« Courts - "Michigan Supreme Court rules homelessness not a defense for sex offender failing to register" | Main | Courts - More on: ChicagoTribune wins suit over U of Illinois clout list »

Thursday, July 14, 2011

Law - "Amazon Takes On California"

The ILB has been following stories about Amazon.com and sales tax collection, most recently with this entry from May 9, 2011, headed "Online retailer Amazon repays Indiana sales tax policy."

Amazon recently stopped its affiliates program in California after that state passed passed a law "that requires Internet retailers to pay sales tax if they have affiliates or subsidiaries in the state." See also this March 13th ILB entry, headed Taxing Amazon purchases cost Illinois $$$."

Today the NY Times has a long story by Matt Richel and Verne G. Kopytoff, headed "Amazon Takes On California." Some quotes:

SAN FRANCISCO — Amazon, the world’s largest online merchant, has an ambitious and far-reaching new agenda: it wants to rewrite tax policy for the Internet era.

Amazon said this week that it would push a voter initiative in California that could eliminate sales tax for virtual sellers with only a modest physical presence in the state. Its move instantly escalated the company’s long-running battle with many states over collecting sales tax, taking the question directly to voters. And it has sharply intensified its dispute with physical retailers like Wal-Mart Stores and Target, which have vowed to fight the measure.

Some political science and business professors say the conflict could take on the polarizing nature of Proposition 13, a decades-old referendum that limited property tax increases and remains a lightning rod in the state. Political experts say Amazon’s proposed referendum is likely to gather the signatures necessary to appear on the ballot as early as next February.

Nancy F. Koehn, a retail historian at the Harvard Business School, said the initiative highlighted the evolution of Internet retailing into a “major highway of commerce.”

Internet shopping “is no longer a small, out-of-the way quirky tributary of shopping,” she said, adding: “It’s the fastest-growing distribution channel in America. This is a referendum on how we’re going to treat it.” * * *

The boom of Internet commerce has prompted a growing number of states to pass laws redefining “physical presence.” California’s law, which took effect July 1, is the most expansive, while laws in other states, like Illinois, Colorado and Connecticut, expand the definition of physical presence to include affiliates but not subsidiaries.

To avoid paying sales taxes in those states, Amazon has severed business ties with its affiliates, local Web sites that promote and link to Amazon products. Two weeks ago, in response to the California law, Amazon cut ties with California affiliates. In Texas, it plans to close a warehouse to avoid having a physical presence. In New York, Amazon has gone to court to challenge a state law that defines physical presence to include affiliates. In the meantime, the company is collecting New York sales tax.

Posted by Marcia Oddi on July 14, 2011 09:24 AM
Posted to General Law Related