Winning Worth the Payout for Amazon

Online Tax CollectionFor nearly a decade, local brick and mortar stores across the nation have been fighting to level the playing field with Amazon, the headlining online retailer who has decided to forgo the collection of state sales tax. In a united effort California became the seventh state to adopt sale tax fairness legislation in July. According to Institute for Local Self-Reliance advocate, Stacy Mitchell, “Amazon’s physical presence has spread to more than a dozen states, where it has built warehouses and other facilities that would normally trigger an obligation to collect sales tax.” Going to great lengths to maintain a tax-free advantage by structuring its facilities as separate companies or lobbying state legislatures, Amazon isn’t going to go down without a fight. California’s new law led to the firing of 10,000 or so companies and individuals who earn commissions for using their blogs and websites to funnel sales to Amazon. “The move seemed motivated purely by spite, since it will not alter Amazon’s obligation to collect California’s 7.25 percent sales tax,” notes Mitchell.

Amazon Spending Big Bucks for a Big Win?

The firings were nothing more than a distraction, however, as Amazon planted real plans for disaster. With a referendum scheduled for June 2012 to overturn the new Internet sales tax law, the online retailer has already spent $5.25 million in campaigning, a scare tactic against legislators and the retailers favoring and financing the tax law and its enforcement. The New York Times notes “Political observers say that by spending more, earlier, Amazon is showing potential opponents that its ultimate campaign spending could soar even higher.” And while a close eye is on Amazon’s campaign spending and its impact on deep-pocketed retailers like Walmart who are in favor of the tax law, legislators are faced with another concern in the effort to make Amazon pay.

There is fear that the vote and Amazon’s financial fate could lay in the hands of the public. “Loni Hancock, a state senator who wrote the law Amazon is trying to overturn, has begun a quixotic quest to keep California voters from weighing in on whether online retailers should be required to collect sales tax. She pushed a new bill through a legislative committee that election law experts said could prevent Amazon from putting a referendum on tax collection before the voters,” The New York Times reports. It is feared voters don’t know the detrimental effects the state and the public would feel if the law were overturned. “It means a lot of teacher that aren’t in classrooms and police that aren’t on the streets,” Hancock emphasizes. Online retailers such as Amazon have been flying under the radar in regards to the collection of state sales tax for too long, relying on the upstanding honesty of online shoppers to declare taxable purchases when it comes time to file.


To read more about Amazon’s fight against Internet sales tax, click HERE.