Goodbye, California? Will California's New 'Amazon Tax' Send E-Retailers Packing?


Gov. Jerry Brown recently signed into law California's 2011-2012 budget bill, and trailer bills related to the budget bill. One such trailer bill contains language commonly referred to as the "Amazon law."1 This law-also known as California's affiliate nexus law-will require out-of-state retailers who: (1) engage in business in California through the use of affiliates; and (2)have cumulative sales of greater than $500,000 during a preceding 12-month period, to collect and remit taxes on sales made within California. In incorporating this legislation into its new budget, California becomes the latest in a growing list of states - Texas, Colorado, Connecticut, Arkansas, Illinois, Hawaii, Rhode Island, North Carolina, and New York-to enact a law making online retailers, who have no physical presence of their own in these states, subject to sales and/or use tax obligations as a result of the activities of their in-state affiliates.

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