Lawmakers Want to tax Amazon Sales in California

According to LA Times, lawmakers in my home state of California are hoping to bring in over $150 per year in new revenue by levying sales taxes on purchases made online from businesses without a physical presence in the state. The company that would be hit hardest by this new law would be Amazon, who has had a competitive advantage over retail stores in California for years thanks to a 1992 Supreme Court decision.

Consumers here are required to pay sales tax on the goods they purchase at Amazon but almost never do, because the state has no mechanism for tracking Amazon purchases and collecting the money.

Now California is one of several cash-strapped states exploring a novel legal strategy that could force Amazon and others like it, including Overstock.com, to start collecting tax from their customers. New York launched the effort with a law that took effect in 2008. North Carolina and Rhode Island have passed similar laws; other proposals have advanced in the statehouses of Virginia, Illinois, Colorado and Hawaii.

The Democrats who control California's Legislature plan to put their own bid on the governor's desk this month in hopes of reaping up to $150 million annually for state and local coffers. The revenue would make only a tiny dent in the state's $20-billion deficit, but supporters say every dollar counts in tight times, and there's a principle at stake.

Continued at LA Times…

Amazon and Blue Nile Cut Off Affiliates in More States Over Taxes

From Internet Retailer.com:

Jewelry e-retailer Blue Nile Inc. today joined Amazon.com Inc. in severing its referrals from Rhode Island online affiliates because of legislation that would require the collection of sales tax. The two retailers recently took similar action in North Carolina and Amazon today cut off its affiliates in Hawaii.

“This is a result of the tax collection legislation passed by the Rhode Island state legislature, and expected to become law,” Blue Nile said in a letter sent today to its Rhode Island affiliates. “Blue Nile regrets the need to take this action. As the U.S. Supreme Court’s 1992 Quill decision makes clear, the proposed bill is unconstitutional as it requires sellers with no physical presence in the state to collect sales tax on sales to buyers in that state.”

Blue Nile made a similar announcement to its online affiliates in North Carolina on Saturday, June 27.

Amazon also sent similar messages to its Rhode Island affiliates yesterday, to its North Carolina affiliates on Friday and to its Hawaii affiliates today. “This is a direct result of the unconstitutional tax collection scheme passed by the Rhode Island General Assembly with a veto-proof majority,” Amazon said in the message yesterday. “As a result, we will no longer pay any referral fees for customers referred to Amazon.com or Endless.com after June 29. We were forced to take this unfortunate action in anticipation of actual enactment because of uncertainties surrounding the legislation’s effective date. The governor could sign the bill—or have his veto overridden—any day now.”

Both Blue Nile and Amazon said they would pay their affiliates for all referral fees earned until the recent terminations. Amazon notes that its referral fees can run as high as 15% of the value of a sale transaction, and that it will make final payments to affiliates by Sept. 1.