the CDTFA.
Who Runs California Sales Tax Now
The Taxpayer Transparency and Fairness Act of 2017, enacted as Assembly Bill 102, moved the Board’s sales and use tax responsibilities to the newly created CDTFA and set up a separate Office of Tax Appeals to hear administrative tax disputes.1Franchise Tax Board. AB 102 – Taxpayer Transparency and Fairness Act of 2017
The Board of Equalization still exists, but its remaining work is narrow: reviewing and equalizing property tax assessments, assessing taxes on insurance companies, and collecting excise taxes on alcoholic beverages.2California Board of Equalization. Board Meeting Overview – January 29, 2019 Anything involving a sales tax permit, return, refund, or audit runs through the CDTFA. Old habits explain most searches for the Board’s name in this context.
Getting a Seller’s Permit
Any business selling tangible goods in California needs a seller’s permit from the CDTFA before its first taxable sale. The permit itself is free. Before you open the online application, collect the information the CDTFA will ask for:
- Social Security number or ITIN for every owner, partner, corporate officer, and LLC member or manager.
- Names and addresses of your primary suppliers.
- Estimated average monthly sales and the portion that will be taxable. The CDTFA uses this figure to set your filing frequency.
- Names and locations of banks where you hold accounts.
Corporations and partnerships also need their Federal Employer Identification Number to link the state registration to federal records.3California Department of Tax and Fee Administration. Get a Seller’s Permit Missing pieces can force you to restart the application, since partial saves aren’t reliable.
Operating without a permit while making taxable sales exposes you to penalties and enforcement action.
Out-of-State Sellers and Online Marketplaces
If you sell into California from another state, the CDTFA expects you to collect and remit sales tax once you cross an economic nexus threshold. A remote seller has nexus when combined sales of tangible goods delivered into California exceed $500,000 in the current or preceding calendar year, counting your own direct sales, sales by related entities, and sales facilitated through marketplace platforms.4California Department of Tax and Fee Administration. Tax Guide for Marketplace Facilitator Act
Under the Marketplace Facilitator Act, platforms such as Amazon, eBay, and Etsy collect, report, and pay California sales tax on the sales they facilitate. If you sell only through a marketplace facilitator, you generally don’t need to register with the CDTFA yourself.4California Department of Tax and Fee Administration. Tax Guide for Marketplace Facilitator Act Sell anywhere else — your own website, a craft fair, a trade show — and you need your own permit and must report those sales separately.
Filing Returns and Paying
The CDTFA sets your filing frequency at registration based on expected taxable sales. Options are monthly, quarterly, quarterly with prepayments, or yearly (including fiscal yearly).5California Department of Tax and Fee Administration. Filing Dates for Sales and Use Tax Returns Higher-volume sellers file monthly; smaller or newer businesses usually start quarterly or annually. The CDTFA can change your frequency if your volume shifts.
In the CDTFA’s online system, you enter gross sales, exempt transactions, and any taxable purchases you made without paying tax (use tax). The system calculates the amount due, and you authorize payment electronically. Keep the confirmation number the system returns. It’s your proof of timely filing.
Payment options include direct bank withdrawal, credit card, or a mailed check with a payment voucher.6California Department of Tax and Fee Administration. Online Services – Make a Payment Larger businesses that meet certain thresholds must pay by electronic funds transfer.7California Department of Tax and Fee Administration. Electronic Funds Transfer Payment Options
Late returns trigger penalties and interest. The CDTFA also compares your figures against third-party data, so mismatches with what suppliers or payment processors report will draw a notice. Repeated missed filings can lead to estimated assessments based on whatever data the agency has, permit revocation, or both.
Records You Have To Keep
California requires you to preserve sales and use tax records for at least four years. That covers sales invoices, purchase records, resale certificates, bank statements, and filed returns. The CDTFA can authorize a shorter retention period in writing, but without that approval, four years is the floor.8California Department of Tax and Fee Administration. Regulation 1698 – Records
Keeping records longer than the minimum is prudent. If an auditor asks for documentation and you can’t produce it, ambiguity gets resolved against you.
What Happens in a Sales Tax Audit
The CDTFA selects businesses for audit based on data discrepancies, industry risk profiles, and random selection. An audit notice typically asks for sales tax returns, sales and purchase invoices, resale certificates you accepted, bank statements, and register or point-of-sale reports.
Auditors often sample rather than review every transaction. They pull a representative period, calculate an error rate, and project it across the full audit period. Resale certificates get particular attention: if the certificates you accepted are incomplete, or if the buyers didn’t actually hold valid seller’s permits, the auditor treats those transactions as taxable sales and bills you accordingly.
Organizing records by period, keeping resale certificates accessible, and reconciling returns against bank deposits on a regular basis makes the audit far easier than reconstructing after a notice arrives.
Disputing an Assessment
If the CDTFA issues a Notice of Determination, you have 30 days from the date on the notice to file a Petition for Redetermination. Miss that window and the assessment becomes final, and the CDTFA can pursue collection through bank levies and other enforcement tools.9California Department of Tax and Fee Administration. California Revenue and Taxation Code 6561 – Petition for Redetermination
Your petition should explain exactly why the assessment is wrong and attach supporting documentation: corrected invoices, records the auditor didn’t see, evidence that exempt sales were miscategorized. The CDTFA usually offers an informal appeals conference first, which resolves many straightforward disputes.
If the informal process doesn’t settle the matter, the case moves to the Office of Tax Appeals, the independent body created alongside the CDTFA under AB 102.1Franchise Tax Board. AB 102 – Taxpayer Transparency and Fairness Act of 2017 A panel of three administrative law judges reviews both sides and issues a written decision setting your final liability. Further appeal to superior court is possible, but most disputes end at the OTA.
When Sales Tax Problems Become Criminal
Most sales tax mistakes produce civil penalties and interest, not criminal charges. California does treat willful evasion as a crime, however. Filing a fraudulent return, intentionally evading a tax determination, or helping someone else prepare a false return is a misdemeanor under Revenue and Taxation Code Section 7152.10California Department of Tax and Fee Administration. California Revenue and Taxation Code 7152 – Criminal Penalties
Each offense carries a fine of $1,000 to $5,000, up to one year in county jail, or both.11California Department of Tax and Fee Administration. California Revenue and Taxation Code 7153 Each is the operative word: violations across multiple returns can stack. Criminal prosecution is uncommon and generally reserved for deliberate fraud or large unpaid balances. Being behind on filings alone won’t produce criminal charges; lying on returns can.