Cupertino's City Council approved a $12.1 million repayment to Apple for over-collected sales tax from online purchases between January 2023 and June 2024. This decision stems from an audit by the California Department of Tax and Fee Administration, which found that Cupertino had entered an improper sales tax agreement with Apple, requiring the city to repay previous collections. Initially, Cupertino faced a potential $56.6 million shortfall. A settlement with the CDTFA allowed the city to retain $74.5 million in Apple sales tax, alleviating some financial strain while the repayments impact budget allocations.
Since 1998, Apple has treated all online purchases of products within California as if they were made in the city. It allowed Cupertino to collect 1% of Apple's 7.25% sales tax.
The California Department of Tax and Fee Administration audited Cupertino and determined they had improperly entered the agreement regarding sales tax, leading to the need for repayment.
Cupertino had prepared to set aside $56.6 million from its budget for repayment, which could lead to reductions in staff, community services, and city projects.
A settlement with the CDTFA allowed Cupertino to keep roughly $74.5 million in Apple sales tax revenue, alleviating some financial pressure from the repayment.
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