Nonprofits, Amazon at Odds in California over Taxes

August 15, 2011; Source: Associated Press via Yahoo News | NPQ has twice covered the efforts of state governments to levy sales taxes on Internet-based sellers such as Amazon (once in The Cohen Reportand once in NPQ Newswire). Amazon, Overstock.com, and other online retailers may hawk their wares through the ether, but they sponsor affiliate programs and own warehouses in various states, and that theoretically makes them subject to state sales taxes.

Among the Internet-based sellers most resistant to paying the so-called “Amazon tax” is, no surprise, Amazon, which has been slugging it out with several states over this issue. One of them is the all-but-bankrupt fiscal disaster known as California. Amazon is reportedly backing a state ballot referendum that would overturn the law that makes online purchases taxable if they involve companies that have operations or affiliates in California. (Ballot referenda have long made California a policy basket case, since they are frequently financed by out-of-state or shady special interests—hardly the citizen initiatives that the word “referendum” denotes.)

A coalition of Golden-State nonprofits called ThinkBeforeYouClickCA.org is taking on Amazon, asking the Internet retailer to “stop cheating California.” The coalition’s website doesn’t exactly identify the nonprofits behind this effort, but the Associated Press identified Community Resources for Independent Living, the California Alliance for Retired Americans, the Health and Human Services Network of California, and Parent Voices as joining the effort. All contend that taxing Amazon and its ilk could raise as much as $1 billion a year, money that could be used to stave off some of California’s planned human-services budget cuts.

ThinkBeforeYouClickCA’s referendum opponent is More Jobs Not Taxes. The AP report calls this group a coalition of small businesses, taxpayer groups, and Internet companies, though the otherwise opaque website acknowledges that its funding comes from none other than Amazon Corporation LLC. AP reports that Amazon has spent $3 million trying to overturn California’s e-tailer tax and has terminated contracts with its affiliates in California in order to deny the state jurisdiction.

The nonprofit coalition is taking aim at Amazon by organizing people to close their Amazon accounts. “If Amazon.com won’t contribute to California, then we won’t contribute to Amazon,” one coalition member said. A state legislator backing the anti-Amazon campaign added, “Think before you click that mouse to buy anything from Amazon.”

How do you feel about states taxing the sales of Internet-based retailers?—Rick Cohen