Grosz v. Cal. Dept. of Tax & Fee Administration
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Amazon fulfills orders for products sold by third-party merchants through a program it calls “Fulfillment by Amazon” (FBA). According to the First Amended Complaint (FAC), the state agency responsible for collecting sales and use tax is the California Department of Tax and Fee Administration (DTFA) has historically not collected from Amazon sales and use taxes for products sold through the FBA program.
Plaintiff filed a taxpayer action under section 526a seeking a declaration that the DTFA “has a mandatory duty to assess and collect” sales and use tax specifically from Amazon for products sold through the FBA program. The DTFA and its Director and the Amazon entities that Plaintiff named in his FAC as Real Parties in Interest all demurred to the FAC. The trial court sustained Respondents’ demurrers without leave to amend.
The Second Appellate District affirmed the trial court’s order sustaining Respondents’ demurrers. The court explained that no statute or regulation conclusively establishes that the DTFA must pursue Amazon for sales and use taxes related to FBA transactions. The language of Revenue and Taxation Code section 6015, subdivision (a) makes it clear that there may be multiple “persons” who the DTFA may regard as “retailers” for the purposes of a single transaction. The statutory framework of the Sales and Use Tax Law and the statutes vesting the DTFA with authority to administer that statutory framework led the court to conclude that whether a taxpayer is a retailer for purposes of the Sales and Use Tax Law is a discretionary determination and not a ministerial task.
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