Gov. Jerry Brown signed Assembly Bill 155 into law on Sept. 23. The bill states that online retailers, such as Amazon.com, will have until July 31, 2012 to lobby for a federal sales tax standard.
For now, the retailers don’t have to collect sales tax. If they do not succeed, the bill’s implementation will extend to Sept. 15, 2012. If the retailers are successful in lobbying, provisions of AB 155 will occur beginning January 2013.
Initially, Amazon campaigned against a similar sales tax bill, Assembly Bill 28 – or e-Fairness bill – which was approved by Brown in August in hopes of eliminating the controversy over online sales tax.
“Our hope then was that it would usher in a new era of e-fairness by requiring out-of-state internet retailers to collect taxes for their California customers,” said Nancy Skinner, California State Assembly member of the 14th Assembly District, in a letter to Brown.
According to the chief consultant of Nancy Skinner, David Sebeck, the e-Fairness legislation was signed to end the unfair advantage online companies had over in-state retailers because the online companies didn’t collect the sales tax due on purchases made by Californians. He said Amazon and other retailers spent millions of dollars in an attempt to repeal this legislation.
To resolve this issue, the legislature created AB 155, a compromise that would allow online retailers to seek a federal standard for the sales tax issue and to prevent referendums, or asking of voters to overturn the bill.
“The compromise contained in AB 155 removes the uncertainty facing retailers,” Sebeck said in an e-mail. “They know the playing field is going to level out. Under the compromise, Amazon will drop its referendum challenge, which also removes uncertainty.”
Skinner said AB 155 provides a certainty to California and to retailers in an area that has been uncertain for years.
“This measure represents a historic compromise between our in-state retailers and online sellers, and enjoys the support of a broad, bipartisan coalition of legislators,” she said.
Amazon, as one of the biggest online retailers, backed AB 155 with the goal of being able to create more jobs in California.
“We’re grateful to Gov. Brown and the legislature’s bipartisan leadership for this win-win law,” said Amazon’s vice president Paul Misener in an e-mail. “We’re excited that we can now create 10,000 jobs and cause $500 million in investment in California in addition to reinstating our California-based affiliates.”
With the passing of AB 155, Amazon plans on creating large distribution centers to help the flow of business Amazon has in California and to in turn bring in more jobs.
As a proponent of the bill, Amazon is hoping to terminate the controversy sales tax has on online purchases in other states as well.
“We’re committed to working with Congress, retailers and the states to pass federal legislation as soon as possible, and as analysts have noted, we’ll continue to offer customers the best prices regardless of whether sales tax is charged,” Misener said.
CLAIRE TAN can be reached at email@example.com.