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California Legislators Push New Internet Sales Tax Bill to Thwart Amazon.com Referendum
What games the Democrats in the California Legislature play to impose or collect new taxes.A group of California legislators plans to pass a new online sales tax bill in a move to thwart tax opponent Amazon.com.
Lawmakers today used a “gut-and-amend” procedure that takes an existing bill and substitutes an online sales tax measure. The bill passed the Senate Appropriations Committee today.
In late June, Gov. Jerry Brown signed a bill requiring Amazon and other online retailers to begin collecting sales tax on California transactions. The bill passed on a regular, majority vote. Amazon has refused to collect the tax and launched a referendum to have it overturned.
But Larry Levin, a spokesman for Sen. Loni Hancock, D-Oakland, said the new legislation would be different. It would pass on a two-thirds supermajority and would carry an “urgency” clause. That means it can’t be subject to ballot referendum, Levin said.
I would urge my fellow Republicans in the California Legislature to BLOCK this tax increase on California taxpayers and allow the referendum process sort out the law.
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California’s Amazon Tax Referendum Faces Epic Legal Battle
Dan Walter’s has the story here of the challenge to the recently enacted California Amazon Internet Sales Tax Legislation.But will the referendum run afoul of Proposition 25 – the 2010 initiative ballot measure, which public employee unions sponsored, to reduce the legislative vote margin on the budget and its trailer bills from two-thirds to simple majorities?
Before any ballot battle, the rivals are poised for a legal showdown.
The tax measure, Assembly Bill X1 28, appropriates $1,000 to the Board of Equalization for administration.
Democrats placed token appropriations in trailer bills to qualify for simple majority votes under Proposition 25, and one section of the state constitution says appropriations are not subject to referendum.
Two Democratic legislators declared Thursday that the referendum is invalid due to Proposition 25. But Amazon cites multiple declarations by Proposition 25’s supporters that it would not dilute voters’ referendum rights, plus an opinion from the Legislature’s counsel to that effect.
Last August, for instance, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez issued a statement that, if Proposition 25 passed, it “will not allow a majority of the Legislature to use budget trailer bills to enact new ‘referendum-proof’ programs or requirements,” adding, “Any attempt by this or any future Legislature to circumvent this right would be in clear violation of California’s constitution.”
The Amazon petition is now before Attorney General Kamala Harris. She could conceivably declare it to be invalid under Proposition 25, thereby triggering a legal battle with Amazon’s attorneys attacking Proposition 25’s validity.
Harris is more likely, however, to clear the referendum for signature-gathering. But if and when Amazon submits the signatures for certification, the California Retailers Association is poised to challenge them under Proposition 25.
Either way the entire matter will head to the California Supreme Court where the referendum process will be examined under the precepts of Proposition 25. Then, there will either be an election and/or a federal court challenge.
These taxes will not be collected, nor shall the California treasury be enriched for a long long time.
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Is the California Amazon Internet Sales Tax Legislation Dead?
It is hard to say since California Proposition 25 language in the bill (tax increases requiring a 2/3’rds super majority) makes for some legal incongruity and the fact that Governor Jerry Brown vetoed the enabling California Budget bill .
ABX1 28 (Blumenfield)
State Board of Equalization: administration: retailer engaged in business in this state.The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, measured by sales price. That law defines a ?retailer engaged in business in this state? to include retailers that engage in specified activities in this state and requires every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state to register with the State Board of Equalization and to collect the tax from the purchaser and remit it to the board.
This bill would further define a retailer engaged in business in this state as a retailer that has substantial nexus with this state and a retailer upon whom federal law permits the state to impose a use tax collection duty. The bill would also include specified retailers as retailers engaged in business in this state and would eliminate an exclusion.
This bill would include in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by an Internet-based link or an Internet Web site, or otherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 within the preceding 12 months, and provided further that the retailer has cumulative sales of tangible personal property to purchasers in this state of over $500,000, within the preceding 12 months, except as specified. This bill would also provide that a retailer entering into specified agreements to purchase advertising is not a retailer engaged in business in this state and would define a retailer to include an entity affiliated with a retailer under federal income tax law, as specified. This bill would further provide that these provisions would not apply if the retailer can demonstrate that the referrals wold not satisfy specified United States constitutional requirements, as provided.
This bill would also include as a retailer engaged in business in this state as a retailer that is a member of a commonly controlled group, as defined under the Corporation Tax Law, and a member of a combined reporting group, as defined, that includes another member of the retailer?s commonly controlled group that, pursuant to an agreement with or in cooperation with the retailer, performs services in this state in connection with tangible personal property to be sold by the retailer.
This bill would provide that the provisions of this bill are severable.
This bill would appropriate $1,000 from the General Fund to the State Board of Equalization for administrative operations.
The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. Governor Schwarzenegger issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on December 6, 2010. Governor Brown issued a proclamation on January 20, 2011, declaring and reaffirming that a fiscal emergency exists and stating that his proclamation supersedes the earlier proclamation for purposes of that constitutional provision.
This bill would state that it addresses the fiscal emergency declared and reaffirmed by the Governor by proclamation issued on January 20, 2011, pursuant to the California Constitution.
This bill would declare that it is to take immediate effect as a bill providing for appropriations related to the Budget Bill.
The lawyers will have to get together on this one but at first blush and with the solence coming from Amazon and Overstock.com, my bet is that the legislation is dead.
Thank goodness! I can keep my meager Amazon Associate status – at least for today.
Stay tuned….
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Amazon Cuts Affiliate Ties In More States Over Internet Sales Taxes
Note well, California Legislators because if current legislation becomes law, then this will happen to your state.Amazon has shut down its affiliates program in Connecticut and Arkansas over the controversial issue of collecting state taxes.
The company announced the move in letters to affiliates Friday, noting that contracts with all Connecticut residents who participate in the Amazon Associates Program would be terminated effective immediately, while contracts with affiliates in Arkansas will be terminated on July 24.
Affiliates of the Associates Program are typically Web site owners and bloggers who link to Amazon on their sites as a way of driving traffic to the online retailer. In return, they receive a commission if a sale is made.
Though Amazon isn’t required to collect taxes in states where it has no presence, many cash-strapped local governments have tried to force the company to pay taxes in states where affiliates are located. Amazon naturally has challenged that requirement, a move that has forced the company to shut down its affiliate programs as it fights the tax regulations.
The retailer has terminated similar agreements in other states, including Illinois, Colorado, North Carolina, and Rhode Island, and has threatened to do the same in other states where affiliates are located.
In its letters to Connecticut and Arkansas affiliates, the company blamed the budgets signed by the governors of those states that force it to collect tax from online purchases even though Amazon has no physical presence in the states. Because of the new state tax laws, Amazon said it was “compelled” to shut down the affiliates programs.
Great, it looks like I will no longer be an Amazon Associate (if and when Jerry Brown signs the legislation), although I have not realized any revenue yet. But, what about the Californians that do derive their livelihood from Amazon? Well, they lose their jobs.
While federal litigation continues, up to the United States Supreme Court more than likely, the states will add little revenue while hurting its working citizens.
In a recent interview, Amazon CEO Jeff Bezos condemned the drive to collect sales tax, arguing that Amazon is no different than big retail chains that don’t collect sales tax in states where they don’t have what’s known as a “nexus,” or presence. The CEO said Amazon’s point of view is that the collection of taxes among the states should be simplified, referring to a plan called the Streamlined Sales Tax Initiative.
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Updated: California Assembly Passes Amazon Internet Sales Tax Legislation – Lawyers Get Rich; PMA Sues Illinois Over Internet Sales Tax Nexus
***** Update*****Well, it didn’t take long. the California Assembly passes this arguably unconstitutional internet sales tax legislation and in Illinois which had previously passed it, the Performance Marketing Association files a federal lawsuit.The Performance Marketing Association (PMA) filed a lawsuit against the Illinois Department of Revenue on Wednesday challenging the constitutionality of the newly enacted law that requires out-of-state merchants who advertise on affiliate websites in Illinois to collect sales tax.
PMA said there are at least 9,000 Illinois-based affiliates including bloggers, non-profits, home-based businesses and small businesses with dozens of employees that generated $744 million in advertising revenue last year.
Since the law was enacted in March, retailers including Amazon.com and Overstock.com have already severed their relationships, and PMA said if HB 3659 takes effect on July 1 as scheduled, Illinois affiliates will be in jeopardy, as will the $22 million in state income tax it estimates are generated annually from the affiliates.
PMA said there are over 200,000 online affiliates operating nationwide. It explained the affiliate model as follows:
“Performance marketing is an advertising model whereby an independent affiliate receives a referral fee or payment from an online retailer when visitors to the affiliate’s website use links and banners to navigate to and subsequently purchase products on the retailer’s site. Affiliate marketers do not sell products or collect money from consumers. Affiliates do not deliver products or services, and there is no ownership or business relationship between affiliates and merchants beyond a limited advertising agreement.”
The PMA said it filed its complaint with the United States District Court for the Northern District of Illinois on behalf of its members in an effort to reverse the effects of the Illinois affiliate nexus legislation and to deter other states from enacting similar measures.
According to the PMA, HB 3659 exceeds the limits of the state’s power to regulate interstate commerce under the Commerce Clause, as established in the 1992 Supreme Court ruling in Quill Corp. v. North Dakota, which declares that a state cannot impose a sales or use tax collection obligation on a company if the company does not have a physical presence in that state.
Additionally, the PMA believes the law discriminates against electronic commerce in violation of the Internet Tax Freedom Act, which states that Internet sales cannot be discriminated against through tax obligations that apply only to online transactions.
Fancy that.
The PMA’s news release is here.
The Democrat majority and one Republican in the California Assembly passed the legislation yesterday.The last of three bills aimed at getting the Seattle giant and other out-of-state online retailers to pay sales tax passed the Assembly on Wednesday afternoon.
“It’s something we’ve been working on for years,” said Assemblywoman Nancy Skinner, D-Berkeley, who authored the bill. “But this is the first time that so many businesses up and down the state are supporting it.”
A companion bill, authored by Assemblyman Charles Calderon, D-Whittier (Los Angeles County), passed the full floor on a 47-16 vote on Tuesday.
“This bill levels the playing field for businesses in California,” said Assemblyman Bill Berryhill, R-Ceres (Stanislaus County). “Not a day goes by when I don’t hear from businesses about their ability to compete.”
Which is what supporters of the so-called e-fairness legislation have been shouting from the rooftops for years, despite vetoes from former Gov. Arnold Schwarzenegger and dire threats from Amazon.com (2010 profit: $34 billion) and Utah’s Overstock.com to pull their affiliate business out of the state.
So, what comes next?
Senate action on the two Assembly bills, AB 153 (50-21- 9) and AB 155 (52-20 -8) and Assembly Action on SB 234 (22-17). Then the complimentary legislation if passed would go to Democrat Governor Jerry Brown. But, these bills passed with simple majority votes and some maintain that these “new” taxes fall under the jurisdiction of California Proposition 26, which requires a super legislative majority in order to pass.
I smell a lawsuit and a state court case, unless Governor Jerry Brown vetoes these bills, like Governor Arnold Schwarzenegger did in the past two legislative sessions.
In the meantime, if the bills become law, the actions should come swift from Amazon and the other internet sales tax targets, as they will pull their business out of California to reduce their liability.
And, as to the nexus issue, they will file probably a federal lawsuit.
This issue is far from resolved and I see the only revenue California will receive will be for its legal staff and judiciary.
Kind of a waste for California taxpayers.
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California Assembly Passes Amazon Internet Sales Tax Legislation – Lawyers Get Rich
The Democrat majority and one Republican in the California Assembly passed the legislation yesterday.The last of three bills aimed at getting the Seattle giant and other out-of-state online retailers to pay sales tax passed the Assembly on Wednesday afternoon.
“It’s something we’ve been working on for years,” said Assemblywoman Nancy Skinner, D-Berkeley, who authored the bill. “But this is the first time that so many businesses up and down the state are supporting it.”
A companion bill, authored by Assemblyman Charles Calderon, D-Whittier (Los Angeles County), passed the full floor on a 47-16 vote on Tuesday.
“This bill levels the playing field for businesses in California,” said Assemblyman Bill Berryhill, R-Ceres (Stanislaus County). “Not a day goes by when I don’t hear from businesses about their ability to compete.”
Which is what supporters of the so-called e-fairness legislation have been shouting from the rooftops for years, despite vetoes from former Gov. Arnold Schwarzenegger and dire threats from Amazon.com (2010 profit: $34 billion) and Utah’s Overstock.com to pull their affiliate business out of the state.
So, what comes next?
Senate action on the two Assembly bills, AB 153 (50-21- 9) and AB 155 (52-20 -8) and Assembly Action on SB 234 (22-17). Then the complimentary legislation if passed would go to Democrat Governor Jerry Brown. But, these bills passed with simple majority votes and some maintain that these “new” taxes fall under the jurisdiction of California Proposition 26, which requires a super legislative majority in order to pass.
I smell a lawsuit and a state court case, unless Governor Jerry Brown vetoes these bills, like Governor Arnold Schwarzenegger did in the past two legislative sessions.
In the meantime, if the bills become law, the actions should come swift from Amazon and the other internet sales tax targets, as they will pull their business out of California to reduce their liability.
And, as to the nexus issue, they will file probably a federal lawsuit.
This issue is far from resolved and I see the only revenue California will receive will be for its legal staff and judiciary.
Kind of a waste for California taxpayers.
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Flap’s California Morning Collection: June 1, 2011
A morning collection of links and comments about my home, California.
Superstore Projects Could Face New Hurdle
Jerry Brown Announces Budget Cuts at California Department of Corrections and Rehabilitation HeadquartersCalifornia Assembly OKs AB 155 to Tax Online Retailers
Internet Sales Tax bill Advances in California Legislature
Enjoy your morning!
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An Amazon Tax Lesson for California Legislators – Businesses Move and Job Loss Occurs
Goerge Will’s column today illustrates the point that maybe the “Amazon Tax” may not be all that it is touted to be.Tim Storm, an Illinois businessman until a few weeks ago, is now a Wisconsin businessman. Herewith a story about how states can reduce revenue by trying to increase them and about the economic benefits of federalism.
Storm, 42, is founder and chief executive of FatWallet.com. The company, until recently one of about 9,000 Illinois “affiliates” of Amazon.com, directs online shoppers to online retailers, which often pay affiliates commissions for referrals that result in sales. Storm’s company, which has 54 employees, used to be located in Rockton, Ill., but now is five miles up the road in Beloit, Wis.
One reason online sales are brisk is that the retailers are not required to collect state sales taxes. In 1992, the U.S. Supreme Court held that such taxes must be collected only by companies that have a “substantial nexus” — basically, a brick-and-mortar presence — in the state. Under this rule, Amazon collects sales taxes in only five states.
Illinois, comprehensively misgoverned and ravenous for revenue, has enacted what has come to be called an “Amazon tax.” It requires Amazon and other online retailers to collect the state’s sales tax. Amazon and many other retailers responded by severing their connections with their Illinois affiliates.
Storm responded by relocating to Beloit. No one knows how many other Illinois affiliates of the thousands of online retailers — transactions with Amazon are less than 1 percent of FatWallet’s business — will lose revenue, pay less in taxes, cut jobs or leave the state. When Texas sent Amazon a bill for $269 million because of the “nexus” of its Dallas warehouse, Amazon decided to close the warehouse.
Read all of the piece.
I understand that the California Democratic Party is voting on a resolution today that supports the “Amazon Tax” in California. It would be a mistake for this legislation to pass, as I have discussed many times before.
Look at Illinois and Texas…..
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eBay Says Let’s Make a Deal to California’s Internet Sales Tax LegislationDemocrat Senator Dick Duban to Introduce Bill to Tax Internet Sales
Poll Watch: 63 Per Cent Oppose Taxing Online Transactions
Video: California and the Amazon Internet Sales Tax
Video: How Amazon Internet Sales Tax Legislation Hurts California Small Business
Amazon Internet Sales Tax WILL Require Super Majority in California Legislature
Video: California Board of Equalization Casts Doubt on Amazon Internet Sales Tax Legislation
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eBay Says Let’s Make a Deal to California’s Internet Sales Tax Legislation
Amazon.com et. al. should not feel bad – after all it is just business, right?“Yes, I’ve met with eBay quite a lot,” said Assembly member Nancy Skinner (D), who introduced the bill. Skinner told Tax Analysts that eBay is concerned about the proposal’s impact on lower-volume sellers, and the two sides have discussed raising the $10,000 threshold.
Internet auction giant eBay Inc. is negotiating language in a proposed California “Amazon” law (AB 153) in hopes of reducing the number of its sellers that could be required to collect sales taxes.
The click-through nexus legislation would require remote sellers to collect state sales taxes if they make $10,000 or more in annual sales through California affiliates that receive a commission. Much of the attention has centered on Amazon.com, but eBay — a California-based company — also receives commissions from its sellers, who could then be required to remit California sales taxes.
“We hope to come to a threshold that they feel good about,” Skinner said. “But I’m certainly not going to be making the law ineffectual.”
This entire exercise which will lose California jobs and provide NO new measurable tax revenue is looking more and more like a “JUICE BILL.”
The divide and conquer of business interests, the campaign contributions, the never ending amendments and tweaks to the bills. My God, no wonder American business is so fed up with the political process – particularly the Democrats in the California Legislature.
So, the legislation will linger on and Assemblywoman will have all the attention and PAC money the business interest will provide.
In the meantime, the Amazon.com and other business sales affiliates will sweat out whether they will have a job or not.
How disgraceful…..
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Democrat Senator Dick Duban to Introduce Bill to Tax Internet SalesPoll Watch: 63 Per Cent Oppose Taxing Online Transactions
Video: California and the Amazon Internet Sales Tax
Video: How Amazon Internet Sales Tax Legislation Hurts California Small Business
Amazon Internet Sales Tax WILL Require Super Majority in California Legislature
Video: California Board of Equalization Casts Doubt on Amazon Internet Sales Tax Legislation
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Democrat Senator Dick Duban to Introduce Bill to Tax Internet Sales
Senator Dick Durbin (L) and Senate Majority Leader Harry Reid listen to a fellow senator speak about the budget in the Capitol in Washington April 7, 2011
Yeah, this is all the American economy needs – more taxes.
A Democratic senator is preparing to introduce legislation that aims to end the golden era of tax-free Internet shopping.
The proposal–expected to be made public soon after Tax Day–would rewrite the ground rules for Internet and mail order sales by eliminating the ability of Americans to shop at Web sites like Amazon.com and Overstock.com without paying state sales taxes.
Here we go for a national sales tax and/or a Value Added Tax (VAT) like in Europe. The Democrats are tax and spend socialists who cannot resist taxing Americans blind.
And, for what?
Get this: FAIRNESS
“Why should out-of-state companies that sell their products online have an unfair advantage over Main Street bricks-and-mortar businesses?” Durbin said in a speech in Collinsville, Ill., in February. “Out-of-state companies that aren’t paying their fair share of taxes are sticking Illinois residents and businesses with the tab.”
Fair share of what?
This is a tax grab, plain and simple. And, a disaster for the economy.
What Democrats like Durban really want is MORE tax revenue that they can redistribute to their constituents in order to buy votes.
Just say NO to internet sales taxes at the state and federal level.
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Poll Watch: 63 Per Cent Oppose Taxing Online TransactionsVideo: California and the Amazon Internet Sales Tax
Video: How Amazon Internet Sales Tax Legislation Hurts California Small Business
Amazon Internet Sales Tax WILL Require Super Majority in California Legislature
Video: California Board of Equalization Casts Doubt on Amazon Internet Sales Tax Legislation