Law & Order

California Legislature Delays Online Sales Tax Collection for One Year

The California legislature voted in favor of a one-year delay on collection of sales taxes for online transactions made within the state. Earlier this year, the legislature passed a law requiring online retailers with subsidiaries in California to collect sales taxes from their customers. The law, which took effect July 1, has been met with strong resistance by, the world’s largest electronic retailer. Governor Jerry Brown has until October 9 to sign or veto the bill.

Under the deal, Amazon will delay collecting sales taxes until September 15, 2012. In exchange for the reprieve, Amazon will cease its efforts to include a referendum to overturn the law on a statewide ballot next June. Amazon will also urge the U.S. Congress to enact the “Main Street Fairness Act,” which will set a national standard for collection of online sales taxes. The legislation, supported by Amazon, would recognize the “Streamlined Sales and Use Tax Agreement,” an ongoing initiative by state and local governments to address the collection of sales/use taxes. The agreement creates a system for companies to register with member states, collect and remit taxes and file one tax return for each state. To date, 44 states have worked to create the agreement and 24 states are participating members.  

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