Online sales tax could bring millions to California

California was already trying to wring more taxes out of online retailers months before the Supreme Court handed down a ruling that gave states permission to do so.

Last fall, more than 2,500 online retailers with out-of-state addresses received letters from California's Department of Tax and Fee Administration informing them that they appeared to owe sales tax here. It marked an escalation of the state's efforts to collect sales tax from online retailers — and their customers — since the state in 2012 struck a deal that compelled e-commerce behemoth Amazon to begin collecting sales taxes in California.

Nic Maduros, the tax department director, told a Senate committee in April the potential taxes from the companies who received the batch of letters could total "hundreds of millions of dollars" a year in revenue. "It's not an area we can afford to overlook," he said.

The Supreme Court's recent decision in South Dakota v. Wayfair could expand the playing field even further. The 5-4 ruling overturns a 1992 decision, Quill Corp. v. North Dakota, that allowed states to collect online sales taxes from sellers only if the seller has a physical presence in the state. States will be able to collect sales tax from all online retailers, provided they meet criteria to be determined by each state.

The decision came as a victory to brick-andmortar retailers, who were subject to state sales taxes and felt they were at a disadvantage to online retailers.

"In effect, Quill has come to serve as a judicially created tax shelter for businesses that decide to limit their physical presence and still sell their goods and services to a State's consumers — something that has become easier and more prevalent as technology has advanced," Justice Anthony Kennedy wrote in the majority opinion.