Amazon.com to start collecting sales taxes from California customers this Friday

[Correction]

In case you haven't been following California's budget mess

http://www.latimes.com/business/la-f...,4344787.story

Amazon.com to start collecting sales taxes from California customers

By Marc Lifsher, Los Angeles Times

June 30, 2011
Reporting from Sacramento—
California shoppers are about to lose a big tax break.

Beginning Friday, Amazon.com Inc. and other large out-of-state retailers will be required to collect sales taxes on purchases that their California customers make on the Internet.

The new tax collection requirement — part of budget-related legislation that was signed into law by Gov. Jerry Brown Wednesday — is expected to raise an estimated $317 million a year in new state and local government revenue.

Getting the taxes, which are legally due, is "a common-sense idea," Brown said.

The bite from buyers' pocketbooks will be eased only a bit because California's basic sales tax rate also will drop 1 percentage point to 7.75% on Friday when a 2-year-old temporary increase expires. The basic rate in the city of Los Angeles drops to 8.75%.

Brown's signature on the budget bills is aimed at closing a loophole that freed online retailers, such as Seattle-based Amazon, from collecting sales taxes and sending them to the state when they had no brick-and-mortar stores, warehouses or offices in California.

Not collecting sales taxes gave Internet retailers a competitive price advantage over California's small businesses such as independent booksellers and big-box retailers with a presence in the state, including Barnes & Noble Inc., Wal-Mart Stores Inc., Best Buy Co. and Target Corp.

"You can't give one segment of retail a 10% discount every day. It's just not fair," said Bill Dombrowski, president of the California Retailers Assn., a major player in a coalition of large and small stores supporting the legislation.

California's new requirement will generate badly needed state revenue and send a signal to Congress that "we want to see a national solution" to the issue of taxing Internet sales, Dombrowski said.

California is the seventh and largest state in the country to pass a law to collect taxes on out-of-state Internet sales. Illinois, Arkansas and Connecticut acted earlier this year, North Carolina and Rhode Island in 2009 and New York in 2008. Amazon sued to overturn the New York law and lost in the lower courts. The company is paying sales taxes into an escrow account pending an appeal.

Other states currently are considering similar sales tax collection bills.

California's new law was drafted to circumvent a 1992 U.S. Supreme Court ruling that sellers can't be forced to collect sales taxes if they have no physical presence in the state where buyers live.

The new statute would establish that presence in two ways: when sellers pay commissions to other Internet sites in California, known as affiliates, that refer buyers; and when sellers have a related company operating in the state.

Amazon has thousands of such affiliates in California. It also has related business operations that include Lab126 Inc. in Cupertino, which develops Kindle electronic book readers, and a Studio City office for its Internet Movie Database unit.

Amazon and Overstock.com Inc. in Salt Lake City, another major online retailer, have notified their affiliates in California that California's law is forcing them to terminate contracts.

"We oppose this bill because it is unconstitutional and counterproductive," Amazon wrote its California business partners.

Amazon has not indicated what further actions it might take to challenge the California law.

Both Amazon and Overstock have told affiliates that they would have to move to another state if they wanted to continue earning commissions for referring customers.

Many of about 25,000 affiliates in California, especially larger ones with dozens of employees, are likely to leave the state, said Rebecca Madigan, executive director of trade group Performance Marketing Assn. The affiliates combined paid $152 million in state income taxes last year, she pointed out.

That's what Ken Rockwell of San Diego, the owner of a 12-year-old photography website, said he planned to do.

"Will it be Las Vegas or Scottsdale or Ensenada?" he said. "It's a question of where, not if."

In unrelated news:

http://amzn.to/kPUQfW

Free $2 amazon mp3 download credit (good for 2 songs, basically)

[archibaldcrane]

Makes sense.

[Correction]

Not looking forward to the cost of my next newegg.com order, though :X

[BadKarma]

Bout time you fuckers got taxed.

[volcanicweather]

They tried to do the same thing in South Carolina, but Amazon wheeled and dealed by saying they would create jobs in the state for tax breaks: http://www.wistv.com/Global/story.asp?S=14852107

They are trying to do the same thing in Texas right now, but Texas is stalling and they are trying to sweeten the deal by adding more jobs.

Amazon knows that this will hinder their business dramatically. People go there almost primarily for price because few can compete. Without purchases, there's no reason to go their for product reviews because there will be fewer, they can't generate product recommendations based on past purchases, etc. It's a snowball effect. As they look to branch out with their new ad services as well and new competitors like eBay still getting some tax breaks it could be problematic long-term for Amazon if too many states come after them with this.

Sometimes getting too big is a bad thing...

[Melena]

Not looking forward to the cost of my next newegg.com order, though :X

Newegg I believe is in Cali, never got a tax break from them when I built a pc a few years ago

[geno]

Yeah I've always got tax'd from newegg in CA. This is probably fair, but I'm going to miss my discount because I'll still prefer shopping online to going to brick n mortar stores just out of convenience sake.

[archibaldcrane]

I love that Amazon.com straight up acknowledges that all their customers are tax-evading criminals and begs state governments to look the other way.

[Cream Soda]

I love that Amazon.com straight up acknowledges that all their customers are tax-evading criminals and begs state governments to look the other way.

State should take that up w/ the customers then, not Amazon. It's not their responsibility. Aren't citizens supposed to mail in their taxes for online purchases anyways?

[archibaldcrane]

It's not their responsibility.

It is now, just like any brick and mortar retailer.

[volcanicweather]

It's Amazon's responsibility, trust me, we have a whole department where I work devoted to eCommerce taxation. If you are the seller of record then you are responsible for playing by the rules of the state / country you are selling to.

[archibaldcrane]

The rules said they didn't have to collect sales tax for out of state sales until now. Now the rules are different.

[fantasticdan]

We've already been getting taxed for this shit in NY for 2-3 years. We even get taxed on MMO subscriptions.

[Maaglin]

whaaaaaaaaaaaaaaaaaambulance.

[Fhqwghads]

Amazon should have said "fine, we won't sell to people in California." State sales tax should only be collectible if a purchase was made face-to-face or the retailer's origin is inside that state. If they're going after Amazon, then they need to go after all mail order catalogs and all online retailers. The notion that the state has a right to tack on additional fees is to support the infrastructure enabling people to get to that retailer and for that retailer to stock their wares. Roads, traffic lights, police to enforce traffic laws, etc. With an online purchase the amount of involvement getting a product from out of state to someone's front door is a hell of a lot less, so if anything the taxes should reflect that.

It's just California's way of trying to remedy their own idiotic politician's mistakes in running their bills sky-high and never being held accountable for getting a budget in place that will get them out of the mess they're in by grasping at straws instead of cutting government spending. And I don't mean the typical bullying government spending cuts where they threaten to take away things they know the public is going to get outraged over like state parks and education, in an effort to get the public to agree to tax increases instead of cutting their own salaries and eliminating ridiculous jobs that are equivalent to the Ministry of Silly Walks.

[Not Kuno]

I like how nobody really cares that NY has had this for years. Quit yer bitchin' and suck it up.

[Correction]

Did people actually use the $2 credit I posted or did they just read the title and say 'wah' or 'wahcalifornia?'

Jus' checkin

[*Shinzon*]

Checked the link but at work now so prolly take advantage later.

[Cream Soda]

Couldn't find any songs I wanted on there lol

[Melena]

Amazon should have said "fine, we won't sell to people in California." State sales tax should only be collectible if a purchase was made face-to-face or the retailer's origin is inside that state. If they're going after Amazon, then they need to go after all mail order catalogs and all online retailers. The notion that the state has a right to tack on additional fees is to support the infrastructure enabling people to get to that retailer and for that retailer to stock their wares. Roads, traffic lights, police to enforce traffic laws, etc. With an online purchase the amount of involvement getting a product from out of state to someone's front door is a hell of a lot less, so if anything the taxes should reflect that.

It's just California's way of trying to remedy their own idiotic politician's mistakes in running their bills sky-high and never being held accountable for getting a budget in place that will get them out of the mess they're in by grasping at straws instead of cutting government spending. And I don't mean the typical bullying government spending cuts where they threaten to take away things they know the public is going to get outraged over like state parks and education, in an effort to get the public to agree to tax increases instead of cutting their own salaries and eliminating ridiculous jobs that are equivalent to the Ministry of Silly Walks.

Actually, Amazon was one of a small select few that wern't collecting sales tax. Every place I ordered from online charged my states sales tax. People were wising up and realizing that if they didn't mind waiting a week for that new big screen tv, they could save upwards to 10% depending on which part of california you lived in. Hell, people would actually go into Best Buy/Frys/Etc and not only ask that they match Amazon (which they do) but also deduct the sales tax. Also Amazon would be retarded to make that kind of threat. If they are estimating 140mil or so in taxes, were talking close to a billion in sales that they threaten to throw away? Amazon isn't stupid. They know right now through a dumb supreme court decision in the 70's, they can out play any brick and mortar store and especially in this economy when states are trying to shore up billions in shortages, you know those loop holes are getting closed.