The city of Cupertino settles with Apple, pays $12.1 million to end sales tax dispute
Cupertino, California, has resolved a contentious sales tax dispute with Apple, agreeing to pay the company $12.1 million.
The settlement, finalized in March 2025 and approved by the City Council, stems from a 1998 agreement where Apple allocated all California online sales to Cupertino, allowing the city to collect a 1% share of the state’s 7.25% sales tax. In return, Cupertino rebated about a third of this revenue to Apple, a deal that fueled city services but drew scrutiny as Apple’s digital sales soared.
A 2023 audit by the California Department of Tax and Fee Administration (CDTFA) ruled that sales tax should be distributed based on purchase delivery locations, not Apple’s headquarters. Initially, Cupertino faced repaying $56.5 million, prompting budget cuts affecting staff and community programs. A 2024 settlement allowed the city to retain $74.5 million in collected revenue, with the $12.1 million refund to Apple drawn from its general fund, covering taxes from January 2023 to June 2024.
This case highlights the evolving landscape of digital tax policies and may set a precedent for other California municipalities with similar corporate agreements. While the refund is minor for Apple, it signals potential shifts in how tech giants report online sales.
MacDailyNews Take: For perspective, Apple’s estimated average daily expenditure is approximately $761 million.
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