Borders Online v. State Board of Equalization
Opinion
Opinion
Rivera, J.
We face with increasing frequency issues at the junction of Internet technology and constitutional principles. This is another such case.
Borders Online, LLC (Online), a Delaware company, sold more than $1.5 million in merchandise over the Internet to California consumers in 1998 and 1999. Online’s Web site included a notice that any goods purchased from Online could be returned to any Borders Books and Music store (Borders store). Under the policy of Borders, Inc. (the owner of Borders stores), customers could exchange the items or receive a credit card refund. Numerous Borders stores are located all over California. Borders, Inc. (Borders) and Online also engaged in incidental cross-marketing practices to benefit the Borders brand. Online and Borders are affiliated through a common parent company but are distinct corporate entities.
The State Board of Equalization (Board) determined that Borders was Online’s representative operating in the state “for the purpose of selling” Online’s goods, and therefore Online was required to collect and remit a use tax from its California customers for the period April 1, 1998, through September 30, 1999 (the disputed period). (In…