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Online sales tax proponents move to invalidate Amazon referendum

August 25, 2011 |  1:03 pm

Amazon2

A coalition of giant, brick-and-mortar retailers and their legislative allies have come up with a new strategy to try to head off Amazon.com's referendum to overturn the state's new Internet sales tax law.

On Thursday, lawmakers amended a bill in the Senate Appropriations Committee and sent it to the full Senate for a vote next week. If the bill gains approval from the Senate, the state Assembly and the governor, its passage would have the effect of nullifying Amazon's current drive to qualify a referendum for the June 2012 budget.

The original law requiring Amazon and other large Internet retailers to collect sales taxes on purchases by California customers took effect on July 1. Within days Amazon announced that it was bankrolling a referendum campaign to collect 505,000 signatures of registered voters to put the question of repealing the law on the ballot. As of this week, Amazon said it was close to turning in the needed signatures.

But the campaign to repeal the law is now threatened by the latest legislative maneuver. Passage of a new law would supersede the old law, making the referendum invalid.

Supporters of the new law, including Wal-Mart Stores Inc., still  have a major challenge: The new bill is a so-called urgency measure and needs support from two-thirds of the membership of both houses of the Legislature.

According to the state Constitution, urgency bills are not subject to being repealed by a referendum.

Consequently, the large retailers, which provide financial support for many Republican candidates in the Legislature, have to persuade at least three GOP members in the Senate and two in the Assembly to vote for the Internet sales tax collection.

That's doable, said Bill Dombrowski, president of the California Retailers Assn. The latest bill, he noted, has raised a threshold for exempting small Internet sellers from collecting the California sales tax. The increase from annual sales of $500,000 to $1 million was sufficient to get EBay Inc. to remove its opposition, Dombrowski and state Sen. Loni Hancock (D-Berkeley) said.

Neither Amazon nor its referendum campaign consultants responded to requests for comment at midday.

RELATED:

Amazon ups the ante in Internet sales tax fight 

California advocacy groups urge boycott of Amazon

Amazon gathering anti-tax-law signatures outside retail stores

-- Marc Lifsher

Photo: Amazon fulfillment center in Phoenix. Credit: Joshua Lott / Bloomberg

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