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Amazon CEO Jeff Bezos addresses a press conference. The online mega-retailer will start charging California customers sales tax.
In just a few days — September 15, to be exact — Amazon will have to start collecting sales tax from Californians who buy stuff (and boy, does Amazon sell a lot of stuff these days) from the online mega-retailer. Last year, Amazon struck a deal with the state. In exchange for getting the statutory sales-tax deadline extended by a year, the company agreed to drop a ballot-measure battle it was gearing up for; and to create a total of about 35,000 full- and part-time jobs in the state by 2015.
So what does this all ultimately mean? Let's break it down.
Q: I'm buying stuff like crazy from Amazon ahead of the deadline. Am I really getting out of paying sales tax?
A: Legally, no. While the sales-tax deadline was extended, the "use tax" provision of state law wasn't waived. As the L.A. Times points out, taking a very hardline position, you were never technically getting away with skipping the sales tax before this whole thing came to a head last year. If you made purchases through Amazon, you were supposed to calculate the sales tax yourself and send it in. Amazon will now start doing that for you, but you're officially liable for the tax that you should have paid as sales tax on all those flatscreen TVs, tennis rackets, and Kindle Fires you picked up over the course of the past 12 months.
Gov. Jerry Brown isn't sure. This is from the L.A. Times' Money & Company blog:
Brown on Thursday did not dismiss the Amazon bid out of hand. But, he stressed that he's mostly concerned about losing an estimated $300 million in badly needed state revenues that his budget expected to get once Amazon complies with a new law that took effect on July 1.
"I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," the governor said after attending an awards ceremony for correctional officers in Sacramento. "We need more revenues unless we're going to keep curbing schools, courts, corrections."
Amazon, so far, has refused to collect the tax on purchases made by California customers. Instead, it's contributed more than $5 million to a referendum campaign to repeal the new sales tax collection law.
Over the weekend, the New York Times ran a story about Amazon's brisk spending on a 2012 referendum that would ask voters whether the state should be able to require the online retailer to collect sales tax. We're talking $5.25 million -- and as the NYT reports, we're more than nine months away from the actual vote.
The argument on the pro-tax side is that enforcing collection will bring in $200 million in revenue California "has already counted toward balancing the state budget." Obviously, down the road there's quite a bit more moolah at stake than that.
On the Amazon side, the argument has been framed in terms of jobs, but it's really about cash: Amazon figures it will do pretty well in California if it can sell people all manner of stuff for less than they can buy it from outfits that force them to pay the tax. Just for the record, the taxing part would occur at online checkout. Heretofore, it's been the responsibility of Amazon's California customers to pay the sales tax themselves -- and as you can imagine, that's a difficult responsibility for the state to enforce.