> This directly contradicts what the article states.
No, it doesn’t.
It contradicts what you appear to have falsely inferred from the very vague writing in the article, and that false inference may be the intent of the vague writing, but it doesn’t contradict what the article actually says.
“In December 2021, the CDTFA notified the City that they were reviewing one of the taxpayers in the City. In May 2022, the CDTFA updated the City, saying they had asked the taxpayer for more tax returns. […] In March, the CDTFA verbally informed the City of their preliminary determination that tax dollars had been misallocated to the City, and they gave rough estimates of how much money the City might lose. The CDTFA said the City would get a letter with the final results of the review, including the actual amount of money that would be lost, in the next four to six months.”
So that tells us the issue is about “misallocation”. So, how are sales taxes supposed to be allocated? Here’s official information from the CDTFA, the agency responsible for sales and use taxes in California: https://www.cdtfa.ca.gov/industry/localanddistricttaxes.htm#...
“Regulation 1620, subdivision (a)(2)(A), states that participation in the transaction in any way by the in-state place of business is sufficient for the transaction to be subject to sales tax. However, to constitute participation, an activity must serve some real purpose and have some meaningful effect in the actual sales process and involve some genuine physical human interaction with the sale from that location.
“Generally, activities taking place after the sale has occurred are not participation in the sale. There are also activities that a retailer might conduct from a California location to support its operations that do not constitute participation in the sale for purposes of Regulation 1620, subdivision (a)(2)(A), including price setting, purchase of resale inventory, web design, and general marketing.
“Internet transactions are generally designed and intended to be processed online, without direct human intervention until the property is picked, packed, and shipped at the storage location. As such, a storage location is often the only place of business that participates in an Internet transaction. Activities related to creating and maintaining the automated online processes would generally be considered the type of support operations that do not constitute participation in any particular transaction. The location of the server where the website is hosted or maintained is also immaterial”
A. What you are describing here isn't illegal activity. You're describing the State determining that Apple incorrectly reported where the sales tax should go (no one is saying deliberately). Now the state is trying to remedy this.
B. From what I was gathering there's been a change in law regarding online sale tax in 2019 or so. Fair enough for the State to take a couple of years to audit and find compliance.
Doesn't really seem to be malicious actions between Apple and the city.
Additionally Apple is free to apeal here and say they did report their sales tax correctly.
> What you are describing here isn’t illegal activity.
Yes it is.
> You’re describing the State determining that Apple incorrectly reported where the sales tax should go
Failing to report as legally required is illegal.
> (no one is saying deliberately).
Sure, but that’s not germane.
> From what I was gathering there’s been a change in law regarding online sale tax in 2019 or so.
There was; mainly, from looking at the CDTFA information on sales tax (which calls out the 2019 changes) affecting sales through internet marketplaces and in some circumstances making the marketplace, rather than the seller-through-the-marketplace, the retailer for sales tax purposes, and requiring registration and use-tax collection by retailers in certain cases. The change doesn’t seem related to the Apple/Cupertino sales tax issue.
No, it doesn’t.
It contradicts what you appear to have falsely inferred from the very vague writing in the article, and that false inference may be the intent of the vague writing, but it doesn’t contradict what the article actually says.
I have gone beyond the article to understand the actual facts here. For instance, here’s the official city page on the issue: https://www.cupertino.org/our-city/departments/finance/cdtfa...
“In December 2021, the CDTFA notified the City that they were reviewing one of the taxpayers in the City. In May 2022, the CDTFA updated the City, saying they had asked the taxpayer for more tax returns. […] In March, the CDTFA verbally informed the City of their preliminary determination that tax dollars had been misallocated to the City, and they gave rough estimates of how much money the City might lose. The CDTFA said the City would get a letter with the final results of the review, including the actual amount of money that would be lost, in the next four to six months.”
So that tells us the issue is about “misallocation”. So, how are sales taxes supposed to be allocated? Here’s official information from the CDTFA, the agency responsible for sales and use taxes in California: https://www.cdtfa.ca.gov/industry/localanddistricttaxes.htm#...
“Regulation 1620, subdivision (a)(2)(A), states that participation in the transaction in any way by the in-state place of business is sufficient for the transaction to be subject to sales tax. However, to constitute participation, an activity must serve some real purpose and have some meaningful effect in the actual sales process and involve some genuine physical human interaction with the sale from that location.
“Generally, activities taking place after the sale has occurred are not participation in the sale. There are also activities that a retailer might conduct from a California location to support its operations that do not constitute participation in the sale for purposes of Regulation 1620, subdivision (a)(2)(A), including price setting, purchase of resale inventory, web design, and general marketing.
“Internet transactions are generally designed and intended to be processed online, without direct human intervention until the property is picked, packed, and shipped at the storage location. As such, a storage location is often the only place of business that participates in an Internet transaction. Activities related to creating and maintaining the automated online processes would generally be considered the type of support operations that do not constitute participation in any particular transaction. The location of the server where the website is hosted or maintained is also immaterial”