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.