Amazon Initiates Effort to Get Calfornia’s Internet Sales Tax Repealed

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Amazon has decided to tackle states that are adopting Internet sales taxes head on, by underwriting and spearheading a referendum to have the newest Internet sales tax, that in California, repealed.

Amazon, and other large online retailers, such as, routinely close down their affiliate programs in states that pass Internet sales taxes, including California, Colorado, New York, and North Carolina.

The reason for dumping the affiliates in these states is that it is the presence of the affiliates within the state borders on which the states hang those Internet sales taxes – the concept being that if Amazon has a ‘representative’ in the state, that provides the nexus that allows the state to collect sales tax on their Internet orders.

But now Amazon has a new tactic – trying to get California to repeal that Internet sales tax law.

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According to Amazon spokesperson Mary Osako, Amazon will “begin participating in the process of collecting the signatures needed to have this referendum on next year’s ballot.”

It wasn’t clear whether Amazon would get approval for the ballot referendum from California’s Attorney General, but that approval came through this week.

Amazon’s angle on this is that by forcing Amazon to dismiss all California affiliates, the state has obliterated more than 10,000 jobs (the number of Amazon affilliates that were in California) in a state which already has a serious unemployment problem.

“With state unemployment at well over 11 percent, we’re glad the people of California now have an opportunity to have their voices heard on this issue,” Osako added.

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The California Assembly’s budget office estimates that the state could collect more $317million per year in sales tax if able to collect an Internet sales tax.

The approval from the attorney general for the referendum does not mean that Amazon will have an easy go of it – there is stiff opposition from both the public and private sector.

In a statement, Jerome Horton, the Chairman of the California Board of Equalization, said that “Today the battle begins between out-of-state retailers who prefer to skirt the law rather than abide by California’s use tax laws, and those businesses who comply with the tax laws, employ Californians and contribute to the well being of California’s essential services provided for our citizens. This is a question of equity and fairness; will out-of-state companies have to pay their fair share and contribute to the essential services of California or can they exploit California’s consumer market without contributing to California’s infrastructure?”

Meanwhile, the California Retailers Association said in an issued statement that “Californians have a history of rejecting multi-billion dollar companies that try and get special deals on the ballot for their own benefit and to the detriment of the state. Regardless of whether the courts find this referendum to be constitutional, which is certainly in question, there is no doubt that Californians will not be bullied or fooled by Amazon as it does whatever it takes to get a special tax advantage at the expense of California small businesses, jobs and taxpayers.”

In addition to the strong opposition from Sacramento, and from the California Retailers Association, Amazon will have to collect more than a 1/2 million signatures in order to get the measure on the ballot and before the voters.

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