Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 220.0125

220.0125 Internet Nexus. An out-of-state retailer engages in selling tangible personal property in California through its Internet web sites. The retailer's parent corporation operates retail locations in this State. Signs are posted inside the retail stores informing customers that they may purchase gift cards that can be used either online (via the out-of-state retailer's web address) or at the named retail stores. The signs also indicate that customers can obtain discounts on their online orders when they shop with a gift card.

By selling gift cards that can be used to purchase tangible personal property at the out-of-state retailer's Internet web site, the in-state parent is acting as the out-of-state retailer's representative and is engaged in selling activities on the out-of-state retailer's behalf for purposes of Revenue and Taxation Code section 6203 (c)(2). Accordingly, the out-of-state retailer is engaged in business in this state and must register to collect California's use tax. 12/21/00. (2001–3).