Sacramento, CA – Governor Jerry Brown has signed what’s being referred to as the “Amazon Tax.”
The tax mandates that online retailers pay sales tax on transactions made in the state of California.
Republican Board of Equalization member George Runner, whose district covers the Mother Lode, feels the new law is bad for business. Which companies must pay the tax is still debatable. A 1992 Supreme Court ruling stated that retailers must have a physical presence in the state in order to be subject to a state imposed online sales tax. The new California law requires that any company with a nexus, or physical presence in the state, to pay the tax. Runner fears that many companies will close California affiliate offices and move to other states, in hopes of avoiding the tax. “Major out-of-state retailers like Amazon.com and Overstock.com are teminating their California affiliate advertising programs in response to this legislation,” claims Runner. “I’ve been warning for months that this would happen, but apparently these warnings fell on deaf ears.”
Proponents say that the tax will bring the state $200-300 million in revenue a year.