Business

Seattle-Based Amazon Wants California Voters to Decide on Sales Tax Collection

Seattle Based Amazon Wants California Voters to Decide on Sales Tax CollectionSAN FRANCISCO (AP/The Blaze) — Amazon.com Inc. wants California voters to decide whether to overturn a new law that forces online retailers to collect sales taxes there.

A petition for a referendum was filed Friday with the state Attorney General’s Office so that voters can decide on the requirement, which was included in a state budget signed into law in late June.

The new law forces online retailers to collect California sales taxes by expanding the definition of having a physical presence in the state. The requirement now kicks in if an online retailer has a related company, such as a marketing or product-development arm, or affiliates in the state – individuals and companies that earn commissions by referring visitors to Amazon from their websites.

Passage of the law, which is projected to help the state collect an additional $200 million annually, adds California to a growing list of states that have turned to such measures in hopes of bringing in more tax revenue. Its legislature passed a similar law in 2009, but then-Gov. Arnold Schwarzenegger vetoed it.

Billions of dollars are at stake as a growing number of states look for ways to generate more revenue without violating a 1992 U.S. Supreme Court ruling that prohibits them from forcing businesses to collect sales taxes unless the business has a physical presence, such as a store, in that state. When consumers order from out-of-state retailers, they’re supposed to pay the tax that is due, but they rarely do and it’s difficult to enforce.

States are trying to get around the Supreme Court restriction by passing laws that broaden the definition of a physical presence. Online retailers, meanwhile, are resisting being deputized as tax collectors.

Amazon had thousands of affiliates in California, which received fees varying from 4 percent to 15 percent of each sale they brought to the company. Amazon, which is based in Seattle, cut ties with them after the law’s passage.

Paul Misener, Amazon’s vice president of public policy, said the referendum supports “jobs and investment in California.”

“At a time when businesses are leaving California, it is important to enact policies that attract and encourage business, not drive it away,” he said.

Overstock.com Inc. also has cut ties to California affiliates because of the law.

According to the Performance Marketing Association, there are 200,000 affiliates across the country, 25,000 of which are located in California.

Amazon also has dropped affiliates in Arkansas, Connecticut and Illinois after similar sales-tax collection laws were passed there. Overstock, which is based in Salt Lake City, also has shuttered its affiliate programs in several states due to the laws.

Amazon does collect sales taxes in North Dakota, Kansas, Kentucky and its home state of Washington. It collects in New York, too, as it fights the state over a 2008 law, the first to consider local affiliates enough of an in-state presence to require sales tax collection.

This Fox Business video from the end of March explains the situation between Amazon and its affiliates:

Comments (14)

  • dontbotherme
    Posted on July 12, 2011 at 4:14pm

    The tax is in effect in Illinois. There’s a big surprise. (sarcasm)

    Report Post »  
  • JRook
    Posted on July 12, 2011 at 10:52am

    Shouldn‘t be a problem as I’m sure all the good citizens here report their out of state purchase on their state taxes and pay the sales tax due. And of course if they did pay sales tax to another state they would simply deduct it. So what is the problem for those who are honest when it matters…when no one is around to know if they did or did not pay sales tax.

    Report Post »  
    • American Soldier (Separated)
      Posted on July 12, 2011 at 11:54am

      Talk about tax collecting back fire. I got an email from Amazon a week ago. I use to live in California and was an affiliate member of their site. I ran a website back in the day that I had amazon as an advertiser for. They were telling me that i could no longer participate in Amazon’s referral business.

      So instead of creating $200 million in revenue, they just caused hundreds of californian’s that rely on Amazon and their website for extra or or even their main source of income.

      I bet they didn’t expect Amazon to take the steps that they did. “Hey let’s just tax them more! What are they gonna do, LEAVE?! HAHAH!” And leave they did….

      Report Post » American Soldier (Separated)  
    • JRook
      Posted on July 12, 2011 at 12:18pm

      @American Soldier I’m pretty sure the sales tax would be passed to the customer, so I’m not sure how that would equate to taxing Amazon more. Bottom line is that there should be a level playing field with the bricks and mortar businesses in the state which have to charge sales tax. While government spending across the board needs to be reduced, including Defense, all this kind of behavior does nothing more than shift the tax burden. It would not be that difficult for Amazon to calculate, collect and remit sales tax to the respective state. They don’t because it gives them an overall price advantage to the local businesses that have to collect it. At the macro level free trade does not work if it is not bilateral and fair in all respects.

      Report Post »  
  • boca_chica
    Posted on July 12, 2011 at 10:33am

    Someone needs to read the Constitution to these people-but then you would have to read it the “newly educated” progressives-and they still would not understand it. Too many big words( and racist not one of them).

    Report Post »  
  • EqualJustice
    Posted on July 12, 2011 at 9:44am

    WOW, there’s a business killer, for sure. Buy from NH.. no sales tax. We make up for it in PROPERTY taxes, though. They get you one way or another!

    Report Post » EqualJustice  
  • bharris0
    Posted on July 12, 2011 at 8:41am

    I think the people in CA are too focused on getting something for nothing then to pay attention to something that may create jobs.
    While I do blame their politicians for the anti-business environment they have, I blame their citizens even more.
    These folks love public employee unions and their benefits. They love Al Gore and embrace his nonsense. They consider themselves to be a sanctuary state for illegal aliens. In short, they have created the cesspool they now live in and they more than deserve the misery they have brought unto themselves.
    These people are too arrogant and smug to see what their liberal behavior has cost them.

    Report Post »  
  • GadsdenPatriot
    Posted on July 12, 2011 at 2:54am

    No one knows how to increase unemployment and chase businesses away like the left.

    Report Post » GadsdenPatriot  
  • Wdawg
    Posted on July 12, 2011 at 2:11am

    Texas has been trying to collect back taxes on Amazon after they passed their law. Amazon left Texas.

    Report Post » Wdawg  
  • Elena2010
    Posted on July 12, 2011 at 1:55am

    LOL — The more you tax, the fewer are the businesses — silly liberals and progressives! Ruin these states just to spite tax payers. I smell tea in the harbor!

    Report Post » Elena2010  

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