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Internet sales tax challenged

By
July 19, 2011 |

SACRAMENTO (AP) — Online retailers can start gathering signatures for a referendum to overturn California’s new law that requires more of them to collect sales tax from customers in the state, officials said Monday.

Attorney General Kamala Harris on Monday approved ballot language for the measure to overturn the so-called Amazon tax. Supporters must collect nearly 505,000 valid signatures to put the measure before voters as soon as June 2012.

Online retailers must collect sales tax if they are “engaged in business” in the state, which usually requires having a physical presence in California. Lawmakers passed a bill in June to expand the definition to include sister companies or marketing affiliates with a presence in the state, saying the change would bring in $200 million in taxes that the state is owed but cannot collect.

Retail giant Amazon.com Inc. and other online retailers cut ties with thousands of California affiliates and have refused to collect the taxes. They have argued that forcing them to collect hundreds of different taxes and tax rates across the nation is a burden and that a streamlined national approach is needed.

“Now that it’s approved, they’ll begin gathering signatures,” said Steve Merksamer, a Sacramento attorney who represents the campaign committee backing the referendum.

Backers of the Internet tax include California retailers that lose business because the online players effectively offer a discount by not charging the tax, as well as online retailers who have physical stores in California and are required to collect the tax on Internet sales.

One retail group suggested that the referendum will be challenged in court.

The Associated Press

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