California to Out-of-State Online Retailers: Collect State Sales Tax

California has told out-of-state online retailers to start collecting sales tax for customers residing in the state Beginning July 1. This includes,, and Beginning Friday this new requirement for retailers takes effect, along with a 1-percentage-point drop in the tax. The new tax collection scheme is projected to raise $317 million a year in new state and local government revenue.

Besides the slight cost to California customers, there are other adverse effects for companies connected with Amazon and similar retailers. Amazon and online retailer have reportedly told thousands of California Internet marketing affiliates that they will stop paying commissions for referrals of click-through customers. This is due to the fact that the new requirement applies only to online sellers based out of state that have a connection to California, such as workers, warehouses or offices.

The LA Times reports that "both Amazon in Seattle and Overstock in Salt Lake City have told affiliates that they would have to move to another state if they wanted to continue earning commissions for referring customers."

California’s law was drafted to circumvent a 1992 U.S. Supreme Court ruling that retailers can’t be forced to collect sales taxes unless they have a physical presence in the state. The new law establishes that presence by redefining it in two ways: when a seller pays commissions to affiliate sites in California, that refer buyers; and when sellers have a related company operating in the state.

Many of those affiliate companies said that they plan to move or are considering a move.

Meanwhile, Governor Jerry Brown is praising the new law, calling it a "common-sense idea." He signed the bill into law on Wednesday.

Amazon sees it differently:

"We oppose this bill because it is unconstitutional and counterproductive," Amazon wrote to its California business partners Wednesday. Amazon has said what further actions it might take to challenge the California law.

Source: LA Times

Tweet about this on TwitterShare on FacebookShare on Google+Share on RedditEmail this to someone


  1. 0
    udx says:

    Apparently, Barnes and Noble welcome the new law

    “We thank Governor Jerry Brown for demonstrating his commitment to California businesses by signing e-fairness into law. This legislation will directly benefit California businesses by creating a fair marketplace,” said William Lynch, Chief Executive Officer, Barnes & Noble. “We believe that e-fairness will improve the economy, add jobs, and help struggling businesses everywhere in California. By signing this law, the Governor has made clear that his priorities are to help bolster economic recovery. This is a huge win for business in the state of California.”


    What is a game?(throws wine glass on the floor and it breaks to pieces) A miserable little pile of secrets.

  2. 0
    Conejo says:

    Spell Check.

    If you’re aware enough that you have an awful way with words, be productive enough to counter it rather than using your disability as an excuse for laziness.

    Here are we — and yonder yawns the universe.

  3. 0
    katiekat says:

    it doesint bug me what bugs me is when i get peaple acting like gramer notzies and  herassing me over it so i put it in becuse for the most part  it keeps ppl from sayingthings


    am dyslexic and have a learning disablement from when i died as a baby and sustained brain damage do to lack of oxygen pleas pardon my bad spelling and grammar

  4. 0
    Bill says:

    Understood, but you can always run your text through a spell-checker before you post if it bothers you enough to feel the need to explain it.  

  5. 0
    Grif says:

    Fun fact: is a seperate entity from brick-and-mortar stores. Since it’s based in Texas, and has no branches in California, it can enjoy the same non-taxing that and has. When you order from, you’re ordering directly from the warehouse (In Texas), and not a local location.


    "Power means nothing without honor and pride." My video game review site.

    Atlanta Video Games Examiner for

  6. 0
    ecco6t9 says:

    I was watching TV the other night, North Dakota came up about it’s amazing job growth through some backwards extremeist idea that "Bussiness Friendly Laws" are good for jobs.


    I guess Califorina is far too progressive for such bacwards thinking.

  7. 0
    Shahab says:

    As a Californian myself I have to say this was stupid. We all knew exactly what Amazon and others would do, cut ties to all affiliates in California, thus causing small California businesses who rely on those programs to be hurt. This won’t bring any signficant money into the state, on the whole we’ll probably lose out.

    California has to take a good hard look at what it wants to do about property taxes before we’ll be solvent again. That and cut services.

  8. 0
    katiekat says:

    i spit out my milk when i red  your coment it made me laugh so hard. but yea its redickulis how peaple seam the way to get out of det is to tax in sted of you  know maybe cuting spending  i know i know ratickel idea

    am dyslexic and have a learning disablement from when i died as a baby and sustained brain damage do to lack of oxygen pleas pardon my bad spelling and grammar

  9. 0
    airford says:

    This bill is aready in New York, Illinois, Rhode Island, and North Carolina. I find this counter-productive in that the bill just makes Amazon, Overstock, drugstore, and E-bay remove their presence from the state rather than rework their entire site to accomidate individual states.

    Rhode Island General Treasurer Frank T. Caprio was recently quoted, saying, "The affiliate tax has hurt Rhode Island businesses and stifled their growth, as they’ve been shut out of some of the world’s largest marketplaces, and should be repealed immediately."

Leave a Reply