The inaugural Frieze Los Angeles art fair opens February 15 with art businesses from across the country traveling to LA to showcase their booths. In light of all of the out-of-state art businesses traveling to LA for the fair, we wanted to provide an update on where California stands vis-à-vis last year’s Supreme Court case South Dakota v. Wayfair, Inc., whose holding now allows states to require out-of-state sellers to register and collect sales tax in states although such sellers have no physical presence.
California’s Post-Wayfair Rule:
In December 2018, the California Department of Tax and Fee Administration (CDTFA) announced that beginning April 1, 2019, out-of-state retailers will be required to collect California use taxes on their sales delivered into California if, during the preceding or current calendar year:
1. the retailer’s sales for delivery into California exceed $100,000; or
2. the retailer makes sales for delivery into California in 200 or more separate transactions.
Historically, art businesses attending art fairs in California may have only registered to collect sales tax on a temporary basis. However, with the post- Wayfair rule, art businesses may now want to consider whether they will need to register on a non-temporary basis to comply with California law. Lastly, art businesses may want to consider whether their participation at Frieze may create a California income tax exposure.