Amazon makes offer to persuade California to drop sales tax collection law
Amazon.com is offering to build a number of distribution centers and hire more than 1,000 workers if California lawmakers back away -- at least temporarily -- from their efforts to force the Internet giant to collect sales taxes on purchases made by customers from the Golden State.
The proposal was made in the form of draft legislation at a meeting Tuesday night between Amazon lobbyists and representatives of companies that belong to the California Retailers Assn.
Backers of California's effort to collect about $300 million a year in unpaid taxes on Internet sales dismissed the Amazon compromise as a ploy. "It's a totally cynical maneuver that's part of their game that they try to play in every state that keeps them from getting the sales tax," said Lenny Goldberg, a legislative advocate for the California Tax Reform Assn.
According to an informal memo based on a description of the deal by an Amazon lobbying firm, Greenberg Taurig, Amazon wants the state Legislature to repeal a law that took effect on July 1. The statute requires Amazon and other out-of-state Internet sellers to collect California sales taxes.
Amazon, so far, has said it would not do so and is bankrolling a referendum campaign to repeal the law.
Amazon wants California to refrain from forcing it to collect the sales tax until at least January of 2014.
In return, Amazon would hold the signatures it's already collected and drop its effort to repeal the sales tax collection law on the June 2012 ballot. Amazon also would build build two fulfillment centers, one in Northern California and one in Southern California, with approximately one million square feet of floor space and 1,000 employees.
Amazon further offered to send its customers annual statements listing their total purchases and advising them that they owe California use tax on the goods, the memo said.
The use tax, which is paid by the buyer, is the same basic rate of 7.25% for the sales tax.
The retailers association confirmed that the meeting took place and dismissed the proposal as "not serious."
Retailers President Bill Dombrowski said the deal "will only prolong the harm to small businesses that employ Californians."
"We're looking at their proposal," said Retailers President Bill Dombrowski.
For its part, Ned Wigglesworth, a spokesman for the Amazon referendum campaign, declined to discuss the matter.
But people familar with the talks said that the alliance of California big-box stores that backed the sales tax law is not interested in cutting a deal with Amazon.
The impetus for the new talks came from a meeting between Amazon lobbyists and Senate Minority Leader Bob Dutton (R-Rancho Cucamonga).
"Sen. Dutton encouraged the individual retailers and their association and Amazon to get around the table and try to work out a deal that would be a win-wini-win for the retailers, Amazon and the people of California," said spokeswoman Jan Taber.
However, Dutton's counterpart, Senate President Pro Tem Darrell Steinberg (D-Sacramento) is more skeptical that the offer would go anywhere.
"It's an intriguing idea, but it's late in the session," said spokeswoman Alicia Trost. "There's a whole host of obstacles and no legislation yet."
Steinberg told reporters that he is putting most of his time and energy into an attempt to pass a new Internet sales tax bill that would nullify the Amazon referendum before the Legislature recesses on Sept. 9.
A spokesman for Gov. Jerry Brown, who is counting on at least $200 million of revenues from the Internet sales tax to balance his budget, could not be reached for comment.
Photo: Amazon fulfillment center in Goodyear, Ariz. Credit: Ross D. Franklin/Associated Press.