Being a resident in California, this is becoming a hot issue.
For now, I wouldn’t really be concerned with the new California law. The law was intended to collect taxes from big online businesses like Amazon. California was claiming that big online businesses like Amazon that have no sales tax have an unfair advantage over brick and mortar stores in California and this law was intended to level the playing field.
Under current CA law, if an online store has a physical presence in CA and sells a product that is shipped to a CA address, then CA can collect sales tax on that transaction.
Now Federal law clearly states that one state can not tax an item that comes from another state. However, what California is trying to claim is that even though Amazon’s physical corporate address is in another state, because they have a partnerships with businesses in California that sell through Amazon, this constitutes a physical presence in the state and therefore CA is claiming it has the right to collect sales tax on those items that are sold in California. However, there is a lot of debate whether this violates Federal law and/or constitutional.
In the mean time, Amazon decided to ban all California businesses from selling on Amazon. So, now CA can’t claim any right to collect sales tax and Amazon is giving CA the middle finger. Needless to say, a lot of CA businesses that sold through Amazon are a bit pissed right now.
Now the only thing I see the A&A is actually selling is T-shirts. If the A&A web site is listed with a California address, you should be paying sales tax anyway. (Out of curiosity, what state is this web site listed in?) Now let say that you’re not in CA but you sell a a T-shirt to me and it’s shipped from a CA address. CA might claim they have the right to collect sales tax from you. But if you want to be a prick, you can give the T-shirt away for free but charge $28 for shipping Sales tax are based on the price of the sale and not shipping.
Now I see the Amazon link at the top of the web site. As far as I’m concerned, this is advertisement. Amazon is paying you to advertise on your sight. You are not involved in the sales transaction. So I don’t think will affect your revenue.
I also discovered that CA law only requires online stores to collect sales tax if they have an annual sales of $10,000 or more.
So as I said in the beginning, I wouldn’t be too concern with this new law. I have a feeling that this will end up going to the Supreme Court. So sit back and watch the show.
Here’s the link to the law.