Jun 30

New California Internet Sales Tax AB 28

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california internet sales tax

California Internet sales tax hurts affiliates

What is the California Internet Sales Tax?

Just a quick note to let you know that there’s now a California Internet sales tax. The state is requiring some online retailers based in other states to collect the tax and remit it.

With few exceptions, the law “include[s] in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by an Internet-based link or an Internet Web site, or otherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 within the preceding 12 months, and provided further that the retailer has cumulative sales of tangible personal property to purchasers in this state of over $500,000, within the preceding 12 months…”

If California needs more money in the future (and it will), expect those dollar amounts to be lowered so that more business website owners are covered by the new Internet sales tax law.

Affiliates terminated because of California Internet sales tax.

Because of this Internet sales tax, Amazon and other large online retailers are already terminating their affiliates in California.

Link to the new California Internet Sales Tax law

Here’s a link where you can read the new California Internet sales tax law (Adobe Acrobat PDF file)…

These types of Internet sales taxes are heading to the U.S. Supreme Court to determine if they’re legal. Unfortunately for you, the California Internet sales tax will be collected for years while this dispute plays out in the courts.

Internet Lawyer

Internet lawyer Mike Young helps business owners protect themselves. Whether you're wanting website legal help, ecommerce agreements, technology contracts, corporate formation, LLC formation, or want to buy or sell an Internet-related business, Mike may be able to help you or refer you to someone who can.

  1. SB 30 Jun 2011 |

    does this law affect internet sales of *non-tangible* items (such as membership sites, e-books, other online content, services, etc.)?

    • Internet Lawyer 1 Jul 2011 |

      Although most Internet law is federal or international, an issue regarding state sales tax is, of course, governed by state law. As I do not practice in California, you’ll need to obtain legal advice on this issue from a California attorney. If you need the name of a California Internet lawyer to advise you, simply email me using the contact form on this site.
      Best wishes,
      P.S. It’s also a good rule of thumb to not get legal advice directly off of anyone’s blog no matter where they’re licensed. Chances are you’ll have someone weighing in on the issue who isn’t a lawyer but pretending to be one.

  2. Tom Morgan 30 Jun 2011 |

    Most people like me will only do business with online retailers who refuse to follow the new unconstitutional California law (like Amazon and Overstock). California legislators have only hurt this state with all of their taxes.

  3. Vrej Grigorian 14 Aug 2011 |

    Do California companies have to charge tax to non California customers?

    • Internet Lawyer 17 Aug 2011 |

      You’re asking for legal/tax advice. Please discuss this issue with your California business lawyer or California accountant.