Passing the Ballot: Amazon.com Wants Californians to Vote on New Sales Tax Law

Is the cat in this Amazon.com box saying "don't tread on me?" (Photo by alisdair via Flickr)

A new law requiring online retailers to collect California sales tax from shoppers has stirred up controversy, and now Amazon.com Inc. is saying they are looking for voters to take the matter to the ballot. "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," explains the Sacramento Bee.

The issue isn't so much pure sales tax for Amazon, but rather how it broadens what that tax means, and asks of the business to do:

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.

Once upon a time, there were thousands of such affiliates in California, "which received fees varying from 4 percent to 15 percent of each sale they brought to the company." Now, not so much. Amazon "cut ties with them after the law's passage." Overstock.com has done the same.

The new law, and the possible ballot battle, could wind up pitting businesses against each other. California's shoppers might be compelled to make their online purchases from companies based in states where sales tax is not collected from internet sales. Major companies might wind up taking business away from smaller, Californian businesses. Plus, traditional brick-and-mortar retailers have long felt that online businesses who don't charge sales tax have an unfair advantage.

If Amazon doesn't collect tax, but the law requires them too, they could wind up in Uncle Sam's doghouse: "Under the law, if Amazon fails to pay any taxes owed to California, it would be required to pay penalties and interest, like any other tax scofflaw. Its first payment would be due by Oct. 31," notes the NY Times.

Of course, getting all the 505,000 signatures needed means beating the pavement and meeting some in-the-flesh people. Maybe they will stand outside, like, actual sales-tax-collecting stores with their clipboards to get 'em. Think they're going to make it work?

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By Lindsay William-Ross in News on July 12, 2011 8:40 AM

Comments [rss]

khagler

I'd certainly sign that petition.

jrb

You're saying out of state companies that do business via the internet should have a built in 10% discount advantage over local mom and pop businesses?

khagler

I'd rather nobody had to pay sales tax, but every little bit helps.

If you're so dreadfully concerned about the poor mom and pop businesses, there's decades worth of we-hate-business profit-is-evil regulations around killing them off that are a much bigger concern. If I wanted to start a small business, I'd have to be a complete idiot to start it in California instead of someplace more friendly to capitalism, like the People's Republic of China.

jrb

"I'd rather nobody had to pay sales tax..."

Well gee guys, I hope you're prepared to do without police service, fire dept service, libraries, public parks, street repair, irrigation and maintenance of public spaces, shall I go on?

jrb

What's the big deal Amazon? Collect the tax, pay the tax. Just like any other business in California.

anzastan

I know of many people who sell used books through Amazon... and those sources will stop because of the law. Those people put their profits into the local economy... so it hits our state in more ways than just tax revenue.