The California State Board of Equalization (Board) unanimously rejected Craigslist, Inc.’s (Craigslist) argument that California’s adoption of a factor-presence nexus regime in 2009 reflected pre-existing federal constitutional nexus standards pursuant to which Craigslist would be “subject to tax” in jurisdictions where it did not have a physical presence, and would not be required to throw out sales made in such jurisdictions. Pursuant to a written agreement, the California Franchise Tax Board (FTB) had granted Craigslist alternative apportionment for the 2007-2010 tax years, which required Craigslist to exclude from its sales factor sales made in states where Craigslist was not subject to tax under “United States constitutional standards for nexus.” At the time, California law, as interpreted by the Board and the FTB, required taxpayers to have a physical presence in a jurisdiction to be taxable in that jurisdiction. But 2009 legislation changed California’s nexus rules to include a market-based definition, effective January 1, 2011, which established a bright-line, $500,000 threshold for sales in a state to establish nexus. Craigslist filed an amended return in 2011 for the 2007 tax year, and included in its sales factor sales in any jurisdiction where Craigslist had more than $500,000 in sales for 2007 even if Craigslist had never had a physical presence there, arguing that if economic nexus satisfied U.S. constitutional standards in 2009 when expressly adopted by the California Legislature, it necessarily satisfied those same standards two years prior. The FTB argued that the constitutional standards must be determined through the lens of California decisional law, that the 2011 legislation applied prospectively to adapt to changes in the economy, and that a Board ruling in favor of Craigslist would cause significant uncertainty for other taxpayers regarding pre-2011 tax and filing obligations. The Board unanimously agreed with the FTB and denied Craigslist’s appeal, stating at the hearing it would be an “injustice” to allow the “change in law” effective in 2011 to apply to earlier years. Because the amount in controversy exceeds $500,000, the Board will have 120 days from when the appeal becomes final to issue a written decision. Appeal of Craigslist, Inc., Cal. Bd. of Equalization, No. 725838, appeal denied, Dec. 16, 2015.