Deutsche Bank Comments on Secondary Impacts from CA Internet Tax

On Wednesday, June 29, 2011, Governor Jerry Brown signed into law legislation that will “require large out-of-state retailers to collect sales taxes on purchases that California customers make over the internet.” “The new statue applies to online sellers based out of state that have some connection to California - such as workers, warehouses or offices,” Deutsche Bank writes. “Many of these are run by what are called ‘affiliates' - companies that are based in CA and partner with Amazon

(and Amazon refers its business to these affiliates). “The new CA statue establishes ‘presence' in two ways - 1) when online retailers pay commissions to other sites in CA (the affiliates) and 2) when online retailers have a related company operating in the state.” Amazon closed Thursday at $210.38.