Amazon.Com Can Move Forward on Internet Sales Tax Referendum

Posted Posted in Amazon Tax, Internet Sales Taxes

And, so the campaign to repeal California internet sales taxes begins.
Amazon.com can begin collecting signatures to overturn California’s new online tax collection law after state Attorney General Kamala Harris issued ballot language Monday for the retailer’s proposed referendum.

The retailer and its online allies will have until Sept. 27 to gather 505,000 signatures to qualify the referendum for the ballot. Should it qualify, the state would have to suspend its new sales tax law until voters decide on the matter next June.

The law, Assembly Bill X1 28, was approved by Democratic lawmakers and signed by Gov. Jerry Brown last month. It expands the definition of retailers required to collect sales and use tax on California purchases, and the budget relies on the measure to raise $200 million this fiscal year.

Amazon.com cut ties last month with 10,000 California affiliates who refer customers to the website. The retailer said that act was sufficient to avoid the new tax requirement, though state officials disagree.

Harris issued a ballot title and summary for the referendum late Monday, the last major hurdle for proponents. Secretary of State Debra Bowen must still issue an election schedule, but that is considered a perfunctory act.

Harris’ move was not a certainty. Democratic lawmakers have suggested the referendum is illegal under the constitution because it would challenge a budget bill that took effect upon signing. Assembly Majority Leader Charles Calderon, D-Whittier, warned last week that the referendum would face a legal challenge.

Now, over to Wal-Mart and Target who are Amazon’s REAL adversaries in this fight to tax the internet.

Undoubtedly, there will be a legal challenge to California Attorney General Kamala Harris’ decision. Going to court in 1…2….3……..

California’s Amazon Tax Referendum Faces Epic Legal Battle

Posted 1 CommentPosted in Amazon Tax, Internet Sales Taxes

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.

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

Posted Posted in Amazon Tax, Internet Sales Taxes
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.

Amazon.com Files a Referendum to Ask Voters to Overturn California Internet Sales Taxes

Posted 2 CommentsPosted in Amazon Tax, Internet Sales Taxes

After writing about this issue for months, I really did not see this coming.
Amazon.com Inc. wants California voters to decide whether to overturn a new law that forces online retailers to collect sales taxes there.

A petition for a referendum was filed Friday with the state Attorney General’s Office so that voters can decide on the requirement, which was included in a state budget signed into law in late June.

The new law forces online retailers to collect California sales taxes by expanding the definition of having a physical presence in the state. The requirement now kicks in if an online retailer has a related company, such as a marketing or product-development arm, or affiliates in the state – individuals and companies that earn commissions by referring visitors to Amazon from their websites.

Passage of the law, which is projected to help the state collect an additional $200 million annually, adds California to a growing list of states that have turned to such measures in hopes of bringing in more tax revenue. Its legislature passed a similar law in 2009, but then-Gov. Arnold Schwarzenegger vetoed it.

Billions of dollars are at stake as a growing number of states look for ways to generate more revenue without violating a 1992 U.S. Supreme Court ruling that prohibits them from forcing businesses to collect sales taxes unless the business has a physical presence, such as a store, in that state. When consumers order from out-of-state retailers, they’re supposed to pay the tax that is due, but they rarely do and it’s difficult to enforce.

States are trying to get around the Supreme Court restriction by passing laws that broaden the definition of a physical presence. Online retailers, meanwhile, are resisting being deputized as tax collectors.

Amazon had thousands of affiliates in California, which received fees varying from 4 percent to 15 percent of each sale they brought to the company. Amazon, which is based in Seattle, cut ties with them after the law’s passage.

Paul Misener, Amazon’s vice president of public policy, said the referendum supports “jobs and investment in California.”

“At a time when businesses are leaving California, it is important to enact policies that attract and encourage business, not drive it away,” he said.

I thought Amazon.com et. al. would be headed to court rather than the political arena which in California will certainly be expensive – more expensive to gather signatures for a referendum and then a television, plus direct mail campaign to overturn the law. But, it will certainly give the California GOP an issue to run on in 2012.

Maybe they will do both?

I will have the links to the exact language of the referendum and post some updates when they are available.

California Affiliate Businesses Hurt By Internet Sales Tax Law

Posted Posted in Amazon Tax, Internet Sales Taxes

As you know, I was fired by Amazon.com as a sales affiliate because of the recently passed and enacted California internet sales tax legislation. But, others are feeling the pain even more acutely.
For several years now, the military museum in Old Sacramento has quietly earned a nice little income by acting as a sales rep for Amazon.com.

But this small nonprofit, along with thousands of other California organizations and businesses, has been caught in an epic standoff between Amazon and state officials.

The state enacted a law last week requiring Amazon and other Internet retailers to begin collecting sales tax from California purchasers. Amazon says the law is unconstitutional and it won’t collect the tax.

While legal experts expect Amazon to sue the state, the online giant already is taking action of a different sort. Hoping to exempt itself from the law, Amazon has fired its 10,000 California affiliates, cutting off their commissions. Scores of other e-commerce companies affected by the law, including Overstock.com and a slew of smaller firms, have done the same.

Their decisions won’t prevent Californians from buying from Amazon and other online retailers.

But they will affect organizations like the California State Military Museum, which earned about $2,000 a year as an Amazon affiliate.

“That was our book-buying budget,” said Dan Sebby, the museum’s director.

A Camarillo trade group, the Performance Marketing Association, says 25,000 California businesses, individuals and nonprofits make commissions as affiliates for online retailers. They place links on their websites to the retailers, and earn commissions when visitors “click through” to make a purchase.

For many, it’s a sidelight. For others, it’s their livelihood. Rebecca Madigan, the trade group’s executive director and a critic of the new law, said the California affiliates will lose 25 percent of their Internet income as a result of the controversy.

“Hundreds and hundreds of retailers have terminated their affiliations,” she said.

California isn’t the first state to feud with Amazon. The Seattle retailer dumped affiliates in several other states, including Connecticut and Arkansas, that imposed an Internet sales tax. It has also rewarded states that remain tax free.

Citing a business-friendly climate, Amazon announced Wednesday it’s building a major distribution facility in Indiana. At the same time, it’s continuing a lengthy court fight over a New York law that imposes the tax requirement.

So, what will happen is the large sales affiliates will leave California, move to states that are not forcing Amazon.com et. al. to collect the tax and the State of California will attempt to force collection in October. Amazon and the others will simply sue.

There will be NO new tax revenue for California because of internet sales taxes and, in fact, will lose income, sales taxes, property taxes, etc. from those who will move.

Not a winner here for the California state budget and certainly not for California taxpayers.

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

Posted 1 CommentPosted in Amazon Tax, Internet Sales Taxes

I doubt Amazon.com et. al. will voluntarily surrender to the newly enacted California legislation.
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…..