California legislation states that the tax charged for a drop-shipped item must be based on:
- The amount the out-of-state retailer charged the California consumer (if known), or
- The amount the California retailer (drop shipper) charged the out-of-state retailer plus a markup of 10 percent.
This means if we don't know your retail price, we must use our Printful price + 10%, rather than just the Printful price. For example, let's say you are selling a shirt that costs $10 on Printful. If we don't have the retail price, then when it comes to sales tax, it would look like this:
$11 x 7.5%
Where $10 + %10 is $11, and tax rate depends on the county. You can find more information here.