• Amazon Tax,  Internet Sales Taxes

    California State Board of Equalization Votes to Begin Rule Making to Implement the Amazon Internet Sales Tax

    Why the Board is proceeding and wasting taxpayers money on a law that will face a referendum is pure Democratic politics.

    But, oh well.

    Debate over the 90-day interim period during which Amazon gathers signatures for the voter referendum to repeal the law was a hot issue today between board members. Because the office of legislative counsel issued a recent opinion which said the law would be suspended the minute Amazon qualifies the issue for the ballot, Republican board members George Runner and Michelle Steele
    said the BOE should not implement the tax yet.

    At issue was whether the new law would or should even take effect.

    However, board members Betty Yee and Jerome Horton, Democrats, insisted that because ABx1 28 was already signed into law, it needs to be upheld by the board unless and until it is repealed either by the voters, or in a court of law.

    Yee wanted to abandon discussion of the interim period, and instead pushed ahead for implementation of the tax, beginning with an “interested parties” process discussing the need for rule making to implement and clarify the provisions of the bill.

    The Board voted 3-2, siding with Yee and Horton to have obtain an opinion from the Attorney General explaining how the referendum process will affect the tax, and to begin the meetings to discuss implementation.

    This move is just the beginning of a long litigious process.

    Signature gathering is on-going and it is just a matter of time before the referendum folks and the California Attorney General are sued to try to remove the referendum from the ballot –  before and then after it qualifies.

    The campaign consultants, communications strategists and the lawyers are all going to get rich while I no longer earn a few bucks from selling Amazon books and media on flapsblog.com.


  • Amazon Tax,  California State Board of Equalization,  Internet Sales Taxes

    California State Board of Equalization to Discuss Implementation of the Amazon Internet Sales Tax

    Today the California State Board of Equalization will meet at 10 AM.

    The state Board of Equalization will start to tackle how to implement a new law requiring major online retailers to collect sales tax on purchases made by Californians at its Sacramento meeting today.

    But any solution for applying the so-called “Amazon Tax,” which was approved last month as part of the budget package backed by Democratic lawmakers, could be short lived. Opponents of the change have filed referendum papers to ask voters to overturn ABX1 28 in the next statewide election, a move that could pull the plug on the plan to generate revenue much sooner than 2012.

    A Legislative Counsel opinion sought by Sen. Joel Anderson, R-Alpine, concluded that the law would be suspended once the challenge qualifies for the ballot, even though the majority-vote measure took effect immediately as a result of Proposition 25. That scenario would put the Amazon Tax on hold until the next statewide election, which will likely be held in June 2012.

    The meeting will be webcast this morning here and the full agenda in Pdf format is here.

    In the meantime, the signature gatherers are proceeding and the television ad mavens are busy.

  • Amazon Tax,  Internet Sales Taxes

    California Amazon Internet Sales Taxes Will Be Suspended When Referendum Qualifies for Ballot?

    Looks like it, as per a new legal opinion from the Office of the Legislative Counsel.

    Legislative lawyers believe that if a referendum on the new law requiring sales tax collection by online retailers qualifies for the ballot, the law will have to be put on hold until the voters have their say.If that opinion holds, it may raise the stakes for a budget written with an expectation of at least $200 million from the law in question.

    “We are of the opinion that the operation of the statute would be suspended during that time period,” writes attorneys for the office of
    the Legislative Counsel in a letter dated Friday to state Sen. Joel Anderson (R-San Diego).

    Anderson apparently asked for a legal opinion on whether the law, contained in ABx 28, would be operable should the newly launched campaign to overturn it via referendum gather enough voter signatures.

    The six page letter (PDF) tackles an issue raised a few times before, and several times since, voters approved Proposition 25 in November: whether a majority vote budget and its related “trailer” bills are subject to referendum.

    But, I am positive that this will be litigated once the requisite signatures are gathered.

    Which I do not surmise will be too long with Amazon.Com’s deep financial pockets. With the polling already showing a likelihood that the referendum will pass, Walmart, Target and the other brick and mortar retailers will want to keep Amazon’s feet to the fire – and in legal fees.

    Some have suggested that the budget and any related bill which includes an “appropriation” could, under Prop 25, may be immune from the referendum. In part, the quandary is linked to the California Constitution’s exclusion of “urgency statutes” (which go into effect immediately and require a supermajority legislative vote) and those “providing for appropriations.” Until Prop 25 lowered the budget vote in the Legislature, both seemed to apply to state’s annual fiscal plan.

    “Before Proposition 25,” the opinion letter states, “the referendum was applicable only to statutes that did not go into effect immediately.”

    But now, write legislative attorneys, the budget can no longer be considered exempt from referendum because Prop 25 didn’t explicitly say so. And while the constitution doesn’t expressly put a statute on hold once a referendum has qualified for the ballot, Legislative Counsel says the courts have nonetheless operated on that assumption.

  • Amazon Tax,  Internet Sales Taxes

    Poll Watch: California Voters Split on Internet Sales Taxes ( Amazon Tax) Referendum

    For the second year in a row, USC Dana and David Dornsife College of Letters, Arts and Sciences is partnering with the Los Angeles Times for a public opinion poll about the state of California. Dan Schnur, director of the Jesse M. Unruh Institute of Politics, and Evan Halper, Sacramento Bureau Chief from the Los Angeles Times, discuss the amazon.com tax.

    According to the latest USC Dornsife/Los Angeles Times Poll.

    California voters are split about new legislation that would require Internet retailers to begin collecting sales tax on online purchases, according to the USC Dornsife College of Letters, Arts and Sciences/Los Angeles Times Poll. This week, opponents of the so-called “Amazon tax” were given approval by Secretary of State Debra Bowen to begin collecting signatures for a ballot referendum to overturn the measure.

    Conducted July 6-17, 2011, the latest USC Dornsife/Los Angeles Times Poll shows 46 percent of voters favoring the online sales tax as a revenue source to help balance the budget and pay for state services. Forty-nine percent opposed the measure, which would raise taxes and could hurt local businesses who sell products through online retailers such as Amazon.com.

    This will be a costly media campaign and remember once the half million or so signatures are collected, the internet sales taxes are suspended until after the election. Also, the way the referendum is worded, voting NO means NO Tax – a clear advantage to the referendum proponents.

    Now, whether Walmart and Target will team up with Big Labor and the Democrats to fight the referendum will be an interesting development. The early polling may scare them away from such a massive ad driven campaign though.

    Stay tuned….

    Non-white voters are slightly more likely than White voters to oppose the tax. Among White voters, 47 percent favor the tax and 49 percent oppose it. Among non-white voters, 43 percent favor the tax and 52 percent oppose it, including 57 percent of Black voters and 52 percent of Latino voters.

    Younger voters are also more likely than older voters to oppose the tax. Fifty-nine percent of young men oppose the tax, as do a majority – 52 percent – of young women. (37 percent of young men and 45 percent of young women support the tax.)

    Overall, 55 percent of young voters opposed taxing online purchases by California residentsand 41 percent support it. In contrast, 43 percent of voters over the age of 50 oppose taxing online purchases, and 52 percent support it.

    Opposition to the sales tax correlated to online shopping habits. Among voters who do most of their shopping online, 61 percent oppose taxing online purchases and 39 percent support it.

    But a significant majority of California voters — 82 percent — currently do little or no shopping online. Among voters who never shop online, 48 percent support charging sales tax for online purchases, and 45 percent oppose it.

  • Amazon Tax,  Internet Sales Taxes

    Amazon.Com Can Move Forward on Internet Sales Tax Referendum

    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……..

  • Amazon Tax,  Internet Sales Taxes

    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.

  • Amazon Tax,  Internet Sales Taxes

    Amazon.com Files a Referendum to Ask Voters to Overturn California 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.

  • Amazon Tax,  Internet Sales Taxes

    California Affiliate Businesses Hurt By Internet Sales Tax Law

    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.

  • Amazon Tax,  Internet Sales Taxes

    California and Amazon.Com Dancing Around the Collection of 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…..

  • Amazon Tax,  Internet Sales Taxes

    Updated: Amazon.com Won’t Be Collecting the Internet Sales Tax Tomorrow – Amazon Has Fired Me: Amazon Cuts California Affiliate Ties Over Internet Sales Taxes

    +++++ Update+++++

    Looks like from this tweet that Amazon.com will be giving the flying fickle finger of fate to the State of California tomorrow.

    You are aware of the FLAP since I have been writing about this California Legislation for months now. Here is the link to the archive of posts.

    But, now it is official I am out as an Amazon.com Associate because of the actions of California Governor Jerry Brown last night.

    Shopping at Amazon.com Inc. and other major Internet stores is poised to get more expensive.

    Beginning Friday, a new state law will require large out-of-state retailers to collect sales taxes on purchases that their California customers make on the Internet – a prospect eased only slightly by a 1-percentage-point drop in the tax that also takes effect at the same time.

    Getting the taxes, which consumers typically don’t pay to the state if online merchants don’t charge them, is “a common-sense idea,” said Gov. Jerry Brown, who signed the legislation into law Wednesday.

    The new tax collection requirement – part of budget-related legislation – is expected to raise an estimated $317 million a year in new state and local government revenue.

    But those taxes may come with a price. Amazon and online retailer Overstock.com Inc. told thousands of California Internet marketing affiliates that they will stop paying commissions for referrals of so-called click-through customers.

    That’s because the new requirement applies only to online sellers based out of state that have some connection to California, such as workers, warehouses or offices here.

    Both Amazon in Seattle and Overstock in Salt Lake City have told affiliates that they would have to move to another state if they wanted to continue earning commissions for referring customers.

    “We oppose this bill because it is unconstitutional and counterproductive,” Amazon wrote its California business partners Wednesday. Amazon has not indicated what further actions it might take to challenge the California law.

    Many of about 25,000 affiliates in California, especially larger ones with dozens of employees, are likely to leave the state, said Rebecca Madigan, executive director of trade group Performance Marketing Assn. The affiliates combined paid $152 million in state income taxes last year, she pointed out.”We have to consider it,” said Loren Bendele, chief executive of Savings.com, a West Los Angeles website that links viewers to hundreds of money-saving deals. “It does not look good for our business.”

    Although I did not realize a great deal of money from Amazon.com in this program, since I was getting older and blogging more and practicing dentistry less, I was hoping to make a few more dollars from my blogs. But, I guess as Amazon and others gear up for the lawsuits against the State of California, we California Associates are just out of business.

    Good move California Democrats and Wal-Mart. We know where you guys hang out and will sign initiative petitions and vote accordingly. Others will simply move their businesses and employees out of California.

    A lose – lose for everyone with no real gains by the State of California.

    Here is the final notice from Amazon.com.