California Enacts Internet Sales Tax

California is now the latest state to require Internet
companies collect sales tax.

On June 29, Gov. Jerry Brown signed
a bill
requiring sales tax collection from companies with local affiliates. The law only applies to on-line companies
doing $500,000 or more in business with in-state purchasers.

In response, Amazon severed its ties with California
affiliates, according to TechCrunch
and numerous other news sources.

“We oppose this bill because it is unconstitutional and
counterproductive,” the company reportedly said in a statement to affiliates.
“It is supported by big-box retailers, most of which are based outside
California, that seek to harm the affiliate advertising programs of their
competitors. Similar legislation in other states has led to job and income
losses, and little, if any, new tax revenue.”

However, computer site CNET
noted that the bill also includes a provision that forces sales tax collection
from companies with subsidiaries in the state. Amazon has two in-state subsidiaries that helped develop its
Kindle e-reader, the site said.

Laws requiring Internet companies collect sales tax are now
on the books in Arkansas,
Connecticut,
Illinois,
Rhode Island, New York, Hawaii, and North Carolina.

On June 21, JA
relaunched its campaign
in support of “sales tax fairness.” Senator
Dick Durbin (D-Ill.) has said he will introduce a bill
to require Internet
sales tax collection on a national level.