California bill for online sales tax

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California lawmakers have voted to force companies with stores in the state to collect sales tax on products they sell over the Internet.

The bill, believed to be the first of its kind in the US, is not yet law. The state governor, Gray Davis, has not said whether he will sign the bill, though a spokeswoman said he does not generally support Internet taxes.

California’s sales tax is 7.25 percent. If that was applied to Internet sales, the state estimated it could bring an additional $14 million annually, a fraction of its $22 billion in sales taxes.

Governor Davis was also sent a related bill that would require him to talk to other states about developing a multistate sales tax system to capture revenue from Internet sales to California residents by out-of-state companies.

California has approved a moratorium on taxing such purchases while other states consider the complicated issues involved. At least 26 other states have formally approved – either through legislative resolutions, proclamations or gubernatorial orders – plans to study a multistate tax system, according to the National Conference of State Legislatures.

In Washington, US federal lawmakers are considering a five-year extension of a ban on Internet-specific taxes that expires next year. The bill, which has cleared the house, includes taxes on access but does not address state sales taxes.

Under the California 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. That would include companies like Barnes & Noble bookstore and online partner BarnesandNoble.com, which is incorporated separately.

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