Amazon Vows to Go Toe to Toe Over State Sales Tax Legislation
If you're in California and are an Amazon Associate, you probably got your "Dear John" email from Amazon on Friday. Though I saw some surprised folks spouting off at Facebook about how Amazon severed all ties so quickly, it really should have been no surprise for anyone paying attention to what's going in the California legislature.
On July 1, a highly controversial new law went into effect there, which holds that online merchants must now collect California State sales tax on any purchases made by California residents, even when the companies they're buying from are based in other states.
Amazon, which makes up half of all California's online business, is refusing to pay the tax and says that it is "an unconstitutional infringement on interstate commerce," according to the Los Angeles Times. However, since state sales taxes are only due once per quarter and aren't payable until October 1, Amazon isn't making its official stand until then. But at that time, Amazon does intend to test the law.
Undoubtedly, California needs the income, and what the state could collect in tax revenue from California residents is a pretty big chunk of change. All in all, the total take could be as much as $317 million a year.
But Amazon negates any state's right to enact such a law.
And the company does have legal ground to stand on. In the 1992 case of Quill Corporation v. North Dakota, the U. S. Supreme Court ruled that the state could not force Internet and mail order companies to collect sales tax when the company has little physical presence in the state. Period.
Though Amazon does have a lab for Kindles in Silicon Valley and there's no word what might happen there, it claims no physical presence in California. But just to be in a secure position for fighting the law, Amazon severed all ties with its affiliate partners in that state on Friday, the instant the law was in place.Continued on the next page