El Dorado county sales tax revenue could take major hit

Mountain Democrat Report

SOUTH LAKE TAHOE, Calif. — El Dorado County could lose millions in sales tax revenue if a major online retailer gets its way, county Auditor-Controller Joe Harn warned the Board of Supervisors this week.

One of the world’s largest online retailers (Harn is prohibited from naming the retailer or reporting more precise revenue estimates per California Revenue and Taxation Code 7056) “has changed the way it reports sales tax transactions to the California Department of Tax and Fee Administration.”

“If this sales tax reporting change is accepted and validated by CDTFA, El Dorado County will lose millions of dollars in general fund revenues and our two transportation planning agencies will lose significant revenues over the next several years,” Harn said.

Because online retailers have been reporting sales tax to CDFTA based on the location of deliveries, the county’s sales tax revenues have increased during the state’s shelter in place order. Harn’s warning comes just as the board is expected to adopt its preliminary spending plan for fiscal 2021-22.

The retailer “intends to retroactively report sales tax transactions back to Oct. 1, 2020, to the local jurisdiction of its shipping warehouses,” according to the auditor.

“If this tax apportionment decision is final, it is a significant setback to El Dorado County’s financial wellbeing and will result in a lower level of services,” Harn wrote. “This large online retailer has delivery vans constantly crisscrossing our county and wearing out our roads. It is only fair and reasonable that our community receive some tax revenue to compensate us.”

The cities of Placerville and South Lake Tahoe will also be adversely affected.

The Auditor’s Office has requested CDTFA provide a written description and summary of the situation and Harn said he has also contacted California Assemblyman Kevin Kiley to advocate for El Dorado County. The Auditor’s Office and Chief Administrative Office are working together to gather additional information and take additional action if/when needed.

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