California to Marketplace Sellers: You May Owe Income Tax Too (2)

California’s pursuit of taxes from out-of-state sellers using third-party platforms like Fulfilled by Amazon has expanded from sales tax to income tax.

California’s Franchise Tax Board is sending notices this month to online merchants demanding income tax returns, saying the out-of-state sellers may be deriving income from California sources.

The push piggybacks on the state’s effort to collect sales tax from out-of-state sellers tied to customers or inventory that they have in California. Although the income tax board says the notices are part of a longstanding enforcement effort, the recipients of the notices say they are among the thousands of ...