California has made its threats and now Amazon is firing back. Who will blink first?
The Golden State is joining a growing list of states that want the world’s largest online retailer to start paying sales tax.
Most Amazon shoppers currently enjoy the luxury of shopping tax free on the retail website, which sells everything from books to high-end electronics.
The Seattle-based digital retailer fired back at California this week saying that if the state really wants to enforce sales tax on residents who purchase from them the retailer will be forced to cut ties with more than 10,000 California affiliate sellers who sell goods through Amazon.
Last month Amazon responded to a $269 million tax bill from Texas by closing its only brick and mortar location in the state.
Without a physical location and employees in a state, taxing a foreign company becomes a federal issue, which can get tricky.
The issue centers around states demanding that Amazon collect sales tax on purchases. California requires residents who shop at Amazon to pay a use tax, which is the equivalent of sales tax, when purchasing goods online.
But California and other states want Amazon to collect the funds up front. The online retailer doesn't want to for a variety of reasons but the main one being it gives Amazon a competitive advantage over brick and mortar stores that must charge sales tax.
Amazon is so passionate about the issue that the company sued the state of New York in 2008 when the state asked the store to collect sales tax.
Tuesday Amazon said if it was forced to cut ties with California retailers, it would cost the state jobs.