California Prop 56 - Hidden Vape Tax

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Rossum

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More specifically, an out-of-state retailer must collect sales tax from California customers if that retailer:
  • has an agreement with a person or persons located in California to pay for customer referrals obtained via a link on the California seller’s website (a click-through arrangement)
  • the out-of-state retailer’s total cumulative sales to purchasers in California exceeds $10,000 during the preceding twelve months, and
  • the out-of-state retailer also has total cumulative sales to purchasers in California exceeding $1,000,000.
What's not at all clear in that summary is whether the bullet-points are tied together with an "or" or an "and". I'm going to assume it's an "and", because the last two items alone are not sufficient to meet the standard set in Quill Corp. v. North Dakota.

 

Lessifer

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What's not at all clear in that summary is whether the bullet-points are tied together with an "or" or an "and". I'm going to assume it's an "and", because the last two items alone are not sufficient to meet the standard set in Quill Corp. v. North Dakota.
I'm fairly certain it's an "or" between 1 and 2, and there is an "and" between 2 and 3. This would be specifically for companies that do not meet the standard set in Quill Corp. v. North Dakota.
 

Rossum

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I'm fairly certain it's an "or" between 1 and 2, and there is an "and" between 2 and 3. This would be specifically for companies that do not meet the standard set in Quill Corp. v. North Dakota.
It's definitely an "and" between all three. See section (c)(3) here:
Regulation 1684
 

retired1

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Hmm... my legalese is off. Does amazon pay click referrals? or am I misunderstanding the first part?

If a person posts a referral link in a state, that can be counted as a point of presence by the tax offices, even if there's no physical brick and mortar store/warehouse.
 

zoiDman

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And... from the "More Good News" file, I just received an e-Mail from someone regarding the New 2017 - 18 Tax Rates on Tobacco Products in CA.


"...
The fiscal year 2017-18 Tobacco Products Tax Rate is based on the wholesale premium brand cigarette price as of March 1, 2017, as published by the Tobacco Merchants Association, and will be set at 65.08%. This rate is significantly higher than the fiscal year 2016-17 rate of 27.30% due to the passage of Proposition 56, The California Healthcare, Research and Prevention Tobacco Tax Act of 2016.

..."

https://www.boe.ca.gov/meetings/pdf/2017/042517_P3_1_Tobacco_Tax_Rate.pdf

https://www.boe.ca.gov/pdf/l502.pdf
 

Rossum

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And... from the "More Good News" file, I just received an e-Mail from someone regarding the New 2017 - 18 Tax Rates on Tobacco Products in CA.
Congratulations, California! You've surpassed PA's 40% record for state-wide vape tax! :blink:
 

zoiDman

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Congratulations, California! You've surpassed PA's 40% record for state-wide vape tax! :blink:

Woo-Hoo! We're Number One!

podium.jpg
 

Rossum

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I'm pretty naive on how these things work. If things change for the better on the federal level ( FDA Cole-Bishop ), how much does it then change what happens on a state level?
No, that will just mean that the states actually have something to tax.

If the Deeming is implemented as currently written, vapor taxes pretty much become irrelevant in another year or two.
 
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zoiDman

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I'm pretty naive on how these things work. If things change for the better on the federal level ( FDA Cole-Bishop ), how much does it then change what happens on a state level?

Not a Lawyer.

But I would say Not Much in The People's Republic of Kalifornia.
 
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Lessifer

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And... from the "More Good News" file, I just received an e-Mail from someone regarding the New 2017 - 18 Tax Rates on Tobacco Products in CA.


"...
The fiscal year 2017-18 Tobacco Products Tax Rate is based on the wholesale premium brand cigarette price as of March 1, 2017, as published by the Tobacco Merchants Association, and will be set at 65.08%. This rate is significantly higher than the fiscal year 2016-17 rate of 27.30% due to the passage of Proposition 56, The California Healthcare, Research and Prevention Tobacco Tax Act of 2016.

..."

https://www.boe.ca.gov/meetings/pdf/2017/042517_P3_1_Tobacco_Tax_Rate.pdf

https://www.boe.ca.gov/pdf/l502.pdf
Not quite the 80% I was expecting, but pretty darn close...
 

stormjib

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Have you guys seen this in action? None of my local shops seem to have raised their prices, at least the last time I was in them, a month or so ago...I'm sure I would have noticed if juice prices had gone up that much. I bought a new mod from a shop on my last visit and they matched the online price, but if I read it right, this tax is on ejuice only...I buy most of my juice online, have shops raised their prices by 35-40%? (65% of wholesale *should* be around 35% of retail, the way I figure it, maybe less because the margins are really huge on ejuice.)
 

Lessifer

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Have you guys seen this in action? None of my local shops seem to have raised their prices, at least the last time I was in them, a month or so ago...I'm sure I would have noticed if juice prices had gone up that much. I bought a new mod from a shop on my last visit and they matched the online price, but if I read it right, this tax is on ejuice only...I buy most of my juice online, have shops raised their prices by 35-40%? (65% of wholesale *should* be around 35% of retail, the way I figure it, maybe less because the margins are really huge on ejuice.)
The new rate is supposed to be effective July 1st.
 
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