California governor signs Amazon sales taxes into law

California governor signs Amazon sales taxes into law

Summary: A new law in California could set a nationwide precedent for how Amazon deals with state taxes on purchases.

TOPICS: Amazon

California consumers will have to become accustomed to paying for sales taxes on purchases from now that Governor Jerry Brown has signed a new bill into law regarding the controversial topic.

However, this doesn't necessarily mean that all California consumers will see higher shopping cart bills today. Although the bill is supposed to become effective immediately, merchants -- including Amazon -- are not required to collect sales taxes until September 15, 2012.

The topic has had strong arguments from both sides. From the Amazon point-of-view, not charging sales taxes offers a competitive edge on top of already bargain prices. In weak economy, this has proven especially enticing and helpful to consumers nationwide.

However, opponents to Amazon argued that it hurt small business owners who are required by law to pay sales taxes but sell the exact same products seen on the online megastore's website.

The Los Angeles Times reports:

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 consumers might not like the extra upfront charges at first, it does give other online vendors a more competitive chance. Amazon might take a hit at first when this goes widespread in California, the most populous state in the U.S., but it would likely be slight as Amazon is already well-known for budget-friendly prices, so don't feel too bad for them.

This also has the strong possibility to set a precedence for other states, so we could be seeing more online purchase/state tax collection debates for some time to come.

At least there's still free shipping for Amazon Prime members and purchases totaling over $25...for now.

Topic: Amazon

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  • Still the opportunity for Amazon to go nuclear ...

    nuking all of their "nexus" in California to avoid the sales tax issue. I could actually see them abandoning operations in high-population states like California and Texas. Whatever state legislation is passed, it doesn't supersede the US Supreme Court decision, so there is still the possibility of multi-year court fights as well.

    And the false-front "mom and pop" story is getting old, the primary supporters of internet taxation are Walmart and Best Buy. It is completely disingenuous for lawmakers and the media to pretend otherwise.
    terry flores
    • RE: California governor signs Amazon sales taxes into law

      @terry flores
    • Yeah, its total BS

      @terry flores But that's how things are in the People's Republic of Cali.

      Someone's gotta pay for all those govt employee benefits the unions managed to negotiate.
      • They didnt negotiate them. Even an idiot wouldnt agree to them

        They use corrupt campaign donations and strong arm tactics to get their own insiders in place so on the other side of the table so theyre "nogotiating" with themselves. Thats the only way such ridiculously outragous compensation can be gotten.
        Johnny Vegas
  • RE: California governor signs Amazon sales taxes into law

    Amazon should ditch California and relocate to Nebraska; they'll be treated better.
  • RE: California governor signs Amazon sales taxes into law

    As someone who lives in a state where Amazon has a "presence" and does collect tax, I say that Amazon needs to just suck it up and comply with the law. They had a good ride, but even they know better than to abandon a state this large.
  • Face it, every state will follow CA

    There is no such thing as no-tax business, in real store or in virtual store.
    • True, they all mismanage their funds

      @FADS_z And people are demanding more and more govt programs...the money has to come from somewhere.
      • RE: California governor signs Amazon sales taxes into law

        @otaddy - Again true, but I would bet you lunch that if you put ANY kind of sales tax increase to a popular vote, it would be defeated by a huge margin. Sales tax on household goods is one of the most regressive taxes there is.
        terry flores
    • RE: California governor signs Amazon sales taxes into law

      @FADS_z - True, they probably will, but the effect is easily countered by relocating to low-population states, or even just states with low revenues. I could locate operations in Utah, Nebraska, South Carolina and Rhode Island, get great regional coverage and only include 3.3 percent of the population in the taxed states.
      terry flores
      • that is sales taxes

        @terry flores
        Doesn't matter it will locate to an asian island or not. Who buying the product will pay the tax. Just ask Canadians how it works.
      • Why not just pay their fair share of taxes?

        @terry flores
        All that is happening here is that Amazon wishes to keep a larger percentage of profits that they do not want their local competition to keep.

        Amazon is complaining that [i]they[/i] should not have to charge taxes on items they sell, not that they and their competitors should not have to charge tax on the items they sell.

        Tim Cook
  • RE: California governor signs Amazon sales taxes into law

    Ooo Ya,this is all one of Governor moonbeam and his left-wing marauders Idea's.Just wait and maybe they will tax your dream's next.
  • Amazon should not be allowed to bypass that which others are forced to pay

    As what is to stop Amazon from moving their corporate headquarters to a country like the Bahama Islands, reaping the profits and bypassing all taxes?
    Tim Cook
  • Re: The reason for the delay in enforcement ...

    As I understand the agreement, the reason this doesn't get enforced for a year is because California and a number of other states are working on a bill in Congress that would create a single point of collection for these taxes. That way Amazon would not have to deal with each of these states individually. They would simply forward the sales tax to this new federal agency which would then forward each state their portion. This is something that both Amazon and the State of California want since Amazon does not want to have to deal with additional administrative overhead, nor does the State of California. Of course where this goes in Congress remains to be seen. But with a number of large states supporting it, there will be significant pressure on Congress to pass it.
    George Mitchell
  • I hope this gets adjudicated.

    I truly hope Amazon eventually takes this all the way to the U.S. Supreme Court for some clarity.

    I have no problem paying sales tax on items I buy within a state. And, if I bought something on-line from a seller in my own state, then, yes, I would ethically feel some obligation to pay the sales tax -- even if not collected during the sale. But, where it becomes questionable for me is when the state tells me that my on-line transaction with an out-of-state (or, even an out-of-country) seller is just the same as if I had purchased the item within the state's boundaries and, hence, subject to its sales tax. Since no sale actually occurred "in" the state, I'm not so sure that situation obtains. And, if that were really the case, then I would be subject not only to my own state's tax, but also to the possible sales tax of the other state . . . and, even of the other country where the purchase was made. (See how messy this gets?)

    Again: I hope Amazon fights this.
  • RE: California governor signs Amazon sales taxes into law

    I'm confused, is this still about the affiliates program? Or did they pass a law that says any and all internet retailers must pay the state of California sales tax? If it's the latter, then Amazon has quite a lot of leeway to take this to court due to prior court cases concerning mail order sales.
  • ALL goverments

    be it municipal, state or federal, should be forced into reducing wastful spending before they are allowed to tax more. It just seems that they think that the tax base can keep absorbing all these increases.

    Here is the stupidity of those in office. A number of years ago some civil servants (who are not so civil and don't really serve) thought that it would be a good idea to create something called "imputed rent". If you paid your mortgage off you would have the actual mortgage payments, that you were no longer paying, added to your income tax as taxable income. Some of our civil servants seem to have too much time on their hands. If they would only spend that time on finding ways to reduce wasteful expenditures.
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