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California Lawmakers Approve Amazon Sales Tax Compromise

Wednesday, 14 Sep 2011 05:36 PM

(Updates with Amazon comment starting in fifth paragraph.)

Sept. 10 (Bloomberg) -- California lawmakers approved a deal giving Amazon.com Inc. a year before it must collect sales taxes from customers, in return for abandoning its campaign to overturn the levies in a referendum.

The bill, sent to Governor Jerry Brown late yesterday, calls for California and Amazon to work together to get a uniform federal standard for taxing Internet sales. The world’s largest online retailer is to begin turning over taxes on California transactions Sept. 15, 2012, if no national standard is in place by then.

Amazon spent at least $5.25 million on the referendum to throw out the sales-tax law passed in June. California, with the lowest state credit rating from Standard & Poor’s, had projected the law would bring $200 million in revenue this year.

“This compromise is all about fairness,” Assembly Speaker John Perez, a Los Angeles Democrat, said in a statement. “It moves California forward in closing a loophole that gives out- of-state online retailers an unfair advantage over stores in California, and it also gives retailers time to achieve a federal solution.”

An Amazon spokesman called the bill’s passage a “win- win.”

The agreement “will allow Amazon to bring thousands of jobs and hundreds of millions of investment dollars to California, and welcome back to work tens of thousands of California-based advertising affiliates,” Paul Misener, an Amazon vice president, said in a statement.

Future Tax ‘Certainty’

“Even though we have to find a way to get the $200 million that we’re going to have to forgo as a result of this, we’re going to have certainty that we’re going to be able to collect this tax in the future,” said Senate President Pro Tem Darrell Steinberg, a Sacramento Democrat.

Amazon fought attempts by New York, Texas, Rhode Island and North Carolina to force it to collect the same sales taxes as brick-and-mortar stores. The company cited a 1992 U.S. Supreme Court decision that exempted businesses from such a requirement unless they had a “nexus,” or physical presence, in the state.

Amazon has California-based subsidiaries that provide search technologies to its website, design its Kindle e-reader and catalog popular entertainment, according to an analysis of the bill.

Amazon fell $5.87, or 2.7 percent, to $211.39 yesterday on the Nasdaq Stock Market. The stock has climbed 17 percent this year.

--Editors: Pete Young, Paul Tighe

To contact the reporter on this story: James Nash in Sacramento at jnash24@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

© Copyright 2017 Bloomberg News. All rights reserved.

   
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(Updates with Amazon comment starting in fifth paragraph.) Sept. 10 (Bloomberg) -- California lawmakers approved a deal giving Amazon.com Inc. a year before it must collect sales taxes from customers, in return for abandoning its campaign to overturn the levies in a...
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Wednesday, 14 Sep 2011 05:36 PM
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