Amazon, California settle on sales tax…for now

Amazon, California settle on sales tax…for now

I’ve written quite a bit about the question of Amazon collecting sales tax in various states, California being one of them.

That state passed an “Amazon law”, designed to compel Amazon to collect sales because: they had “Associates” in California who got advertising fees for linking to Amazon; and they had non-sales related facilities in California (Lab126, which does R&D…Research and Development…for the Kindle, and IMDb.com, to name two).

Amazon responded to this in two main ways.

They dropped their Associates in California (I was one of them).

They started an initiative drive to overturn the law…I’ve seen that they were going to put five million dollars into doing that.

Now, Amazon and California appear to have reached an agreement, according to this:

Sacramento Bee article

As I’ve written about before, Amazon supports a federal law, the “Main Street Fairness Act”. It would result in internet retailers collecting sales tax for states in which they make sales. It’s not an additional federal sales tax: you wouldn’t owe more taxes, but unless you pay them on your annual state taxes like we do, you might pay more.

So, what California is doing is giving Amazon a safe haven so they can try to get that law passed (presumably, part of that five million dollars they were going to spend on the initiative could go to lobbying).

Here are the key dates, according to the article:

“If no federal deal emerges by July 31, 2012, Amazon would have to begin collecting California sales taxes starting on Sept. 15, 2012.  <snip>

If Congress strikes a deal by July 31, 2012, online retailers would begin collecting taxes starting on Jan. 1, 2013, under whatever federal requirements are approved.”

Could something get passed by the US Congress by then? Well, let’s say that getting anything passed has been hard lately, but I think this might happen. If internet retailers were compelled to collect the sales tax for the states, it would get the states more revenue and reduce their expenses…which in turn, benefits the feds.

This isn’t a done deal. Governor Jerry Brown still has to sign off on it. I intend to e-mail Governor Brown to let him know that I support this compromise. You may want to comment either way. You can do so here:

http://gov.ca.gov/m_contact.php

While I don’t like the name “Main Street Fairness Act”, I’d love it if internet retailers collected my sales tax. It’s a bear to calculate it every year and then send a lump sum…I’d rather pay as I go along.

You can also let your representative know if you support the Main Street Fairness Act:

https://writerep.house.gov/writerep/welcome.shtml

The bill would have to go through both houses. You can contact your Senators through this link:

E-mail your Senator

Feel free also to comment this post to let me know what you think.

This post by Bufo Calvin appeared in the I Love My Kindle blog.

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5 Responses to “Amazon, California settle on sales tax…for now”

  1. Harold Delk Says:

    I believe that online retail sales should not be subject to state sales taxes in any state.

    • bufocalvin Says:

      Thanks for writing, Harold!

      That would be a major change, of course. Right now, online sales are subject to sales tax (it may be called a use tax), they just don’t have to collect it at the time of sale in states. I know that may seem like semantics, but it’s an important distinction.

      Also, to be clear, you are saying that if a company has 100 stores in, say, California, and they sell things over the internet within California, those sales would also not be subject to sales tax?

    • bufocalvin Says:

      Thanks for writing, Harold!

      That would be a major change, of course. Right now, online sales are subject to sales tax (it may be called a use tax), they just don’t have to collect it at the time of sale in states. I know that may seem like semantics, but it’s an important distinction.

      Also, to be clear, you are saying that if a company has 100 stores in, say, California, and they sell things over the internet within California, those sales would also not be subject to sales tax?

  2. Edward Boyhan Says:

    The NYT has a possible alternative interpretation of what Amazon is thinking: it give them a year to move Lab126 out of the state rendering the California law moot as far as Amazon is concerned.

    As you pointed out tax policy changes out of DC are almost impossible in the current climate. As far as lobbying goes, $5mm is a drop in the DC bucket.

    Most consumers probably like the sales taxless internet just the way it is — even if there wasn’t political gridlock, this is probably a non-starter at the national level.

    • bufocalvin Says:

      Thanks for writing that, Edward!

      I thought about time to pull out Lab126, IMDb, and possibly other assets…but what’s the side where that is an advantage for California? I’ll read the NYT article, but why would California both give them an ability to not collect the sales tax for a year (which California wants them to do) and to move jobs out of the state?

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