Sales Tax Compromise For Amazon and California?

We previously reported that Amazon Inc. ended its contracts
with California based affiliates in an attempt to avoid paying
state sales tax under a new law, effective July 1, 2011, that
would have required the online retailer to pay such tax on
purchases made by California residents.

Amazon also fought back against the new law by launching a signature gathering
effort to place the issue on the ballot for California voters.

Now, in the midst of this continuing controversy, the Los Angeles Times reports
that the State legislature, after negotiations with the company, has passed a bill
that will delay the requirement that Amazon start collecting California sales tax until
September 15, 2012.

What remains unclear is whether Governor Brown will sign the legislation.

The LA Times cites State Senate President Pro Tem Darrel Steinberg of Sacramento
as its source for claiming that the delay will cost California $200 million in lost
revenue.

What’s next? Is Governor Brown going to sign the bill and provide breathing room
for the parties to make their next moves and seek a long term solution? Or will it go
unsigned, leaving the argument unresolved as to whether sales tax must be paid,
and whether the Company’s termination of its California affiliates effectively shields
it from such requirements? Is it possible the Feds will step in and pass a law that
requires online retailers nationwide to collect and pay sales tax regardless of their
location and operations?

Stay tuned for more on this hot button issue.

Schein & Cai, advises businesses, including high tech and other companies in
the Silicon Valley and beyond, including San Jose, Santa Clara, Mountain View,
Sunnyvale, Morgan Hill, Oakland, San Francisco, Palo Alto, San Mateo, Santa Cruz,
South San Francisco, Daly City, Cupertino, Saratoga and Emeryville.

Find Schein & Cai at www.sacattorneys.com.

Comments are closed.