Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Uniform Local Sales and Use Tax Annotations

710.0000 PLACE OF SALE FOR PURPOSES OF BRADLEY-BURNS UNIFORM LOCAL SALES AND USE TAXES—Regulation 1802

Annotation 710.0151

710.0151 Website vs. Third-Party Warehouse. Orders are placed with the retailer through its Internet website. Employees at the retailer's warehouse, located in City A, process the orders placed on the website. Employees located at the retailer's headquarters, in City B, do not come into contact with the order at all unless there is a problem requiring customer service after the order is placed. The server hosting the website is in City C. All cities in this scenario are located in California.

During the allocation inquiry period, the retailer spun the warehouse operation off to a wholly-owned subsidiary so that, except when the need for customer service arises after the order is placed, no employees of the retailer participate in the sale. After the warehouse was spun off, the subsidiary sold the goods to the retailer ex-tax for resale, and the retailer sells the goods to the customer.

For sales made after the spinoff of the warehouse operation, when the retailer has only one office in the state the only place to which the local sales tax revenue can be allocated is City B. For in-state transactions, the retailer's employees must participate in negotiating the sale for local sales tax to be allocated directly. Since the retailer's employees do not become involved in the sales, if at all, until after the order is placed, the local sales tax derived from these sales must be allocated to City B through the medium of the county-wide pool of the county in which City B is located. 10/30/02. (2003–3).