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'Amazon Tax' California decision pushed back a year

Webshopping giant hopes feds will step in

Internet Security Threat Report 2014

Amazon's bosses have their fingers crossed in hope that the US government will come round to their way of thinking on sales tax for online retailers after winning a year's reprieve from legislators in California.

A new amendment to AB155, the so-called Amazon Tax law that will allow California to collect sales tax from online retailers with a physical presence in the state, will bring the legislation into force on September 15, 2012. The delay gives the US Congress a year to consider making online stores pay sales tax across the country.

Any nationally binding law would overrule individual states' decisions, saving Amazon from arguing over sales tax in New York, Rhode Island, North Carolina, Illinois, Arkansas, Connecticut and Hawaii as well as California.

"This legislation will allow us to continue to work with Congress and the states to obtain a federal resolution to the sales tax issue as soon as possible," said Amazon's vice-president of global public policy, Paul Misener.

Before the amendment, Amazon had been fighting the enforcement of sales tax in California, which can be as high as ten per cent, arguing that its physical presence was not big enough to warrant it. The etailer showed its affiliates the door and sank $5 million into collecting signatures for a referendum to challenge the law in a bid to get it repealed. When that didn't work, it also tried to get the tax postponed until 2014, offering to set up two new distribution centres in the state in exchange.

But lawmakers stuck to their guns until this latest deal, which gives Amazon just a year before the tax will apply. The Californian politicians, and in particular governor Jerry Brown, want the law in place to help the state recover from the recession and balance an $86 billion budget, as it's estimated the tax will bring in $200 million annually.

"This bipartisan, win-win legislation will allow Amazon to bring thousands of jobs and hundreds of millions of investment dollars to California, and welcome back to work tens of thousands of California-based advertising affiliates," Misener said, signalling that the fight is over for now, at least in the Golden State.

California Legislature passed the amended bill on Friday evening, but it awaits the signature of Gov. Brown, who is widely expected to sign it into law but still has the power to veto. ®

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