As of this weekend, online mega retailer Amazon.com will be taking on a new role in the state of California. In addition to bookseller and Kindle pusher, the company will now be a tax collector.
There has been a battle over the last several years over whether or not internet retailers have the right to charge sales tax on residents of the Golden State – and in 2011, the internet won. The deal that was reached, allowing online retailers to pose sales tax, included a one-year grace period. Caveat Californian emptors: that grace period ends tomorrow, Saturday September 15, 2012.
Unsurprisingly, that deadline has spawned a massive shopping spree in the El Dorado state, prompting consumers into a super buying mode. California residents are scooping up big-ticket items and stocking up on stuff before the tax kicks in.
Up until now, legal professionals have been cantankerous about the giant e-retailer, claiming that Amazon has essentially robbed the state of millions in funds that could have been collected through taxes. Amazon, however, had rebuked that allegation by defending itself with a 1992 United States Supreme Court ruling that prohibits states from obligating retailers who do not have a physical presence in a region to collect sales tax. Since Amazon does not have warehouses or any other physical buildings in California, the retailer felt it fair to sell their goods tax-free. Amazon has even gone so far as to shut down distribution centers and cancel contracts in certain states in order to continue vending sans tax.
The Good and the Bad of It
Aside from posing the tax, the outcome of the tax feud in California has now allowed Amazon to commence erecting distribution centers throughout the state in areas including San Bernardino and Patterson. The good news: the new centers will bring a slew of jobs to the state where currently, the unemployment rate is the third highest in the country. The bad news, of course: Cali-buyers gotta pay the taxman. As a result of the resolution, California will join seven other states including New York and Texas whose residence now pay sales tax on their Amazon items – and the e-retailer now intended to begin imposing the levies in six more states across the nation.
One other perk: a throng of new warehouses could very well mean faster delivery time including the possibility of same-day shipping in many regions as Amazon currently offers in other areas like Boston and Seattle.
A spokesman for Amazon, Scott Stanzel has stated that the internet mall will continue to coffer lower prices without the sales tax advantage, and that the new program should not cause the company to lose much business, however, he declined to comment on whether the tax deadline has affected sales to date.
The story does not stop here: as a result of this recent unfolding of events, Amazon is set to lobby Congress in order to cut through the chaos of state-specific rules in hopes of coming up with a national policy for Internet taxation and essentially get rid of all of this back-and-forth hullaballoo.
*CC image from Flickr
Janice Bevilacqua is a freelance tech journalist in NYC. She covers a wide range of topics within the technology industry and writes primarily for CPS, a retailer of extended warranty solutions for electronics, home appliances and other digital products. Be sure to check out other posts about iPhone jailbreak tips and tricks for the new iPhone 5.