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Amazon: Let Cali Voters Decide Sales-Tax Law

Published July 12, 2011

LOS ANGELES, CA (BRAIN)—Amazon.com is saying not so fast to California when it comes to the recent state law requiring all companies with operations or affiliates to collect sales tax.

The online selling behemoth will ask California voters to overturn the new law that took effect July 1, according to the LA Times.

To protest the new law, Amazon cut ties with more than 10,000 online sales affiliates while refusing to collect the 7.25 percent base sales tax. Affiliates earn commissions on customers who click-through affiliate sites to Amazon or other online retailers.

Amazon hasn’t ruled out filing suit to block the law, as it has in New York, according to the LA Times. However, it might be cheaper and more effective to head straight to the voters on this issue, analysts said.

Fred Clements, executive director of the National Bicycle Dealers Association, said it’s only fair that online companies collect sales tax if California brick-and-mortar stores are forced to do the same.

“The government should not be favoring one form of retail over another with discriminatory tax policy,” Clements said. “If you tax one, tax them all. It’s unfair and outrageous to do otherwise.”

While Clements is pleased that California’s legislators are righting what he perceives as a retail wrong, the best long-term solution would be federal legislation, he said.

In South Dakota and Vermont, new laws went into effect this month that require online sellers with at least $100,000 in annual web sales to notify customers in those states of their responsibility to pay use tax on any online purchases for which a merchant doesn't collect sales tax.

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