Press Releases

SACRAMENTO, CA - Assemblymember Nancy Skinner (D–Berkeley) announced today that she has introduced Assembly Bill 178, legislation that will ensure that California receives its share of sales and use tax revenue from out of state companies leveling the playing field for California’s brick and mortar businesses.

AB 178 would provide that out-of-state companies which maintain a network in California and thus have a presence in the state would therefore be required to collect sales tax on orders received from within California. New York passed a similar law, and was sued by Amazon.com. The New York Supreme Court dismissed Amazon’s claim, based on an extensive body of legal decisions defining the nature of nexus and upheld New York’s right to levy the sales tax.

“This legislation will close the current loophole in California tax law which has allowed out-of-state companies to avoid collecting California sales and use tax,” said Assemblymember Nancy Skinner (D – Berkeley). “During this unprecedented fiscal crisis we cannot afford to lose sales tax revenue from out-of-state companies when our own local businesses are struggling to keep their doors open.”

AB 178 is modeled closely after the New York law and written to conform to the recent New York Supreme Court decision. These taxes are due and payable as use tax, the issue raised in the bill is the point of collection, not the amount of tax owed. The bill exempts businesses doing less than $10,000 in business in the state. AB 178 is expected to raise approximately $55 million in revenue per year.

“This bill helps preserve businesses and jobs in our communities,” said Hut Landon of the Northern California Independent Booksellers Association. “Independent booksellers have been hammered by unfair tax competition from Amazon for over a decade. And as Amazon has expanded its retail reach, more and more locally-owned businesses are faced with unfair competition. We welcome this effort to level the playing field for all retailers.”

AB 178 is joint-authored by Assemblyman Charles Calderon (D – Montebello) who chairs the Assembly Revenue and Taxation committee.