On-Line Sales Tax Ruling in California

The Borders bookstore company (Borders Group Inc.) appeal of a tax notice sent to them in 1999 by the state of California has reached another level, as an appellate ruling has gone against the bookseller. At issue is a 1992 Supreme Court ruling that without a physical presence in a state no taxes can be collected by that state. California has argued, successfully so far, that the on-line and brick and mortar aspects of the Borders bookselling enterprise are closely enough interlinked that the bookstores constitute that physical presence. If rulings continue in the state's favor, many believe that all on-line revenue will be pursued using variations of this argument. Borders has since sold their on-line business to Amazon.

Future rulings could be a boon to independent bookstores, comic book shops among them, who must pay sales tax on those items sold over the counter and have found themselves competing against deep discounts made possible by not having to pay such taxes.

Here's ICv2.com's look at the situation.
 
posted 10:19 am PST | Permalink
 

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