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Sep 28 2011

Amazon.com to Begin Collecting California Online Sales Taxes in 2013 – Period

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You remember the compromise legislation that was signed into law last Friday. Now, Amazon.com is saying that regardless of Congressional action on a national online sales taxes that they will begin collectiong California sales taxes in 2013.

Amazon.com Inc. Chief Executive Jeff Bezos said Wednesday that the online retailer would collect taxes on its sales to California residents by 2013.

California legislators and Amazon officials agreed to a deal in Sacramento earlier this month over the issue of sales-tax collection from online retailers. The lawmakers said they would delay the enactment of a new law, which would require Internet stores with retail-related offices California to collect sales tax, until September 2012. In exchange, Amazon agreed to stop pursuing a ballot measure to repeal that law and to lobby Congress to pass federal Internet sales-tax legislation.

The California law would go into effect on September 2012 if Congress doesn’t enact federal legislation by then. If Congress does pass a law, then the California legislation would go into effect in January 2013.

“In either case, we are going to start collecting,” Mr. Bezos said in an interview.

When asked whether Amazon would either challenge the law in court or close its California facilities to avoid sales-tax collection, Mr. Bezos said, “no.”

Amazon historically hasn’t collected state sales taxes in many states, often giving the company a price advantage compared with brick-and-mortar retailers.

Mr. Bezos also said Amazon would build more facilities in California.

The key here is that Amazon.com will be building more facilities in California (maybe for their new tablet?) and a tax nexus will be created and under the federal law would be obligated to collect them.

Now, the rationale for their “compromiise” becomes more clear.

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