Amazon has been battling with, and bribing, states across the country in an effort to maintain its tax-free online sales.
From South Carolina to Texas and now California, the onlline retail giant has convinced state lawmakers to waive collection, at least temporarily, of sales taxes on products Amazon sends to customers in those states.
After California took a hard line this summer and enacted a law to collect its 7.25 percent sales tax from all online retailers, Amazon ramped up the no-tax fight.
It severed its association with all of its affiliates. Then it launched an effort to put the online sales tax law to Golden State voters.
Now, that ballot initiative drive is on hold and tens of thousands of Amazon affiliates will start making money again thanks to the enactment of a law repealing the online sales tax. Amazon also plans to build more California distribution centers, putting more state residents to work.
With Gov. Jerry Brown's signing of the bill into law on Friday, Sept. 23, Amazon also essentially acknowledged that it is fighting a losing tax battle.
Sure, California's coffers will be short the estimated $200 million it won't collect between now and Sept. 15, 2012.
But after that date, Amazon and other online retailers will start collecting California sales taxes … unless the federal government steps in.
Part of the new deal calls for California and Amazon to work together for a national standard on taxing online sales.
Such a proposal, the Main Street Fairness Act, has been introduced in the U.S. Senate by Illinois Democrat Dick Durbin. It would allow states that abide by the Streamlined Sales and Use Tax Agreement to force Internet sellers to collect participating states' sales taxes.
Amazon has always supported a federal solution to the state sales tax issue. The Seattle-based company has joined traditional retailers such as Wal-Mart, Best Buy and Home Depot in supporting the national legislation.
The reality, however, is that Durbin's bill faces slim prospects on Capitol Hill, especially in the adamantly anti-tax House that will still be in Republican control this time next year.
So while California online buyers get their sales tax payment reprieve, look for other states to continue to duke it out with online retailers and likely cut their own deals with Amazon.
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