Panel debates shifting sales‑tax reporting to delivery platforms

The Department of Tax and Fee Administration proposed making delivery network companies (DNCs) marketplace facilitators under California’s Marketplace Facilitator Act, removing an existing carve‑out that lets some DNCs avoid the role unless they elect it. Brad Miller of CDTFA said audits show restaurants frequently fail to report sales made through DNCs, and treating all DNCs as marketplace facilitators would clarify responsibility and shift reporting from thousands of small sellers to a smaller set of large platforms.

CDTFA estimated the change could bring roughly $44 million in additional sales tax revenue statewide over a full fiscal year, about $20 million of which would flow to the general fund. "This proposal would make California consistent with other states' treatment of DNCs," Miller told the subcommittee.

Committee members focused on who ultimately bears cost and competitive distortions among platforms. One senator argued the change would increase consumer prices because service fees that had been exempt would become taxable, while Department of Finance staff said the move merely enforces existing tax rules and shifts compliance burden to large companies. "This isn't a tax increase," JT Creighton of the Department of Finance said; "it's applying the tax laws as they currently exist consistently across the marketplace." Opponents cautioned that if the law raised costs, it would be regressive for low‑income consumers.

CDTFA said the proposal is intended to reduce confusion for small businesses and improve compliance. The committee did not vote and left the item for further review.