In its second-largest acquisition, Amazon buys the company for $970 million.
The proposed law calls for e-retailers with a physical presence to collect sales tax.
The California State Assembly has passed and referred to the state Senate a bill that requires online and catalog retailers to collect sales tax if they have in-state physical operations, including those operated by sister companies.
The bill, introduced by Assemblyman Charles Calderon, a Democrat, seeks to clarify when retailers come under existing federal law that allows a state to require direct-to-consumer retailers to collect sales tax. The measure specifies that any in-state physical presence, such as stores or distribution centers, even if owned by a subsidiary, qualifies as nexus, the legal term for a physical presence that imposes the tax-collection obligation. Some retailers, including Amazon.com Inc., No. 1 in the Internet Retailer Top 500 Guide, attempt to avoid the sales tax requirement by contending that their distribution facilities, for example, are operated by a separate subsidiary not directly tied to their retailing operation.
But like similar measures in a few other states, California’s AB155 contends that a retailer has a responsibility to collect sales tax if another company within its corporate family has in-state facilities engaged in providing services related to what the retailers sells to in-state consumers.
The bill is similar to laws on the books in Kansas and North Dakota and to proposed legislation vetoed this week in Texas. Texas Gov. Rick Perry, a Republican, said the state would be better off working with other states, tax experts and federal officials to come up with a plan for dealing with sales tax on web sales. Amazon says it supports Perry’s veto as a way to find a better solution to the sales tax issue.
The California Assembly is also considering this week a bill introduced by Assemblywoman Nancy Skinner, a Democrat, that would require online retailers to collect sales tax if they do business with in-state web site affiliates that refer online shoppers to them. Affiliates can be blogs or other types of content sites that provide links to Amazon or other online retailers. Amazon has said it would cut its ties to thousands of California web affiliates if that law goes through.