Nonprofits, Amazon at Odds in California over Taxes

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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,, 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 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 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

  • Gozar

    You’re not taxing Internet retailers!! You are taxing the people of California!!!

    To say Amazon is not contributing is a lie. Its the people of California who will be asked to pay this tax. Amazon will still slaughter the local retailers because even without the sales tax discount Amazon’s prices are so far below those of local retailers that you would have to be an idiot to shop in a store.

    So when it comes time to vote on the referendum, it will really be all about asking California taxpayers to pay more.

    Good luck!

  • Dr.Free

    I say good for the nonprofit coalition! I will no longer buy from Amazon until they stop trying to skirt around laws and play on a fair playing ground. This sales tax goes to some really great organizations and efforts. I believe that Amazon’s reputation will be tarnished around the country. Amazon has had this issue in numerous states!

  • roger

    I Support AMAZON.

    TO: Nonprofit, what do you do for a living? Just protest and get how much percentage? Must be an easy job. Unlike most people who shop in amazon, they work hard for there money to support there family and we and mean all people who support amazon are trying to save every little money we can.
    We dont want to give it to California, who will just end up giving to those who dont need it, like mexicans who clean your yard and earn cash and they get free medical and government assistant money.

  • John e Miller

    According to the above JUNE 2011 document, an online retailer must register and collect taxes if:

    2. Representative in California
    Your business does not have a physical location in California, but you have a representative in the state who
    makes sales, takes orders, installs merchandise, trains customers, OR MAKES DELIVERIES. (My Caps)

    So even in the online retail guys move their warehouses/offices out of CA and suspend all website affiliate plans — based on the current law — as long as they deliver purchased goods via USPS, FedEx, UPS, etc. they would still be liable for tax collection on purchases delivered in California.

  • Debbie

    Roger and Gozar, Who’s cheater whom? All purchases are subject to either sales or use taxes. If your buying products to the internet that you arenot paying sales taxes on you are required, by law, to pay the use tax when you file your state income tax return. If everyone followed the law the state wouldn’t have to go after Amazon and others. If they are doing business in the state they should be subject to it’s laws.

    Sounds like you’re not paying your taxes so, again, I ask, who’s the tax cheat now?