California and Amazon.Com Dancing Around the Collection of Internet Sales Taxes

Amazon.com Inc. is sticking by its vow not to collect California sales tax on Internet purchases — and state officials must decide what to do about it.

But the showdown over the new tax collection law that took effect Friday could be months away. Companies don’t send the taxes to the state until the end of each quarter, which means the California Board of Equalization won’t know officially about Amazon’s refusal to collect them until Oct. 1.

The tax-collecting agency said Amazon accounts for about half the Internet sales in California from large out-of-state firms that, prior to the new law, did not have to collect sales tax for the state. It said the new law would capture about $317 million a year in sales taxes that previously went uncollected.

Amazon, based in Seattle, has said repeatedly that it would not collect the California sales tax, calling it an unconstitutional infringement on interstate commerce.

Such defiance sets up a major legal battle by this fall, though Amazon could first challenge the law in court, as it has in New York. It has lost a trial court ruling there and has an appeal pending.

Amazon is “going to fight in every state where it can fight,” said Tracey G. Sellers, managing director of the Tampa, Fla., office of tax firm True Partners Consulting. “It’s going to be years before this whole issue is settled” in the courts.

Amazon declined to say whether it would sue to overturn the new California statute, though state officials expect a lawsuit.

As, I said before, ONLY the lawyers are going to get rich in litigating this legislation and California will NOT realize ANY additional tax revenue.

Plus, after many years of litigation, the federal law and court decisions are pretty clear – Amazon wins and the California taxpayers will lose with wasting tax dollars on litigation.

Stay tuned…..