On September 10, 2021, the California Department of Tax and Fee Administration (the CDTFA) proposed amendments to the CDTFA’s regulations governing drop shipments, in an effort to clarify that marketplace sales are not drop shipments. In October 2019, the California Marketplace Facilitator Act became effective, making marketplace facilitators the seller and retailer for sales facilitated through their marketplace and responsible for collecting and remitting the sales tax. Historically, drop shipments were those sales made by a retailer not engaged in business in California, but who sells tangible personal property to California purchasers through the purchases of the property from a supplier (the drop shipper) who ships the property directly to the California purchaser. The drop shipper engaged in business in California is then reclassified as the “true retailer” and responsible for collecting and remitting tax on the sale. The proposed regulation provides that when a marketplace seller contracts to purchase property from a supplier, and have the supplier (acting similar to a drop shipper) deliver the property directly to the California purchaser, the supplier is not a drop shipper responsible for tax collection and is not considered the “true retailer.” Instead the tax collection remains the responsibility of the marketplace facilitator. The period to provide written comments to the Department regarding this proposed revision ends on October 25, 2021.