In California, retailers are obligated to pay sales taxes to the state on their gross receipts, subject to certain exemptions. Retailers may, however, seek sales tax reimbursement from their customers.
(Loeffler v. Target Corp. (2009) 173 Cal.App.4th 1229 [93 Cal.Rptr.3d 515].)
(a) Whether a retailer may add sales tax reimbursement to the sales price of the tangible personal property sold at retail to a purchaser depends solely upon the terms of the agreement of sale. It shall be presumed that the parties agreed to the addition of sales tax reimbursement to the sales price of tangible personal property sold at retail to a purchaser if:
(d) The presumptions created by this section are rebuttable presumptions.
CA Civil Code section 1656.1
My Question: If the retailer seeks to add sales tax reimbursement and if customer invokes to rebut the presumption, what needs to be done by the customer to remove the sales tax reimbursement, so that the retailer cannot refuse service?
[For example, customer shows that the retailer is obligated to pay sales tax? Or, customer shows that sales tax reimbursement is not required to be collected?]
1 Answer from Attorneys
A retailer can always refuse to sell to a person who is unwilling to pay the sales tax reimbursement. Until there is agreement on who pays the sales tax, there is no agreement to buy and sell, and no obligation is formed that the retailer deliver the goods the buyer wishes to receive.
As for showing that reimbursement is not required, if the seller disagrees, they are free to refuse to sell even if it turns out they are wrong. They are entitled to lose a customer if they believe an item is taxable and it is not, or they do not believe the buyer is actually a valid reseller who will take on the tax collection duty upon sale to a third party consumer.