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Amazon cuts a deal with legislative leaders

September 7, 2011 |  7:54 pm

Amazon
Amazon has cut a deal with top legislative leaders to avoid a ballot battle over the state's insistence that the online retailer collect state sales tax on purchases by Californians.

Amazon would delay collecting taxes until September 2012, according to multiple sources directly involved in the matter. A new state law mandated that it gather the fees starting this past July. Instead, Amazon has poured $5 million into collecting signatures for a referendum challenging the law.

Under the deal, Amazon's referendum would never make it to the ballot. It would clear the way for a special legislative maneuver to make the sales tax law impervious to challenges at the polls. 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 sources declined to be identified because the deal has not been made public. Notably, there is no word yet from Gov. Jerry Brown, who last week rejected an olive branch from Amazon that included the offer of opening two distribution centers in the state in exchange for being allowed to start collecting the tax in 2014.

"I'm concerned about anything that would reduce revenues going forward because we're in a very uncertain economy," the governor said last week. "We need more revenues unless we're going to keep curbing schools, courts, corrections."

However, Senate Democrats and Republicans have signed off on the deal, as well as the Assembly's Democrats, the sources said.

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-- Anthony York in Sacramento

Photo: A UPS driver delivers Amazon.com packages in Palo Alto in June. Credit: Paul Sakuma / Associated Press

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