Cupertino okays $12.2 million payment to Apple regarding sales tax revenue
On March 6, the city of Cupertino, California greenlit an US$12.1 million payment to Apple to pay back sales tax revenue the city had collected from the tech giant in the last two years, according to SilconValley.com.
The amount is an accumulation of how much the city received in sales tax from Apple between January 2023 and June 2024. The money was pulled from the city’s general fund, an account that supports most of the city’s activities and is funded through taxes, according to SiliconValley.com.
Since 1998, Apple has treated all online purchases of products within California as if they were made in the city. The deal allowed Cupertino to collect 1% of Apple’s 7.25% sales tax, and a third of the revenue was returned to the company.
In October 2024, the San Jose Spotlight reported that Cupertino would be allowed to keep millions of sales tax dollars from Apple, despite a lengthy state audit questioning the city’s tax agreement that left it with a budget shortfall.
At that time the city announced a settlement with the California Department of Tax and Fee Administration, allowing Cupertino to retain sales tax revenue from Apple since the state began an audit in 2021 through August. In 2023, the state audit found some of Apple’s local sales tax dollars were misallocated. Under the settlement, the city was no longer receive the sales tax distribution the state determined should go to other jurisdictions beginning in 2025.
The Cupertino City Council set aside roughly US$77.5 million in the 2024-25 fiscal year budget for potential sales tax repayments to the state tax association, all of which it will now be able to access. The city Cupertino was saddled with a roughly $15 million deficit due to the audit and the settlement could relieve some of that, for now, according to o San Jose Spotlight.
Apple has about 25,000 employees in the Bay Area (although it’s not clear how many of these are specifically based in Cupertino). Apple is Cupertino’s largest employer, and has been for years.
In 2016, then-Cupertino mayor and now councilman Barry Chang pushed for a tax of $1,000 per employee on large companies. However, as Cult of Mac notes, the proposal went nowhere.
Cupertino is located in Santa Clara County, directly west of San Jose on the western edge of the Santa Clara Valley with portions extending into the foothills of the Santa Cruz Mountains. The population is around 60,000.
But in 2023, the California Department of Tax and Fee Administration (CDTFA) audited the city and determined the state should receive that revenue instead and the city needed to pay back any previously collected sales tax dollars.
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