In out-of-state commerce, on-line retailers do not ordinarily collect sales tax, which is part of the reason prices can be set so low.
In a ruling by the California District Court of Appeals, it was determined that Borders Online LLC had nexus in California and owed back use tax because Borders Books & Music, Inc., accepted returns of Borders Online purchases. Borders Online will most likely appeal to California’s Supreme Court. Meanwhile, Bookselling This Week (in which this article is included) has learned that the staff of the California BOE (Board of Equalization) has completed an audit and delivered the opinion to its Board that Barnesandnoble.com has nexus in the state and that the chain retailer owes approximately $20 million in back taxes, according to sources close to BOE. These sources report that Barnesandnoble.com is seeking a settlement with BOE, which to date has not responded.
Of course, this is in just one state–California. Could it be that the bubble is about to burst for Borders and Barnes and Noble…
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