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Amazon Internet Sales Tax Legislation Passes as Part of California Budget
So, on to California Governor Jerry Brown for either his signature or veto.
For only the second time in 25 years a California spending plan was passed on time. One interesting part of that balancing act is an online sales tax, something lawmakers have been reluctant to approve in the past.
It seems like a no-brainer, the state needs money, so why not tax purchases online? We pay a tax when we buy the same products in the store. But critics say this tax could actually hurt some businesses in California. Those big online retailers, like Overstock and Amazon, have found a way around this law in other states. They just sever ties with businesses they deal with in the states with the tax. So companies that sell product to Overstock could lose Overstock as a client. This has put some small companies out of business.
The California state legislature needed to close a $9.6 billion deficit and this is expected to bring in $200 million a year in revenue. Some so called brick and mortar stores support this; they think it’s unfair that their product is taxed, but the same items online are not. The big question is do the benefits outweigh the possible side effects?
So, what happens next?
California Governor Jerry Brown can either sign the legislation, veto or allow it to become law. Brown has scheduled a 12 noon PDT new conference on the California budget and maybe we will know more then.
No word from Amazon or Overstock.com, but I bet their attorneys are preparing to file the lawsuits as soon as Brown makes his decision.
There will probably be a few court challenges.
One in federal court regarding the constitutionality of the nexus and the Commerce Clause. The other in California State Court regarding the imposition of a new tax without the 2/3’rds vote requirement of California Proposition 26.
Stay tuned…..and in the meantime, read this piece about yesterday’s legislative vote and what may portend for California.
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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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Amazon Tax Legislation Coming Up for Votes in the California Legislature
Looks like Assemblywoman Nancy Skinner and Senator Loni Hancock are pushing their respective bills forward in the California Legislature. You remember them – tax increasing, job killing and probably unconstitutional laws.Elsewhere at the Capitol, Democratic Assembly members Nancy Skinner and Charles Calderon and Sen. Loni Hancock tout measures they say will level the playing field for California businesses competing with online retailers such as Amazon.com.
The lawmakers will be joined by Bill Dombrowski, president and CEO of the California Retailers Association; Dean Murakami, president of the Los Rios Community College Federation of Teachers; and others at the news conference, which starts at 11:30 a.m. on the Capitol’s south steps.
Skinner’s Assembly Bill 153 and Calderon’s Assembly Bill 155 may come up for a vote Thursday in the Assembly Appropriations Committee. Hancock’s Senate Bill 234 passed the Senate 22-17 on May 5 and is now before the Assembly.
I guess the Democrats want to force the issue and tie California up in costly federal litigation, while killing California jobs, in the meantime. The California Legislature may impose and Democrat Governor Jerry Brown may dispose of this matter. But, this entire matter will go to the federal courts, if the Governor signs the bill(s).
Yeah and SB 234 which passed the California State Senate, pretty much grants authority to the California Board of Equalization to tax anything they deem constitutional under federal law – which means just about everything. Way to go California Legislature and Democrat majority, pass the buck to another elected agency to raise taxes for you.
Sheesh…..
See you in court, where more of my taxpayer money will be expended for no good reason.
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eBay Says Let’s Make a Deal to California’s Internet Sales Tax Legislation – Part TwoAn Amazon Tax Lesson for California Legislators – Businesses Move and Job Loss Occurs
eBay Says Let’s Make a Deal to California’s Internet Sales Tax Legislation
Democrat 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 – Part Two
As I said before eBay doesn’t care much for Amazon.com but business is business.
Unsurprisingly, eBay has not been enamored with such efforts which would hit eBay sellers, and has been seeking to work into legislation a threshold designed to ensure that at least some of its out-of-state sellers will not be subject to California sales/use tax collection and remittance obligations where they sell to customers in the Golden State (California-based sellers who sell to Californians are already on the hook).
A possible threshold of $10,000 a year or less in sales to Californians has been reported, but sources say that eBay and/or some of its sellers want that limit raised higher– potentially up to $2 million per year.
EBay has its California sellers engaged in a grassroots lobbying effort aimed at forcing amendments to the legislation, which would defang it. No doubt eBay sellers located outside of California, who are currently not obliged to collect and remit sales tax on purchases made by Californians, are ecstatic about this. California-based sellers would not benefit from building in a sales threshold, though, especially a high one that could tilt the eBay marketplace distinctly to the advantage of out-of-state sellers. However, their legislators are being urged to make amendments that, if put through, could seriously reduce the already rather pitiful revenues that backers of the legislation claim they would obtain by ramming it through.
The very best case scenario, according to a Board of Equalization staff analysis produced earlier this year, was that this “revenue
enhancement” measure would bring in a measly $200-or-so million maximum in 2012-13.Let’s see as we repeat – no real, substantive tax revenue for California, a loss of California jobs and a costly litigation. The Skinner Bill (AB 153) et. al is a loser all around.
But, it WILL proceed because the POLS will milk those who have a stake in the legislation for campaign contributions.
Eventually, this will die a quiet, but expensive death.
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An Amazon Tax Lesson for California Legislators – Businesses Move and Job Loss Occurs
eBay Says Let’s Make a Deal to California’s Internet Sales Tax Legislation
Democrat 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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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