has anyone dealt with this?
Richard, speaking as an affiliate who resides in California, I've done dozens of these for merchants on CJ, eBayEnt, SAS, and I'm pretty sure Avantlink, for a variety of OPMs and AMs. Its a set form prepared by the State Board of Equalization, and we fill it out, email it in, and you file it away.
You can actually do this within the tool in SAS and eBay Ent. Affiliate Network... makes it pretty manageable. Get with your rep on how it works if you run one in either of these. Your productive California based affiliates will know what to do otherwise.
CA merchants would not use the workaround - they must already be collecting sales tax for purchases made by CA residents by virtue of their presence in the state. The workaround is for merchants with no other nexus to CA except for their affiliates who reside in CA.