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Amazon cuts deal on California sales taxes

Legislative leaders agree to let the online retailer delay collecting taxes for a year, while it would drop its battle to overturn the state law. Gov. Jerry Brown has not said if he will support the plan.

September 08, 2011|By Anthony York and Marc Lifsher, Los Angeles Times
  • "It's a safe harbor for up to a year," Assemblyman Charles Calderon, D-Montebello, said of the agreement he helped strike. "If they can't get Congress to act by next July, then they will start to collect the tax in September 2012." Above, Calderon with state Sen. Loni Hancock, D-Oakland, left, and Assemblywoman Nancy Skinner, D-Berekely.
"It's a safe harbor for up to a year," Assemblyman Charles… (Rich Pedroncelli, AP Photo )

Reporting from Sacramento — Amazon.com cut a tentative deal with legislative leaders Wednesday night that would allow it to postpone collecting sales taxes from Californians for another year.

The company in turn would drop its battle to overturn the state's new law that required it and many other out-of-state online retailers to collect the taxes.

Under the deal, Amazon would delay collecting taxes until September 2012, Assemblyman Charles Calderon (D-Whittier) said. The new law had mandated that Internet retailers start collecting state taxes in July if they had offices, workers or other connections in California.

Amazon had refused to collect the taxes and poured $5 million into collecting signatures for a ballot referendum challenging the law.

If Congress acts by next summer to settle the contentious issue of how online retailers should be taxed, that decision would override Amazon's deal with California.

"It's a safe harbor for up to a year," Calderon said of the agreement he helped strike. "If they can't get Congress to act by next July, then they will start to collect the tax in September 2012. If by chance they get Congress to act, then that would trump the state law."

There was no word from Gov. Jerry Brown about whether he would support the deal. Last week he rejected an olive branch from Amazon that included the offer of opening two distribution centers in the state in exchange for being allowed to start collecting the tax in 2014.

"I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," the governor said last week. "We need more revenues unless we're going to keep curbing schools, courts, corrections."

Brown's office did not return calls for comment Wednesday night.

Calderon said he had not heard from the governor. "He hasn't indicated one way or another," the legislator said. "Our hope and our guess is that he will support this. It will do away with litigation that has serious implications for the state."

The tax was a key part of the state's $86-billion budget that Brown signed in late June. It was forecast to bring in $200 million annually.

Big-box stores and other retailers had supported the new law, saying that online companies that didn't have to collect taxes had an unfair competitive advantage.

To prevent Amazon from challenging the law, legislators in the session's waning days hit upon a parliamentary trick. They tried to get two-thirds approval for a bill reinstating the tax as an "urgency" measure, which would be immune to a referendum.

On Tuesday, the measure fell five votes short of passing in the state Senate. Calderon said he was confident that with the deal in place, the measure would pass by the required margin. He credited Senate Minority Leader Bob Dutton (R-Rancho Cucamonga) with starting the talks that led to the deal.

anthony.york@latimes.com

marc.lifsher@latimes.com

Staff writers Shane Goldmacher and Michael J. Mishak in Sacramento contributed to this report.

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