Amazon Wants To Overturn A New California Tax Law
Last week, Amazon.com announced that it would support a ballot referendum that would overturn a new California state law that requires the company to collect sales taxes on transactions made by California consumers. The law was signed by Governor Jerry Brown and was made to eliminate the price advantage enjoyed by online retailers over brick and mortar stores.
Traditional stores charge consumers sales tax at the register while Amazon forgoes it. That would be a difference of 7.25 percent to 9.75 percent of the final price. Consumers saved some bucks shopping at Amazon but in reality the buyers owe the tax even if the seller doesn’t collect it. But most people don’t pay for it.
According to California tax authorities, the uncollected sales tax amounts to more than $1 billion each year. They say that the only way to effectively collect sales tax is to let the retailer collect it with each sale.
Amazon and other online retailers found a loophole to avoid collecting sales tax through a 1992 Supreme Court decision that said a state can’t impose its will on a retailer that doesn’t have a presence within the state. The new California law defined the presence as Amazon associates who reside in the state.