State wants to start collecting online sales tax

July 26, 2011 7:01:59 PM PDT
In Sacramento, the wheels are in motion to begin collecting sales taxes from online retailers like Amazon, but is it a waste of time? Some believe the answer is yes.

Online retail giant Amazon began gathering signatures for a referendum, hoping to overturn the state's new law requiring the Seattle-based company and other out of state e-tailers to start collect the sales tax from California customers, despite efforts underway to void that law.

"What authority do we have if the bill is actually suspended?" asked George Runner, R-Board of Equalization.

The Board of Equalization -- a taxing agency -- began discussing how to implement the online sales tax. Republican members question whether it's appropriate to proceed, knowing Amazon will likely get enough signatures to put the brakes on the new law until voters can weigh in next year.

"I have great difficulty, members, for us then to continue a regulatory process on basically a bill and a concept that is indeed on pause," said Runner.

But Democrats pointed out Amazon is still in the process of overturning the online sales tax law, and gave the okay for the state to begin creating rules to comply.

"I believe we have a responsibility to uphold the law. It is the law. We took an oath of office to uphold the law," said Betty Yee, D-Board of Equalization.

Many California-based websites that provided links to Amazon and other e-tailers lost a chunk of their revenue when their contracts were cancelled earlier this month. Amazon and others did not want to start collecting the sales tax. Former Amazon affiliates are disappointed California is moving ahead.

"If the signatures are gathered, then the ruling-making becomes a moot point. It doesn't matter," said Rebecca Madigan from the Performance Marketing Association.

Brick and mortar stores, though, are happy the state is moving forward to even the playing field, where businesses with storefronts and on cyberspace both have to collect the sales tax.

"I believe the businesses that are set up online essentially to skate the sales tax laws are frauding [sic] the government and the people," said Howard Skalet, the Skalet Family Jewels owner.

Amazon executives told PC Magazine they prefer a federal law dictating the online sales tax, rather than leaving it up to the states.


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