September 24, 2011 archive

Sep 24 2011

California Governor Jerry Brown Signs Amazon.com Internet Sales Tax Compromise Legislation Into Law

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Jerry Brown signed AB 155 yesterday.

Saying it would save existing jobs and create new ones, Gov. Jerry Brown signed into law legislation to require Amazon.com and many other out-of-state Internet retailers to collect sales taxes on purchases by California customers.

The new law will “create tens of thousands of jobs and inject hundreds of millions of dollars back into critical services like education and public safety in future years,” Brown said Friday at a ceremony held at the San Francisco headquarters of clothier Gap Inc. The event was attended by the lawmakers, who sponsored the bill, and and retail industry executives.

Experts predicted that the new law would help bricks-and-mortar stores that have sales staffs compete with e-commerce companies that need fewer people to fill orders. They also predicted that new jobs would flow into the state if Amazon, as expected, opens some large distribution centers to better serve California, which is estimated to represent as much as 20% of the company’s market.

Although the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier), takes effect immediately, it doesn’t require that sales taxes be collected from Californians until Sept. 15 of next year. The delay was part of a compromise put together by Amazon with representatives of national retailing chains, including Wal-Mart Stores Inc. and Target Corp., as well as local, independent store owners.

As part of the deal, Amazon agreed not to go forward with a planned referendum to ask voters to overturn an earlier sales tax collection law that took effect July 1.

In the meantime, a decision on the entire tax nexus question is pending in a New York court and a national online sales tax bill will be floating around in the Congress. Plus, Overstock.com and other online retailers who do not plan physical facilities in California will likely fight this law in federal court.

Stay tuned on this issue….

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