California Sales Tax Sourcing in QuickBooks Online

Learn how QuickBooks Online calculates sales tax in California. 

The total sales tax rate in California is divided among the state, county, and district levels.

CA Sourcing rules

When both the buyer and seller are in California, there's a special rule that says state and county taxes are based on the seller's location, while district taxes are based on the buyer's location.  

The seller only needs to collect district taxes if the buyer is located in the same district. If the seller isn’t in the same district, the seller can choose not to collect district taxes and rely on the buyer to pay those when they file a use tax return. 

But most sellers collect district taxes for buyers, regardless of location, to make sure the proper taxes are paid.

How QuickBooks calculates CA sales tax

Since most sellers collect district taxes for buyers, QuickBooks Online splits the state, county, and district taxes. Each level is calculated based on the sourcing rule described. If the item is shipped from outside California, the tax is based on the state, county, and district taxes at the delivery location.