Tag: Internet Sales Taxes

May 21 2012

Amazon to Recapture Up To 80 Per Cent of Local California Sales Taxes?

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Amazon.com’s internet sales will be forced to collect California sales taxes this fall under compromise legislation passed last year.

But, now Amazon will be constructing fulfillment centers in California and making deals with local governments to win up to 80% of the sales tax back.

Such a deal.

Amazon.com Inc.for years has fought government efforts to tax e-commerce. Now it’s poised to pocket millions of dollars in sales taxes paid by California customers.

As part of a pact reached last year with state lawmakers, some online retailers agreed to begin collecting sales taxes this fall. About half of the projected $316 million raised in the first full year is expected to come from merchandise sold by Amazon, which is also setting up two California fulfillment centers that will employ at least 1,000 workers each.

San Bernardino and Patterson, where the centers will be located, will gain not only jobs but also a tax bonanza: Sales to Amazon customers throughout California will be deemed to take place there, so all the sales tax earmarked for local government operations will go to those two cities. It’s a windfall so lucrative — about $8 million a year initially for each city — that local officials are preparing to give Amazon the lion’s share of their take as a reward for setting up shop there.

Talks with Amazon about a so-called sales-tax rebate are still in the early stages. But in Patterson, a struggling Central California community of 21,000, Mayor Luis I. Molina said he’s ready to do what it takes to help his city.

As I said before, the only ones who will lose on taxing the internet are the California consumers themselves.

Now, some of the tax money, which was supposed to achieve “fairness” for the brick and mortar stores will be going back to Amazon.com anyway.

Only the Democrats in the California Legislature and lame-brained California Governor Jerry Brown could craft such a crappy deal for California consumers and taxpayers.

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Dec 01 2011

Amazon.com and eBay Take Their Online Sales Tax Fight to Washington

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You remember the Flap which was sort of resolved in California a few months ago.

Now, the conflict is being staged in Washington and in the Congress.

A Capitol Hill clash between Amazon.com and eBay complicates California’s hopes for an online sales-tax fix.

The fight flared Wednesday, underscoring how big differences between the Internet sales giants stand in the way of congressional efforts to help California and other states collect hundreds of millions of dollars in taxes.

Each side has its respective political champions, and each side wants small businesses exempt from the burdens of collecting state taxes for online sales. They diverge sharply, though, over what “small” means.

“We want to stand with the little guys,” Rep. Zoe Lofgren, D-San Jose, noted at a hearing Wednesday in the House of Representatives, “and the difficulty is, who is that?”

The Seattle-based Amazon wants a much more limited small-business exemption than eBay, which is based in Lofgren’s hometown. So long as the companies remain apart, they can’t put their combined weight behind an online sales-tax bill, versions of which have been floating around Congress for years.

The differences and the delays matter because the clock is ticking, particularly in California.

As I have said before, I don’t really think the various online retailers will be able to work out any legislative compromise particularly going into an election year. There really needs to be a national solution to the collection of state sales taxes for online businesses, but I do not foresee it anytime soon.

The federal courts may eventually decide the issue, but this will take many years and lots of expensive litigation.

States drool with anticipation of receiving a piece of the online sales tax pie, but to capture tax revenue from customers of companies that do not have a physical presence in their state, they will have to wait.

Is this fair?

I suppose it depends upon your business interests and your own TURF.

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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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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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Sep 23 2011

California Governor Jerry Brown Expected to Sign Amazon Internet Sales Tax Compromise Legislation Today

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California Governor Jerry Brown will sign the legislation this morning at 11 AM PDT.

A bill that would require Amazon.com and many other out-of-state Internet retailers to collect sales tax on purchases by Californians is expected to be signed into law by Gov. Jerry Brown, according to people in the Legislature familiar with plans for the event.

The governor has scheduled a signing ceremony for Friday at 11 a.m. at the San Francisco headquarters of Gap Inc., a clothing manufacturer and retailer that lobbied along with other California companies for passage of the bill, AB 155 by Assemblyman Charles Calderon (D-Whittier).

The governor’s office would say only that Brown would be in San Francisco to “take action on legislation critical to job creation in California.”

The so-called Amazon bill is expected to boost employment in a number of ways. Proponents said it would save jobs at shopping malls and on Main Street by creating “a level playing field” between bricks-and-mortar retailers, such as Gap, Wal-Mart Stores Inc. and Target Corp., and Amazon and other Internet sellers.

You remember the flap which I covered here.

And, over at flapsblog.com here.

Some questions remain:

  • What effect will a New York federal court decision have on this compromise i.e. will Overstock.com litigate the issue?
  • Will Amazon.com build distribution centers in California, thereby creating a tax nexus?

Now, when do I get my Amazon.com Sales Associate job back?

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