Doing business in California threshold amounts updated for 2020 October 2020 Tax News

Annually, we update the amounts used to determine whether a taxpayer is doing business in California based on the California Consumer Price Index (CCPI) as prescribed in the Revenue and Taxation Code. The inflation rate, as measured by the CCPI for all urban consumers from June 2019 to June 2020, was 1.4%. By comparison, the inflation rate from June 2018 to June 2019, was 3.1%.

We look to taxpayers’ sales, property and payroll.[1] "Doing business" means actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.

For taxable years beginning on or after January 1, 2011, a taxpayer is doing business in this state for a taxable year if any of the following conditions has been satisfied:

• The taxpayer is organized or commercially domiciled in this state.
• The taxpayer’s sales in California exceed the lesser of $500,000 or 25% of the taxpayer's total sales.
• The real property and tangible personal property of the taxpayer in this state exceed the lesser of $50,000 or 25% of the taxpayer's total real property and tangible personal property combined.
• The amount the taxpayer paid in California for compensation exceeds the lesser of $50,000 or 25% of the total compensation paid by the taxpayer.

The indexed threshold values for the 2020 tax year are as follows:

	Indexed Threshold Value
Sales	$610,395
Property	$61,040
Payroll	$61,040