Amazon.Com Takes Internet Sales Taxes to the California Ballot Via a Referendum

I had some of this last night but now there is more, including some of the political calculus.

Amazon.com, in a fresh attack on California’s new online sales tax law, is pushing a ballot referendum to have the law repealed.

The Internet retailer Monday called it “a referendum on jobs and investment in California.” The effort comes two weeks after the law was signed by Gov. Jerry Brown. It requires online merchants to collect sales tax on goods purchased by Californians.

Amazon hasn’t been collecting the tax. The Seattle retailer responded the day the law took effect by severing ties with its 10,000 California affiliates – individuals, businesses and nonprofits that earned commissions by referring customers to Amazon. Dozens of other online merchants have done the same.

A ballot referendum takes the California-vs.-Amazon fight to another level. Unlike the more commonly used initiative process, a referendum effort can produce much quicker results.

Referendums are used to overturn laws passed by the Legislature, and the new sales tax law would be suspended once the Amazon effort qualifies for the ballot, said Chip Nielsen, a lawyer working on the referendum. The next statewide election is scheduled for February, but a pending bill would move it to June 2012.

Amazon and its allies would need to gather around 505,000 signatures to put the measure on the ballot. In a statement, a company executive portrayed the referendum as a way to restore the retailer’s relationship with those 10,000 affiliates.

“At a time when businesses are leaving California, it is important to enact policies that attract and encourage business, not drive it away,” said Paul Misener, vice president of public policy. “Amazon looks forward to working again with tens of thousands of small business affiliates in California that were harmed by the new law’s effect on hundreds of out-of-state retailers.”

It is probably easier and less expensive to obtain 500,000 California signatures than pay the attorneys to wage a battle in court, since Amazon et. al. have a case pending in the New York appeals courts. This political move might buy them some time.

I would think that any federal suit would probably want to avoid the 9th Circuit which contains California and concentrate on a direct appeal to the Supreme Court if need be.

So, game on and note that the taxes are suspended once the referendum qualifies for the ballot -as if they were going to remit them to the state anyway.