HdL Sales Tax Report for CY2018 Q1 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
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Q12018
Encinitas
Encinitas’ receipts from January
through March were 1.9% below
the first sales period in 2017. How-
ever, due to CDTFA’s transition to a
new reporting system, multiple re-
turns were not processed in the cur-
rent period but are anticipated to be
received with the next quarterly al-
locations. Including these expect-
ed remittances and other reporting
aberrations, actual sales were up
4.9%.Once adjusted, the City experi-
enced a strong sales quarter by
multiple general consumer cate-
gories including family apparel,
home furnishing and sporting goods
stores. Steady price increases at
the pump, mostly due to the global
cost of crude oil and the implemen-
tation of SB-1 locally, pushed ser-
vice stations higher.Favorable winter weather and
the current stable housing market
helped produce solid gains from
building-construction suppliers.This growth in local point of sale
revenue and increased capital and
online purchases of items shipped
into the region boosted allocations
from the countywide use tax pool,
further contributing to the positive
adjusted outcome.Net of aberrations, taxable sales
for all of San Diego County grew
4.7% over the comparable time pe-
riod; the Southern California region
was up 5.6%.
City of Encinitas
Second Quarter Receipts for First Quarter Sales (January - March 2018)
Published by HdL Companies in Summer 2018
7 Eleven
Best Buy
BMW of Encinitas
Cardiff Seaside Market
Chevron
Dick’s Sporting Goods
Encinitas Ford
Encinitas Gasoline & Auto Service
Hansen Surfboards
Herman Cook Volkswagen
Home Depot
Home Goods
Lazy Acres
Pacific Coast Grill
Quick Shine Car Wash
REI
Ross
Shell Gas & Car Wash
Target
TJ Maxx
USA Gasoline
Valero
Verizon Wireless
Vons
Walmart Supercenter
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
SALES TAX BY MAJOR BUSINESS GROUP
1st Quarter 2017
1st Quarter 2018
General
Consumer
Goods
Restaurants
and
Hotels
County
and State
Pools
Autos
and
Transportation
Fuel and
Service
Stations
Building
and
Construction
Food
and
Drugs
Business
and
Industry
$13,239,343 $12,913,450
3,963 8,807
1,702,394 1,752,238
$11,532,986 $11,152,405
2017-182016-17
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Four Quarters – Fiscal Year To Date
NOTESSales Tax UpdateQ1 2018 City of Encinitas
$0
$1,000
$2,000
$3,000
$4,000
SALES PER CAPITA
Encinitas
Q1
15
Q1
18
Q1
16
Q1
17
County California
27%
Cons.Goods
18%
Restaurants
14%
Pools
11%
Autos/Trans.
10%
Fuel
8%
Building
7%4% Food/DrugBus./Ind.
Encinitas This QuarterREVENUE BY BUSINESS GROUP
Q1 '18*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES
Business Type Change Change Change
County HdL State*In thousands of dollars
-4.9%-7.6%-7.1% 42.6 Auto Repair Shops
4.5%3.8%3.2% 190.8 Building Materials — CONFIDENTIAL —
-0.7%-2.0%-3.7% 262.7 Casual Dining
2.1%0.5%7.7% 53.8 Convenience Stores/Liquor
9.5%2.8%3.3% 202.8 Discount Dept Stores — CONFIDENTIAL —
3.0%0.8%-1.7% 91.5 Electronics/Appliance Stores
8.1%8.2%13.3% 77.7 Family Apparel
49.3%6.8%5.8% 93.3 Fast-Casual Restaurants
-11.6%1.9%3.4% 116.3 Grocery Stores
13.8%-1.0%2.2% 119.2 Home Furnishings
-6.0%-0.2%-4.7% 247.6 New Motor Vehicle Dealers — CONFIDENTIAL —
-5.9%-3.8%-5.0% 148.9 Quick-Service Restaurants
7.4%4.6%-0.6% 304.8 Service Stations
-17.2%-10.0%-12.8% 50.3 Specialty Stores
3.9%1.4%3.9% 104.5 Sporting Goods/Bike Stores
-1.8%-3.4%-1.8%
-2.7%
-1.9%
2,559.0
399.4
2,958.3
Total All Accounts
County & State Pool Allocation
Gross Receipts
-4.4%-2.1%
-3.6%-1.8%
CDTFA Changes
The California Department of Taxes
and Fees Administration (CDTFA)
implemented new reporting software
– Centralized Revenue Opportunity
System (CROS) with the first quarter
2018 tax filings. The change will al-
low CDTFA to collect and allocate tax
revenue more quickly than the prior
system making data more timely and
relevant for decision making purposes.
There will also be a greater emphasis
on electronic tax filing with the goal
of decreasing errors and misallocations.
During the changeover, CDTFA had a
hard cutoff of April 30 for tax returns.
Allocating the revenue received through
that period left some activity out of the
current quarter, pushing it to the second
quarter 2018. However, CDTFA will
be disbursing the revenue related to the
previously delayed payments with the
June 2018 monthly allocation.
In summary, the change in software and
partial allocations in the first quarter
2018 payments will inflate actual dis-
tributions in June 2018 and be included
with second quarter 2018 data.
Statewide Results
Given the CDTFA changeover, the
statewide first quarter 2018 receipts were
1.8% lower than the prior year. How-
ever, once HdL adjusted the results for
missing payments and other accounting
anomalies, the results were 5.9% higher
than the same period in 2017.
A stellar rebound in building-construc-
tion activity, compared to a year ago
when gloomy winter weather depressed
results, and continued increases in fuel
prices, were the primary contributors
to overall growth. Steady receipts from
purchases made online also helped boost
countywide use tax pool allocations.
After a long period of solid growth
in new car sales, much of the upward
movement within this group is now
coming from leases rather than pur-
chases. Corporate tax breaks approved
by Congress in December 2017, are ex-
pected to have a positive impact on the
industrial sector as businesses look to
invest excess cash.
Supreme Court Ruling
On Thursday, June 21, 2018, the Su-
preme Court ruled in a 5-4 decision
to require out-of-state online retailers
to collect sales taxes on sales to in-state
residents. The physical presence rule as
defined by Quill is no longer a clear or
easily applicable standard, and the on-
line interstate marketplace was not the
prevailing issue before the court in 1992.
In California, numerous online retailers
already collect and remit state and local
taxes, including 2 of the 3 companies
involved in this Supreme Court case
(Wayfair and Newegg).
According to a study conducted by the
California State Board of Equalization,
the total revenue losses related to remote
sellers for both businesses and house-
hold consumers were about $1.453 bil-
lion in fiscal year 2016-17. Unpaid use
tax liabilities in 2016-17 average $60
per year for each California household,
and California businesses average $171
per year in unpaid use tax liabilities.
The CDTFA is currently reviewing the
court’s opinion to determine next steps
to support taxpayers.