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Amazon Wants California Voters to Decide on Tax Collection Law

Amazon.com Inc., a multinational electronic commerce company, appeals before the California voters to abolish a new law that oblige online sellers to collect sales taxes on purchases made online throughout the state.

On Friday, a referendum petition was filed with the office of state Attorney General so that the state’s registered voters can decide on the given condition, which was part of a law signed in late June.

The new law, which entails online retailers to collect sales taxes from related companies in California, extends the definition of physical presence in the state. Tax collection is now incorporated in companies and individuals that earn commissions through visitor referrals from their websites to the online retailer’s site like Amazon. These companies include marketing and product-development division, as well as company affiliates.

The passage of this law is just one of the actions that states have made to extend the definition of physical presence. In 2009, a similar law was submitted by the legislature; however, Gov. Arnold Schwarzenegger rejected it.

Several states have been trying get around the 1992 U.S. Supreme Court ruling that restricts them to compel businesses to collect sales taxes apart from those with a physical presence, e.g. store, in the state. A supplementary $200 million in tax revenue is expected every year once the law is pushed through.

Amazon needs to gather round more than 500,000 signatures by the end of September to bring the decision before the residents of California through a statewide vote February next year.

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