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Amazon Deals with California

Chaaron Pearson on Tuesday, October 4, 2011 at 12:00:00 am

After years of refusing to collect sales tax from online purchases, Amazon.com has struck a deal in California. Retailers and state governments elsewhere are hoping for similar treatment.

This is a departure from Amazon.com’s previous stance on online tax collection. In response to other states “Amazon laws” requiring online tax collection, Amazon.com has taken New York to court and canceled its relationships with affiliates in Arkansas, Colorado, Connecticut, Illinois, North Carolina and Rhode Island.

California looked to be the stage for the next Amazon show-down. Amazon organized a campaign to repeal the law at the ballot box. Wal-Mart and other big retailers lined-up in opposition of Amazon, arguing that online retailers get an unfair advantage over brick-and-mortar merchants by not collecting sales tax.

Surprisingly, Amazon backed down. The company struck a deal that will require online retailers to collect sales taxes in California starting in fiscal 2013.

Brick-and-mortar retailers view this as a game-changer. If Amazon will pay sales taxes in California, why not in other states? The optimism may be premature, but states would love to see additional sales tax revenue.

It’s difficult to assess where chambers stand on this issue. There are proponents on both sides, with many chambers declining to take a stance while they closely watch events unfold.

Read more:
Stateline.org: Amazon deal with California may set precedent for online tax collection
St. Petersburg Times: California to the rescue on sales taxes
The Journal Gazette: The retail Goliath retreats
Policy Clearinghouse Blog: Main Street Fairness Act

Tags: taxes

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