JS_Harris - 7:37 pm on Mar 20, 2009 (gmt 0)

To know who will take a financial hit on this you need only trace the dollars. If ANY company, be it CJ or Google or Yahoo or eBay or other, sends a commission or payment check of any kind to a CA resident... A sales and use tax will have had to have been collected by the BUYERS of all of the actions leading to that commission generating event, regardless off state (read ESPECIALLY out of state).

this affects EVERYONE, not just CA residents.
- If you DO NOT live in California and buy something from online ANYWHERE in the world you will owe CA sales and use tax if the website owner whos ad you clicked resides in CA. It won't matter if you, and the company you bought from, are NOT based in California...

- Google, Yahoo!: if you click on a cpc ad from a website owned by someone in CA... you'll have to pay the CA sales and use tax if you buy anything.

- eBay sellers and affiliates: if you live IN CA and sell items you must collect the tax, if you live OUTSIDE of CA and buy an item from a website owned by someone in CA you must pay the tax. Same applies to affiliates even though they don't handle product at all, (a double taxing here).

- CJ, why on earth would they want California based websites in their network when it means they must pay taxes on all sales with those sites involved (remember - the affiliate site is used to determine if tax is owed BUT not how much tax is owed, the affiliate site only triggers the event, the total sale amount triggers the tax owed and so it's possible for a $10.00 commission to generate 1000.00+ in taxes owed for a large item).

If you live in CA and own a website, prepare to be scorned. If you run any advertising that shows up in CA, prepare to collect tax on sales (which somehow your affiliate program must pay, not you).

edit: I can't say it strongly enough that don't look at this as just a CA problem, when both NY and California no longer exist to your business and it spreads to other states (which is happening now - Florida and Indiana apparently) everyone is going to be affected.

[edited by: JS_Harris at 7:40 pm (utc) on Mar. 20, 2009]