Amazon Seeks to Out Flank the California Legislature on Use Tax Collection Law


No State Use TaxesEarlier this month, I wrote about Amazon terminating its Amazon Associates program in California in wake of the Golden State passing ABX1 28, a new law that imposed use tax collection duties on certain out-of-state retailers.

Last week, Amazon upped the stakes when Charles T. Halnan, an Amazon lobbyist, submitted a proposed statewide referendum to Attorney General Kamala D. Harris regarding Section 1 of ABX1 28. That section states that retailers with an affiliate or corporate nexus with the State of California must collect use taxes from their California customers who have purchased tangible personal property.

Sales and Use Tax Rates

Admittedly, the state and local sales and use tax system is a contorted mess with tax rates varying not just from county to county, but also for different cities within the same county. Then, the state has its own set of sales and use tax regulations that dictate which products are taxable and which are tax-exempt.

However, Amazon’s referendum is not the solution out of this mess. Even if the voters of California side with Jeff Bezos, California consumers will still be on the hook for use taxes. The sole change would be that Amazon would not have to collect these taxes and remit them back to the state. For law abiding Californians, having Amazon collect use taxes at the time of sale is much more convenient than having to sift through receipts at the end of the year. However, if you believe that Sacramento has no business taxing your out-of-state purchases, then the honest solution would be to seek a repeal of all use taxes, not a limited referendum that just lets Amazon off the hook.