California State Assembly passes internet sales tax bill

California State Assembly passes internet sales tax bill

Jun 02 2011

Earlier this week, the California State Assembly followed a number of other states in passing a bill "aimed at closing a legal loophole that allows internet retailers to avoid collecting California sales taxes on purchases made via computer.

The state and local governments are losing an estimated $1.1 billion in annual revenues because of untaxed Internet sales, proponents contend.

The bill addresses an exemption carved out by a decades-old U.S. Supreme Court ruling that frees retailers from having to collect state sales taxes on purchases as long as they do not have any physical presence in the state. The bill would reinterpret California law to consider the presence of related companies (including affiliates) as sufficient to require that sales taxes be collected.

The measure will now be sent to the Senate.

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