Has CA Treasurer Fiona MA gone far enough in her latest letter to Governor Newsom

Update: It appears Governor Newsom moved in a different direction rather than acting as Fiona Ma requested. See the update we posted on July 5, 2019 at


Read below for our original article concerning Treasurer Fiona Ma’s original letter to Governor Newsom.


While we agree with the current position taken by California Treasurer Fiona Ma in her letter to California Governor Gavin Newsom dated March 8, 2019, concerning relief to third-party Amazon sellers, we do not believe that she has gone far enough or accurately described how long CA has been pursuing FBA sellers. We believe that all sellers who have paid back taxes out of their own pockets going back to 2012 be granted a waiver of the statute for refunds and be automatically refunded all back tax, penalty, and interest. Failure to do so would create disparate treatment of taxpayers should the governor grant Treasurer Ma’s request.

The problem did not begin with the CDTFA.

The practice of pursuing FBA sellers, or of providing guidance that FBA sellers were the retailers and responsible for collecting tax did not begin with the creation of the California Department of Tax and Fee Administration(CDTFA) but rather with the California Board of Equalization(BOE). The CDTFA was created when the BOE was stripped of its powers for alleged improprieties. The BOE was pursuing FBA sellers, albeit on a smaller scale, long before the CDTFA was created.

In addition the BOE issued publication 109 in October of 2016 which appears to clearly cover the FBA scenario. Please see this excerpt.

Identifying the Retailer of Property Sold through an Online Marketplace

When a seller utilizes an online marketplace and/or a third-party fulfillment center to make a sale of tangible personal property to a California customer, either the seller or the marketplace operator may be the retailer for sales and use tax purposes.

Some online marketplace operators display the property of various sellers, process the sellers’ transactions and provide various other services, but the terms of sale dictate and the receipts and other documents related to the sales reflect that the consumers are purchasing the property directly from the sellers. In these instances, the marketplace operators are generally just providing a service, and the seller that lists the property on the marketplace is the retailer making a retail sale to the consumer.

If you are a seller making sales through an online marketplace in this manner, you are generally considered the retailer for purposes of such sales. However, if the marketplace operator is also providing fulfillment services, the marketplace operator will be considered the retailer if it has possession of the property at the time of sale and it can transfer ownership to the purchaser without further action by you. For additional information, please see publication 114, Consignment Sales. (Please note: If the marketplace operator has the authority to transfer ownership, but a different person, such as a fulfillment center operator, has possession of the property at the time of sale, then neither person would be a consignee, even if the two are related entities, and you would still be considered the retailer.)

We believe and have been told by both the BOE and the CDTFA that the bolded portions above describe the FBA scenario.

Treasurer Ma was a Board Member and/or Chairman of the BOE during this time.

We believe this fact is important. Treasurer Ma is taking aim at the CDTFA and those who are currently being pursued by the CDTFA. Our hope is make sure the untold numbers of sellers who have already endured the hardships of paying back taxes, penalty and interest because of the BOE be granted the same consideration as those being pursued by the CDTFA.

In addition how many sellers or their advisors relied on written and/or verbal guidance from the BOE when deciding whether to enter into a voluntary disclosure agreement. Publication 109 is a BOE document. Should those sellers who relied on BOE guidance and tried to comply with CA policy be punished for complying voluntarily?

We agree with Treasurer Ma’s current position.

We believe that third-parties should not have endure the hardships associated with paying back taxes. We agree that third-parties should not bear the cost of compliance going forward. We agree that it makes more sense for a marketplace (Amazon) to collect the taxes going forward. We just want to make sure that those who have already suffered the economic hardship of paying the state not be forgotten. It should not matter which CA agency pursued them or provided guidance. It should not matter whether they were required to pay by CA or whether they paid voluntarily as a result of CA guidance. It should not matter that the statute of limitations for refunds have expired.

What does matter is that all taxpayers be treated equally. There should not be disparate treatment based on who complied with CA and who did not. We believe that when an error by the state is identified it should be corrected, but not limited to the actions of one agency. We believe that Governor Newsom should take action. We just want him to provide remedies for those who have already paid.

Michael Fleming