California Affiliates had better get prepared, California Assembly Bill 178, co-authored by Charles Calderon (D) and Nancy Skinner (D) will be even more devastating than the NY bill.
California Bill 178 was introduced on February 2nd. California Bill 178 includes this definition of what will create a nexus in California “Any retailer entering into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers of tangible personal property, whether by a link or an Internet Web site or otherwise to the retailer…” The dollar threshold at which the nexus is created is $10,000 in the previous 4 quarters. The only out is a reference to satisfying “the requirements of the commerce clause” of the US Constitution during those four quarters.
You can see that the definition of nexus clearly includes affiliates. My suggestion to California affiliates is to start contacting your local politicians, see where they stand.
Then get your sites ready. Find back ups for every merchant that does not currently charge California tax. Research new merchants; start diversifying even more than you currently do. Begin testing new merchants so that you have replacements.
If the law passes and a date is set for it to take effect, begin questioning your merchants and OPM’s in public. Do not ask privately; do not settle for silence.
All it takes to destroy your business is the loss of one key merchant.
I know, I’ve been there.
California has two options to raise money, collect an internet tax or raise other taxes. The internet tax seems like the preferred way – easy, less of a hardship and since it’s due any way as a use tax, the fairest.
I’ll continue to read more about this and will monitor the status. Meanwhile get ready, other states will follow.
Link to California Bill 178
Link to thread at ABestWeb discussing the proposed bill California Internet Tax
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