Borders Online V. State Bd. Of Equalization, 129 Cal. App. 4th 1179 (1st Dist. 2005)

Borders Online, LLC, an out-of-state corporation, is obligated to collect California state use tax on sales of tangible products shipped from out-of-state locations to California residents. The Court of Appeals ruled that Borders Online had a nexus with California by virtue of the fact that Borders, Inc., an affiliated but distinct entity, agreed to and accepted returns from Borders Online's customers at Borders, Inc.'s brick and mortar stores located in California. Therefore, pursuant to tax laws, Borders Online was a retailer engaged in business in California that was making sales of goods for use in the state, and was hence obligated to collect use tax on its sales to California residents. The Court further held that the imposition of such a collection obligation on Borders Online does not run afoul of the Commerce Clause.

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