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Web retailer Amazon.com has funneled another $2.25 million into its “More Jobs Not Taxes” campaign to repeal California’s Assembly Bill X1 28. The bill requires internet retailers doing business in the state to collect applicable sales taxes. To date the company has spent over $5 million on a petition drive to place a measure overturning the bill on the ballot.

Amazon has come under pressure from its refusal to collect taxes that are due in 40 of 45 states with a statewide sales tax. 13 states, including California, have proposed or implemented laws pertaining to tax collection by internet retailers. Local businesses argue that the failure of internet retailers to collect sales taxes provides them an unfair competitive advantage.

Amazon has responded primarily by severing ties with affiliates in those states, refusing to pay them commissions for referrals to the website, which range from 4-15% of consumers’ eventual purchases. In June, 25,000 advertising affiliates in California were terminated. The company argues that this eliminates its physical presence in the state and thus exempts it from collecting the state taxes.

Several Amazon subsidiaries, which are treated differently for tax purposes, remain in California. These include the firm that developed Amazon’s popular Kindle e-reader. Amazon’s career page on its main website lists seven California locations where prospective employees can apply for work.

By September 27, petitioners must gather 504,760 valid signatures in order for the referendum overturning the tax collection law to come to public vote during statewide primaries in June 2012.

Amazon has said that it prefers a federal solution to the issue of internet taxation, though it remains officially neutral on a bill introduced in May to allow states to impose sales taxes on their residents from out-of-state. The company has, however, spent just over $1 million on federal lobbying in the first two quarters of 2011, compared to $610,000 on lobbying in 2010. Last year a similar federal bill, the Main Street Fairness Act, died in committee.

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Comments

SurfPuppy619 Aug. 23, 2011 @ 11:43 a.m.

A sales tax will kill online purchases.

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Facebook Aug. 23, 2011 @ 10:10 p.m.

Rob Larkins: I can see the point of view of the local retailers saying it's unfair that they have to charge sales tax where online retailers don't and that's an unfair advantage to online retailers. But I can also see the point of view of online retailers trying to sell their products at the lowest possible price. It's capitalism but is it a cheat to brick and mortar stores who aren't allowed to leave paying sales tax up to their customers? Sales tax should be built in to online purchases or you have to give the right to local businesses to also not charge sales tax. It's about time our judicial system addresses the loophole. Amazon is just worried the playing field might be leveled and they might face some competition. I don't want to pay more taxes but I don't see an alternative to this anti-competitive practice. Let's be real. If you leave paying taxes up to customers, the vast majority of people will never claim it.

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Facebook Aug. 23, 2011 @ 10:10 p.m.

Donna Crozier Dunaj: If an online company does business in your state, or my state, or someone else's state, then they have to deduct sales tax. (Walmart and other big box stores come to mind) If they do not do business in any particular state, then no sales tax is charged. Keeping track of which state gets how much, is a bookkeeping expense which is passed on to the consumer. Govt. always has its hand out.

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