After a dozen years, independent booksellers and other brick-and-mortar retailers in California prevailed when Governor Jerry Brown signed a bill into law yesterday afternoon requiring out-of-state retailers with a presence in the state to collect sales tax on California sales beginning July 1. For California residents the pain of paying online sales tax to Amazon and Overstock will be amerliorated somewhat by a 1% sales tax drop on Friday, when it returns to 7.75% after a two-year temporary increase.
As reported by TechCrunch.com Seattle-based Amazon wasted no time in firing its affiliates in California. In a letter sent to members of the retailer’s associates program, it wrote: “We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors.” They also noted that they are looking at alternative ways for California residents to monetize their Web sites. As a result of similar legislation, Amazon closed associates programs in Illinois, Hawaii, Connecticut, and North Carolina. Earlier this month The American-Statesman reported that in Texas Amazon offered a swap of 5,000 jobs and $300 million for a four-and-a-half year exemption from paying sales tax.
In addition to affiliate nexus, according to The Los Angeles Times, Amazon also has related business operations in the state, including Lab126 Inc. in Cupertino, which develops Kindle readers, and an Internet Movie Database unit in Studio City. It’s uncertain whether Overstock.com in Salt Lake City will run afoul of nexus with its purchase of naming rights to the Oakland Coliseum.
In an note on the bill's passage NCIBA executive director Hut Landon noted that the association will be in touch with the Board Of Equalization this week "to ensure that it acts quickly in enforcing the new law. We could do worse than what happened in New York, where the state demanded tax payments and Amazon sued, because Amazon also began collecting sales tax and continues to do so while the case makes it way through the courts."
American Booksellers Association CEO Oren Teicher, who has worked with booksellers across the country for sales tax fairness and level the playing field, hailed Governor Brown’s decision as “excellent news in our decade-long fight to achieve sales tax equity in California. ABA congratulates NCIBA and SCIBA for their steadfast support in seeing this through, and, in particular, we extend our thanks and congratulations to Hut Landon, NCIBA’s executive director, whose herculean dedication to this effort for years and years has finally paid off.”