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Amazon cuts deal on California sales taxes, drops ballot fight

September 8, 2011 |  8:56 am

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A tentative deal with California legislators would buy Amazon another year of doing business in the state tax-free. The state Legislature had passed a law forcing Amazon to collect sales taxes in the state, which the company was planning to fight with a statewide ballot measure for which it had been collecting signatures.

The Times reports that Amazon plans to drop its efforts to launch the ballot referendum.

Under the deal, Amazon would delay collecting taxes until September 2012, Assemblyman Charles Calderon (D-Whittier) said. The new law had mandated that Internet retailers start collecting state taxes in July if they had offices, workers or other connections in California.

Amazon had refused to collect the taxes and poured $5 million into collecting signatures for a ballot referendum challenging the law.

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.

"It's a safe harbor for up to a year," Calderon said of the agreement he helped strike. "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."

Gov. Jerry Brown, who supported the legislation requiring Amazon to collect taxes, has not yet shared his stance on the deal.

Amazon's measures to fight the California law included dropping its California associates and collecting signatures to put a measure on the ballot. Those signature-gatherers had been spotted outside at least one Los Angeles bookstore.

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-- Carolyn Kellogg

Photo: Scott Eells / Bloomberg News

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