California Cities Snub Retailer, Share Sales Tax With Each Other

When it appeared things might get uncomfortable between two cities near downtown Los Angeles over sales-tax revenue from online retailer Fashion Nova, Vernon, Calif., did something unusual: It cut a deal with its neighbor instead of the company.

It’s a new twist on the controversial practice of online retailers snagging a slice of local sales tax they collect from customers by earmarking it to a particular city with an office or warehouse.

City councils in Vernon, an industrial city that serves as Fashion Nova’s headquarters, and Santa Fe Springs approved the sharing agreement in December to avoid complexities ...