March 29, 2024

Amazon and California Strike a Deal on Sales Tax

Lobbyists and lawmakers worked on Thursday to prepare new legislation that would give the retailer a one-year reprieve from collecting sales tax in the state. If Amazon cannot get a change in federal tax policy by next June, it will start collecting the tax in September 2012.

Amazon has been resisting a measure passed by legislators at the beginning of the summer mandating that e-commerce companies with subsidiaries in the state collect the taxes. It has spent more than $5 million to gather 500,000 signatures to put the issue on the ballot next June.

Democratic legislators tried this week to come up with a two-thirds vote in the state Senate that would have blocked the ballot measure. They failed. That left them, and Gov. Jerry Brown, with few options except to hope that voters would agree to pay more for online goods.

Why Amazon would agree to surrender even a portion of its fiercely defended competitive advantage is a little mysterious. Some observers speculated that the company was merely buying time and would move its subsidiaries out of California, letting it once again sell in the state without charging the tax.

The retailer, which is getting the most criticism in its history over the tax issue, declined to comment. It has repeatedly said it wants one federal law rather than individual tax provisions in every state.

Amazon was supposed to start collecting the tax under a California law that took effect July 1 but chose to fight instead. If the provisional deal can be completed by the end of the legislative session on Friday, the referendum will be dropped.

The official language of the deal, which was struck late Wednesday, has not been worked out, and participants cautioned that it all could still fall apart. Legislators do not return until January.

“We’re waiting to see the exact words, but we’re hopeful,” said Bill Dombrowski, head of the California Retailers Association. The group was the driving force behind the July law, which was supposed to raise a badly needed $200 million in the current fiscal year.

Article source: http://feeds.nytimes.com/click.phdo?i=b633857e880698563aeb83ccdbfb59c0