Amazon Goes to Voters Over California Sales Tax

13 Jul, 2011 By: Chris Tribbey

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Amazon is hoping California voters will overturn a state law requiring sales tax collections for online purchases, one that caused the retailer to sever ties with approximately 10,000 state affiliates.

Amazon.com and Overstock.com both cut ties with their California affiliates June 29, after California passed a law as part of a budget package that forces online retailers to collect sales tax in the state. The affiliates programs give a cut of sales to websites that refer customers to Amazon and Overstock, and the law would charge online retailers based on affiliates’ physical presence in the state.

A lobbyist representing Amazon filed paperwork with the state July 8 seeking a referendum that would ask voters to overturn the law. Amazon would need signatures from 5% of voters within 90 days to place the issue on the ballot.

“This is a referendum on jobs and investment in California,” said Paul Misener, Amazon’s VP of global public policy. “We support this referendum against the recent sales tax legislation because, with unemployment at well over 11%, Californians deserve a voice and a choice about jobs, investment and the state’s economic future.

“At a time when businesses are leaving California, it is important to enact policies that attract and encourage business, not drive it away,” he added.

The California law is similar to those passed in Connecticut, Illinois, North Carolina, Arkansas, New York and Rhode Island, seeking to get around a 1992 Supreme Court ruling that found a physical presence is required in order for states to impose taxes on retailers.

Betty T. Yee, a member of California’s Board of Equalization, said in a statement that the California law levels the playing field between online and brick-and-mortar retailers, and removing the affiliates won’t keep online retailers from paying their fair share of taxes.

“Actions to sever relationships with affiliates by Amazon.com will not change the fact that they still have nexus through the other provisions in the new law and will still need to collect sales tax,” she said. “This is unfortunate and we call on them to do the right thing and work with the state of California to comply with the law.”
 

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