SAN FRANCISCO — Amazon said Monday that it would back a California ballot initiative that would roll back a new state law that forces more online retailers to collect sales tax.
Amazon’s decision to support the proposed referendum pits the world’s biggest online retailer against the state government, which is looking for ways to raise additional revenue to cover budget shortfalls.
The California legislature last month passed a law, now in effect, requiring online retailers to collect sales tax just like merchants physically located in the state. The law was intended to close a loophole that let online retailers sell their wares but not collect and pay sales tax to the state.
Two weeks ago, Amazon, hoping it could comply with the new law and still avoid collecting taxes, severed ties with thousands of California businesses whose Web sites linked to products on its site. California officials say that move does not free it of this year’s tax obligation, estimated at $83 million.
“At a time when businesses are leaving California, it is important to enact policies that attract and encourage business, not drive it away,” said Paul Misener, Amazon’s vice president of public policy. He also called Amazon’s antisales tax position “a referendum on jobs and investment in California.”
Evan Westrup, a spokesman for Gov. Jerry Brown, said Monday that, “Amazon should be spending less time punishing its affiliates, threatening lawsuits and collecting signatures and more time doing what every other retailer does in California every day.”
The collection of online sales tax by states facing budget deficits is an issue that threatens to spill across the country. Amazon has been at loggerheads in various states. The company has severed ties with affiliates in some states, including Illinois, and is in the process of closing a warehouse in Texas.
Amazon currently collects sales tax in New York, even though it says it does not have a physical presence in the state. But it is challenging the state’s law as unconstitutional.
Legally, Californians are still responsible for sales tax even when retailers do not collect it. When filing their tax forms, residents are supposed to declare what they owe in so-called use tax. Most don’t, and the state argues that the growth of online shopping is leading to an ever greater loss of revenue.
The state Board of Equalization, California’s tax collector, estimates the unpaid taxes at $1.15 billion in the last fiscal year, and estimates it will grow to almost $1.2 billion this year and $1.27 billion in 2012.
At the heart of the issue is what constitutes a company’s physical presence. The new California law expands the definition of physical presence to potentially include Amazon subsidiaries, like an office in Cupertino that designs the Kindle book reader and another in Studio City that handles online advertising.
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.
Amazon says it supports a simplified sales tax structure that would be applied evenly across the country, which would require cooperation from federal and state governments. Some state officials say the issue is about more than just tax revenue. They say it’s about fairness to local retailers competing against Amazon but with the added cost to consumers of sales tax.
Supporters of the proposed initiative must now gather around 505,000 signatures to qualify it for the ballot, according to the secretary of state. A vote could occur during the next statewide election in February 2012.
“Where does Amazon plan to collect these signatures — in front of bricks and mortar retailers that collect sales tax everyday?” asked Mr. Westrup.
Article source: http://feeds.nytimes.com/click.phdo?i=2c42d87c5dfd3f3d9b7db92735a3d0fd
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