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California Takes First Toward Online Sales Tax

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SACRAMENTO, CA/USA (1 September 2000) — With the nationwide ban on internet-specific taxes set to expire this year and federal lawmakers considering a five-year extension, California took matters into its own hands. The state passed a bill on Wednesday that will force companies with stores in California to collect sales tax on products they sell […]

SACRAMENTO, CA/USA (1 September 2000) — With the nationwide ban on internet-specific taxes set to expire this year and federal lawmakers considering a five-year extension, California took matters into its own hands. The state passed a bill on Wednesday that will force companies with stores in California to collect sales tax on products they sell over the internet. By tacking on the 7.25% sales tax, California can generate US$14 million annually.
Under the bill, an internet or catalog company would have to collect sales tax if it has a relationship with stores in California, sells similar products under a similar name or if the two companies promote each other’s sales. The example given was Barnes & Noble and barnesandnoble.com.
Many feel the law, if ratified by the governor, will put California at a competitive disadvantage as a home for e-commerce businesses. Others however feel that many states were waiting for someone to take the initiative and will quickly follow suit. (JW)

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