Weekly Round-Up: Amazon.com and California Strike a Bargain

Legislative leaders in California have reached an agreement with Amazon.com and retailers late Sept. 7 in which Amazon.com would drop its referendum to repeal the new use tax collection law in exchange for a one-year delay in enforcement of the law, BNA staff correspondent Laura Mahoney reports.The deal, according to Mahoney, “emerged one day after Democrats failed to win Republican support for a last-minute bill that would have strengthened the law in place since June to make it immune to the referendum challenge.” The deal between Amazon and California is a verbal one at this time and lawmakers must enact it before midnight Sept. 9.

So why the sudden willingness to work things out? Economics, according to Kelly Phillips Erb, the resident Taxgirl at Forbes. “Amazon has money to spend to fight the new law; California, not so much”, she writes. “The online retail giant has doled out millions of dollars in fees for lobbyists, PR and other maneuvering to squelch the new law…[a]pparently, it kind of worked,” she writes.

However, it is not yet clear, according to Anthony York and Marc Lifsher, of the Los Angeles Times, whether Gov. Jerry Brown will back the deal. Also, if Congress “acts by next summer to settle the contentious issue of how online retailers should be taxed, that decision would override Amazon's deal with California,” the article explains.

The arrangement could lay the groundwork for a national online sales tax law, according to Kevin Yamamura and Dan Smith at the Sacramento Bee. “Basically, Amazon will get a safe harbor to lobby Congress and the retailers will go hand in hand with them to adopt a law that will apply to all of the states," said Assemblyman Charles Calderon, D-Whittier, states in the article.

For a closer look at twists and turns in the road leading up to this deal, check out Laura Mahoney’s article in this week’s issue of the Weekly State Tax Report. 

In other developments, Nicholas Riccardi and Richard Verrier, of the Los Angeles Times take a look at the controversy surrounding California’s film tax credit.

Deloitte issues its September 2, 2011 issue of State Tax Matters which focuses on, among other things, Arizona's tax amnesty program, California’s Voluntary Compliance Initiative, and Ohio’s use tax amnesty program.

The Nelson A. Rockefeller Institute of Government issues a data alert of the status of state tax revenues.

PricewaterhouseCoopers releases their September 2011 Credits and incentives briefing.

For a round-up of recent tax developments in Illinois, check out Grant Thornton’s 2011 legislative update.

By Priya D. Nair

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