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  (Source: Stuart Isett/The New York Times )
Amazon says these sales taxes are "unconstitutional and counterproductive"

Amazon has fully committed itself to its effort against the collection of sales taxes, and it continues to prove this dedication over and over as it cuts ties with state after state.

After cutting ties with states like Texas, where Texas State Comptroller Susan Combs charged Amazon $269 million in unpaid sales taxes, and Illinois, where Sen. Dick Durbin (D-Ill.) plans to introduce a bill that would force Amazon to collect sales tax called the Main Street Fairness Act, Amazon is now looking to turn its back on California as well after Governor Jerry Brown signed a bill that would enforce the collection of online sales tax. 

"We oppose this bill because it is unconstitutional and counterproductive," said Amazon in an e-mail to Californian affiliates. "It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective."

Amazon also noted that these sales taxes "spur job and income losses." But Amazon has to do what it feels it should do, and with this bill in place, Amazon won't think twice about cutting ties with its 10,000 California-based sales affiliates.

Amazon is the largest online retailer with more than 90 million registered buyers and $34 billion in annual sales. In recent times, it has encountered increased pressure from certain U.S. states to collect online sales taxes since the retailer's affiliates operate within those states. In addition, some U.S. states see an online sales tax on Amazon purchases as a way of digging themselves out of large state budget deficits. 

But Amazon refuses to back down. Last month, Amazon CEO Jeff Bezos said the U.S. states' demands were unconstitutional, citing a 1992 Supreme Court decision that excuses Amazon and other remote sellers from having to collect taxes in U.S. states that do not have the company's employees or warehouses operating within its borders. 

As of right now, Amazon collects taxes in Kansas, Kentucky, New York, North Dakota and Washington. In other U.S. states where Amazon does not collect sales taxes, customers are to document and pay tax on out-of-state untaxed sales, but rarely do because they either don't know about this or just don't care.

Brick-and-mortar stores like Best Buy and Wal-Mart retaliated saying that Amazon has an unfair advantage due to its lack of sales tax collection in other states.

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Amazon has a physical presence in CA
By greg_l_2 on 6/30/2011 11:07:35 AM , Rating: 2
The part you are missing is that the law in CA goes deeper than the other states affiliates laws. It also establishes a physical presence from subsidiaries. And amazon does have many subsidiary companies in CA. In fact, Amazon does actually have a big physical presence in California. Amazon's subsidiaries in CA will force it to collect the tax and not just its affiliates. Lab126 their R&D lab in Silicon Valley, IMDB based in LA, and numerous AWS data centers in Northern California are all wholly owned subsidiaries or "shell companies" that are operated by Amazon giving them a presence. . Even if they drop the affiliates they will still have to collect the tax under the law unless they uproot all of their subsidiaries which will not be that easy. They seem to be dropping the affiliates just in spite, and to try and use whatever leverage they had to attempt to prevent this from passing. Also, they will probably wind up dragging this out in the courts but eventually they will be held responsible because they do actually have a nexus in CA. This is the same argument TX is making because Amazon operates warehouses and fulfillment centers there. Even the article says they should have to collect tax where they have warehouses. Well Amazon currently has warehouses in many states where they don't collect tax (ie. Penn, TX, IN, SC, etc..) They actually have a real physical presence in 19 states but only collect in 5. This is the important part of the law and is different from the pure affiliate laws that exist in Ill, Ark, Hawaii, etc..

RE: Amazon has a physical presence in CA
By Nutzo on 6/30/2011 12:17:41 PM , Rating: 2
I hope they relocate all these subsidiaries too.

Only solution to California's spending problem is to starve the beast. Maybe then the people who keep voting in these big spending liberals will get a clue. (and yes I live out here in this broken state of California)

By mindless1 on 7/2/2011 1:51:39 PM , Rating: 2
Starving the beast has to be weighed against loss of sales. Losing CA is no small hit on Amazon, and consider that the people who shop there are a different group than tend to shop locally, they will end up buying things online from someplace else instead so CA is in the same boat.

It could turn out to be that Amazon sees more profit loss than CA from this withdrawl... except CA let the temporary sales tax hike expire so they take a hit too.

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