Ever since Amazon first began selling books online, bricks-and-mortar stores have maintained that the e-tailer had an unfair economic edge since it was not required to collect sales tax in states where it has no presence. But with Amazon's rapid growth, booksellers began arguing, as far back as nine years ago, that Amazon had a legal “nexus” in most states and should be obligated to collect tax, a position Amazon has firmly and successfully rejected. There are signs, however, that change could be coming.

In November, new members joined the California Board of Equalization, and its new president, Betty Yee, has indicated in public comments that she is inclined to support the collection of online sales tax. The staff of the BOE, which is California's tax collection arm, has actively investigated the Amazon sales tax issue in recent months, and Hut Landon, executive director of the Northern California Independent Booksellers Association, is hopeful that a decision is relatively close. “One way or another, I think we will have a resolution before the end of the year,” Landon said. The NCIBA's position is that Amazon's affiliate programs constitute a nexus in every state, and therefore the e-tailer should be required to collect sales tax.

In addition to a possible decision by the BOE, late last month Sen. Mike Enzi (R.-Wyo.) reintroduced the Sales Tax Fairness and Simplification Act, legislation that would force all e-commerce companies to collect sales tax, even in states where they don't have a physical presence. The ABA supports the Enzi bill and is monitoring events in California as well. Oren Teicher, ABA COO, observed that if the bill is passed it would create a federal mechanism for states to collect sales tax. The problem with the legislation is that states must “opt in,” meaning that they must have their own laws that require e-tailers to collect tax. At present, 21 states have such laws, but with a few exceptions, most of the larger states do not. Since passage of the federal law and then new state laws could take years, the ABA is hopeful that a favorable ruling by the California BOE will speed the implementation of other states collecting sales tax from Amazon. “I think you would see a domino effect,” Teicher said.

Amazon did not return calls about the sales tax question. The issue appears to be one of growing concern, however. Late last week, the Associated Press reported that the company had hired the lobbying firm Cauthen Forbes & Williams to lobby Washington on a range of Internet matters, including taxes. And big companies have been known to change their stance on the tax question. Following its acquisition of the 50% of Barnes&Noble.com that had been owned by Bertelsmann, Barnes & Noble stepped up the collection of online sales tax and now collects tax in all states that have a sales tax. Two cases involving the collection of back taxes on sales made before it began collecting the tax are still under review.

Despite the length of time the BOE has dragged its heels, the tax issue remains the NCIBA's top priority, Landon said. Booksellers believe that if Amazon were forced to collect sales tax, which averages about 8% in California, it may be forced to reduce the deep discounts it gives on books. The issue remains high on the agenda of the ABA as well. “All we've ever asked for is for everyone to be treated the same,” Teicher said.