Amazon and California Hug It Out, Sign One Year Sales Tax Deal

Posted 09/08/2011 at 9:54am | by Paul Lilly

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Enemies yesterday, friends today. That about sums up the relationship between online eCommerce giant Amazon and the state of California, two sides that have been bickering over sales tax. According to a report in the Los Angeles Times, Amazon and California legislatures took off the boxing gloves long enough to shake hands and sign a deal where Amazon would be off the hook for sales tax for one more year.

In exchange for California agreeing to let Amazon postpone collecting online sales tax from state residents, the e-tailer is dropping its efforts to overturn a recently introduced law that would force Amazon and other out-of-state eCommerce players to collect and pay said taxes.

"It's a safe harbor for up to a year," said Assemblyman Charles Calderon (D-Whittier). "If they can't get Congress to act by next July, then they will start to collect the tax in September 2012. If by chance they get Congress to act, then that would trump the state law."

California Governor Jerry Brown declined to weigh in on the one-year deal, who as recently as last week refused to sign off on Amazon's offer to open a pair of distribution centers in California if it would be allowed to avoid collecting sales tax until 2014, LAT reports. At the time, Brown voiced concern "about anything that would reduce revenues going forward" due to the "uncertain economy."