Gov. Jerry Brown signed into law a new bill that will require the Amazons of the virtual world to collect sales tax from California customers.
Brown said at a press conference in San Francisco that the compromise with Amazon would "create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years."
The bill was signed as California looks for new revenue streams to jump start its sluggish economy and after several brick-and-mortar stores complained that virtual retailers, such as Amazon, had an unfair competitive advantage because they did not charge customers tax.
Amazon had threatened to sever ties with hundreds of partner retailers in California to exploit a federal law that makes it difficult to force national businesses to pay taxes in a state where they do not have a physical presence, employees working or consistent contact.
Under the new bill, Amazon agreed not to end those relationships and not to pursue a voter referendum to overturn any such state laws.
The new law will not go into effect until Sept. 15, 2012.