Governor Brown signs California/Amazon sales tax compromise
Governor Jerry Brown of California has signed a compromise with Amazon regarding compelling the Seattle-based company to collect California sales tax.
It’s a remarkable development, and one which was not at all certain to occur.
I’ve written about this previously, but this makes it official.
Amazon is dropping a petition drive to overturn California’s “Amazon law” which would have compelled it to collect California sales tax at the time of sale for sales going into California (on products which would have been taxable there if sold in a store…not on e-books).
Amazon also agrees to bring ten thousand jobs to California, and there is talk of them opening fulfillment centers in the state.
What did Amazon get in exchange?
The internet retailer does not have to collect sales tax in California…until September 15, 2012.
That gives time for a national sales tax policy (such as the “Main Street Fairness Act”) to get passed, which would override California’s law.
What does this mean for former Amazon Associates in California (which includes me)?
After all, Amazon dropped the program (through Amazon pays advertising fees to individuals and organizations that use special hyperlinks to direct buyers to Amazon) in California in response to the law California had passed…which is now suspended. My guess is that they’ll restart the program…and soon. Whether a federal law is passed or not, the presence of Associates in California after September 15, 2012 makes no difference. I should say, “Most likely.” The Main Street Fairness Act might not pass, and something else might. I doubt anything else will make advertisers into a “nexus” that forces a company to collect sales tax. If nothing passes, Amazon has to collect sales tax anyway.
The Associates are a good thing for Amazon: we drive business their way. The Associates are also a good thing for California, in my opinion: we pay income tax on those fees. The argument against it is that people buy online from Amazon rather than buying the same thing in California…and then that they don’t pay their “use taxes” on their annual taxes, which is what they hypothetically should be doing.
However, it would be hard to demonstrate that people wouldn’t just go ahead and buy online, even with tax collection.
So, I’m guessing we’ll see the Associates program restored by Monday.
There is also a rumor out there that Amazon is going to announce the AmTab (Amazon Tablet…that’s just my slang for it) on Wednesday. They’ve called a press conference in New York for that day, according to online stories:
Having the Associates back up and running for the launch of the AmTab would make a difference, I believe, in the early sales. Obviously, I’d be favorably affected by that personally, but I don’t think that’s swaying my speculation too much.
My best guess: California Associates restored by Monday, AmTab announced on Wednesday…and I get one quickly and tell you about it.
Amazon could also be announcing something else, but the timing seems about right.
What do you think about Governor Brown signing? What do you think will happen with a national sales tax policy? Is the AmTab going to be announced Wednesday? Feel free to let me know.
This post by Bufo Calvin appeared in the I Love My Kindle blog.