Legal Question in Tax Law in New Jersey

Re: Internet tax

Unless you have a "tax nexus" with CA, you have no obligation to collect CA sales tax. (This is actually true universally throughout the US, as the US Supreme Court put this limitation on the taxing power of the states.) Thus, the correct result is for you NOT to add sales tax (either NJ or CA).

Technically, the CA buyer should pay "use tax" on the transaction. It comes as a complete surprise to most people, but in every state with a state sales tax there is a parallel tax (at the same rate as the sales tax), payable by the buyer, to catch people who purchase taxable merchandise or services out of state; the purpose is to remove the incentive to shop out of state. Unfortunately for the state governments, few are aware of this and even fewer actually pay it. [This is why states push so hard to get out-of-state vendors to collect their taxes at the time of sale.]