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Techski: Gov. Jerry Brown signs Amazon sales tax bill

By Damien Sutevski

Sept. 26, 2011 1:23 a.m.

When it comes to buying a computer, I have a few things to consider.
The obvious advantage of purchasing online is that it ships directly to me. As a busy graduate student, this is an invaluable service.

But there’s another advantage ““ avoiding the substantial California sales tax.

A 1992 U.S. Supreme Court decision established that a business must have a physical presence in a state for that state to impose a sales tax. This may include a headquarters, warehouses, retail outlets, etc.

Amazon has avoided such a presence in California so far.
It is estimated that California loses at least $83 million annually from uncollected taxes from Amazon, according to Gov. Jerry Brown’s website.

But by Sept. 15 next year, an estimated 2,000 online retailers will be required to collect sales tax, after Brown signed Assembly Bill 155 on Friday.

The governor initially signed a bill on June 29 that extended the scope of a physical presence to include in-state advertisers, which drive online traffic to a retailer.

Continuing its trend in other states, Amazon cut ties the same day with 25,000 of its advertising affiliates in California to avoid collecting taxes. The company began gathering signatures statewide to create an initiative to nullify the new law.

Because the threat of legal fees and litigation with Amazon would be expensive and delay collecting online sales tax, the California Retailers Association sponsored a legislative compromise, said Bill Dombrowski, president and CEO of the association, which works on behalf of California’s retail industry.

The compromise bill delays tax obligations for online retailers until September 2012. As part of the compromise, Amazon promised to create 10,000 full-time jobs in California, as well as hire 25,000 seasonal employees by the end of 2015, according to the governor’s website.

With the increasing dominance of online shopping, imposing sales tax on online retailers will affect students, including those who buy textbooks online.

When shopping for textbooks, students often comparison shop online. I rarely purchase books from the Associated Students UCLA textbook store because I can always find them cheaper online.

Though the ASUCLA textbook store will match prices for new books with online retailers through Oct. 7, that does not include online marketplaces ““ or peer-to-peer transactions ““ like the Amazon Marketplace, eBay or Half.com, according to its website.

Yang Yuan, a third-year applied mathematics students, said in her experience new books are price-matched well but used books can be as low as half the original price when purchased online.

Regardless of the advantages of peer-to-peer transaction, it’s difficult for stores to compete when one store can avoid charging customers a sales tax.

The Alliance for Main Street Fairness hopes to start a movement for collecting online sales-tax across the country, leveling the playing field between brick-and-mortar stores and online retailers, said Becky Warren, a California spokeswoman for the alliance, a state coalition of small and large businesses.

The issue needs to be resolved in Congress for California to collect available sales tax revenue, said Paul Misener, Amazon vice president for global public policy, at a press conference on Friday.

About 10 states have already passed or are attempting to pass an Amazon Internet-tax bill, Dombrowski said.

If Amazon can negotiate a solution on the federal level, then national legislation will supersede California’s bill, Dombrowski said. He said he expected the national legislation would be passed.

“We look forward to reinstating thousands of Amazon advertising affiliates based in California,” Misener said.

Bruin news columnist and resident tech-head Damien Sutevski reports on technological news, trends and tips, as well as life as a UCLA graduate student, in this bi-weekly column. Email Sutevski at [email protected] You can also follow him on Twitter, @dsutevski.

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