Amazon Wins Reprieve Over Charging Sales Tax


For the time being, mega-online-merchant of everything has gotten its way, somewhat. On Friday night, California lawmakers approved a compromise bill granting a one-year reprieve from charging sales tax to its customers in the state. Amazon, which has deemed the compromise bill “win-win legislation,”†is to start collecting sales tax on September 15, 2012, provided there is no federal legislation passed that sets a national standard.

The original law, which went into effect July 1, required that Amazon and other e-commerce companies pay sales tax if they had†offices, workers or other connections in California. Instead of paying what some dubbed the “Amazon tax,” the gigantic, Seattle-based e-tailer chose to fight it, spending $5 million to gather†a half-million signatures for a referendum to take the matter to voters. The California legislature†had been wary of such a referendum as it would have entailed a “noisy…campaign that the state could easily have lost,” says the New York Times.†Democrats and the California Retailers Association took a stand against Amazon, which teamed up with Republicans who said attempts to collect the sale tax amounted to a tax increase.

Senate President Pro Tem Darrell Steinberg, a Democrat, dubbed the new bill, AB 155,†a “classic compromise,” says the†Los Angeles Times. Amazon has agreed to cease its fight against paying the tax as part of the deal.†Both California’s Senate and Assembly overwhelmingly approved the bill, which now awaits the signature of †Governor Jerry Brown who, though, has not yet indicated whether he will sign it or not.

Senator Richard J. Durbin, a Democrat from Illinois, has introduced a law requiring all e-commerce companies to charge sales tax but the bill has so far not gained much support. State legislatures around the country view the sales tax on e-tailers as a means to collect much-needed revenue.†Indeed, the New York Times says that the state of California had hoped to collect some $200 million from Amazon and other online retailers for the current state budget; the money will now have to be scraped from other sources. New York state has a law requiring e-commerce companies to pay sales tax and Amazon is currently fighting it in the courts. In negotiations with other states — Texas and South Carolina — Amazon is holding out the prospect of opening or closing warehouses, with a prospective sales tax hanging in the balance.

Amazon had previously sold goods in California through third-party affiliates with facilities in the state but had ended those connections prior to the original bill taking effect on July 1. Amazon†does currently have a physical presence in California, in the form of small subsidiaries such as a†lab in Silicon Valley which does research and development on the†Kindle e-reader and related products.†As the New York Times points out, Amazon may well see the new legislation as a way to bide its time and even move those small subsidiaries out of California, in contrast to its statement that the new measure will enable it†ďto bring thousands of jobs and hundreds of millions of investment dollars to California.”

If Governor Brown does not sign the bill,†and Amazon continues to call for a referendum, “its bricks-and-mortar rivals are poised to spend millions on negative advertising portraying the company as depriving the state of revenue and jobs,” says the Los Angeles Times. However, it’s still up in the air if, given the struggling economy, Californians would vote to require an online sales tax.

Should Amazon and other online retailers be required to pay a sales tax?


Related Care2 Coverage

An Industry Turned Upside Down: Book Publishing Faces Huge Changes

The End of the Story: Borders To Close

Amazon Says Itís Now Selling More Kindle Books Than Print Books

Photo by Daniela Melo


Joe R.
Joe R.6 years ago

Amazon really does not have an actual presence in California. It is not fair to them that they be required to charge their CA customers sales tax. The repercussion is that other states will follow and it will be costly for Internet merchants to charge varying sales tax for each county of every state. It will be accounting hell for them by the end of the year. Anyway, it is not Amazon's responsibility to charge this sales tax Californians have the responsibility to report this tax when they file their income taxes.

You generally owe California use tax when you use, consume, give away or store tangible personal property (i.e., products you can see, weigh, feel or touch, such as clothing, books, computers, DVDs or CDs) in California that you purchased from an out-of-state vendor. If the out-of-state vendor does not collect the California tax on your purchase, you must pay the tax.

Charging tax is detrimental to Amazon's business because half of their customers would rather buy the items locally rather than online if these customers could buy the items for the same price (with the tax) and have the items immediately instead of waiting for them to be shipped.

peggy p.
peggy p6 years ago

gee if we each had that much power....

Ann G.
Ann G6 years ago

No quick Poll? Of course Amazon should have to pay a sales tax. Business is business and they are selling products just like anybody else.

Larry Lawton
Larry Lawton6 years ago

Some taxes are essential (as long as people want government rather than Anarchy, which would have different institutions -- but still the equivalent of taxes), because public services such as parks, education, police, fire protection, libraries, free roads, and more are not going to be provided by charity or for-profit enterprise, at least not equally to all citizens. Maybe some Libertarians want a society in which only the well-off have these services, but for the rest of us, it would be hellish. And for those who think 19th century America was paradise, it was brutal for working people. But there were taxes even then. And governments provided a lot of the infrastructure investment -- who paid for the roads, railroads, canals, the electricity system, homestead farms, schools, and middle class houses? Governments did, at least in part.

However, I agree with those who say the sales tax, specifically, is a regressive tax which harms the poor and workers the most. A progressive income tax is better, and so is a property tax. Amazon could gain more credibility by advocating for elimination of all sales taxes, including for "brick and mortar" businesses.

Anna M.
Anna M6 years ago

Here in Illinois we're required to pay the sales tax for online purchases annually on our state income tax form. Personally, I would rather them just charge me the tax at checkout. That way I would not have to keep track of every single thing I buy online throughout the year. We buy online a lot. And the tax forms and instructions aren't very clear on what we must count and what we don't have to (such as used goods). I understand the resistance from retailers, because then they have this huge cost associated with charging tax and keeping records and submitting to each individual state following individual and widely varying state regs. From the buyer's perspective though, whether or not they are required to charge me sales tax has no impact on what or how much I choose to buy online or otherwise or where online we buy, especially since we end up paying the sales tax at the end of the year anyway. I suspect that if more states decided to follow Illinois' lead in making individuals responsible for paying the sales tax, eventually there would be enough support behind a national bill (to make it mandatory for the businesses to collect state sales taxes so that individuals wouldn't have to), that it would pass. I think that in the long run, Amazon and other online-only retailers are fighting a losing battle, but perhaps they feel that the longer they can put off having to collect the tax, the better off they are financially, because it keeps their overhead costs lower.

Forest K.
S Forest K6 years ago


Insurance Maintenance Tax - Workers' Compensation Research
Insurance Maintenance Taxes - Texas Department of Insurance
Insurance Maintenance Tax - Division of Workers Compensation/Office of Injured Employees Counsel
Insurance Premium Tax - Independently Procured
Insurance Premium Tax - Licensed Insurers
Insurance Premium Tax - Surplus Lines/Purchasing Groups
Insurance Premium Tax - Unauthorized Insurance
International Fuel Tax Agreement (IFTA)
Liquefied Gas

The ignorance of people who do not understand how this government graft does not damage their individual families and our society as a whole is utterly sickening.

Forest K.
S Forest K6 years ago

Taxes are not a necessary evil. There is absolutely not a single necessary item we are taxed for, that could not be solved in our society through voluntary contribution or private endeavor in which the integrity of the cause is continually determined via free choice of the people who participate. Our country didn't have taxes for decades, yet we became an economic powerhouse in a very short history and though we can no longer make such a claim, our demise is not due to lack of taxes, but because of them.

So many gullible people believe the propaganda put out by our indentured media when thinking fed/state tax rates are the only measure of government graft.

Establishment Republicans are just as bad as Democrats and have no claim of virtue on this issue but we taxpayers end up suffering the consequences regardless. Here is a list of the taxes Rick Perry(R), the current GOP darling, advocated during his term as Governor of Texas:

911 Emergency Service Fee
911 Equalization Surcharge
911 Prepaid Wireless Emergency Service Fee
911 Wireless Emergency Service Fee
Automobile Burglary and Theft Prevention Authority (ABTPA) Assessment
Automotive Oil Sales Fee
Bank Franchise
Battery Sales Fee
Boat & Boat Motor
Cement Production
Cigar, Tobacco Products
Cigarette/Tobacco Advertising Fee
Coastal Protection
Coin-Operated Machines Tax
Controlled Substances
Crude Oil
Diesel Fuels
Insurance Maintenance

Sonya Armenia Redfield


Tammy D.
Tammy D6 years ago

taxes are a necessary evil. online stores should be required to pay sales tax just like physical retailers do. Otherwise, online retailers will cause companies in certain regions to fail. It's fair, whether you like taxes or not. Those packages purchase online don't magically appear at the doorstep. The require transportation, which requires roads, etc, that are maintained and paid for with taxes.

If you live in a state with no sales tax, such as the lady from Oregon above, other taxes are in place to compensate for the lack of sales tax. Land rates are higher, or income tax is higher. Or something else. States cannot function without taxes of some sort. American taxes are fairly low, and look at the result. In other countries, VAT is 20%. Be happy with your 7 (or whatever) percent!

Austin R.
Austin Rotter6 years ago