Amazon, California Strike a Deal

Legislators approve bill that delays sales tax collection.

by staff writer
- Sep 13, 2011

Amazon and other online retailers may have one more year before they have to start collecting sales tax from California residents, California lawmakers decided late last week.

That's thanks to Assembly Bill 155, which legislators approved on Friday. The bill postpones enforcement of Assembly Bill 28, which passed in June, and requires out-of-state retailers doing business in California to collect and pay sales tax if they make more than $50,000 a year.

However, with AB 155, online retailers would not have to collect sales tax until Sept. 15, 2012, unless Congress passes federal tax laws regulating online sales tax. In exchange, Amazon has agreed to stop its efforts to put a referendum on the ballot to repeal AB 28. The new bill is being called a "compromise," and comes after long discussions between Amazon and state lawmakers, according to news reports.

Gov. Jerry Brown has until Oct. 9 to sign or veto the AB 155. He reportedly has not said if he will approve the bill.

Amazon noted that if California gave retailers another year before they are required to start collecting sales tax, the retailer would build distribution centers in the state, creating up to 7,000 jobs. It also said it would reconnect with affiliates with which it cut ties when AB 28 passed, according to reports.

In recent months, Amazon has negotiated similar tax-exemption-for-job-creation deals in states including South Carolina and Texas.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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