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Hotly contested legislation aimed at compelling Amazon and other on-line retailers to collect California sales taxes stalled Monday -- probably temporarily -- in the the Assembly Revenue and Taxation Committee.

Committee chairman Henry Perea, a Fresno Democrat, placed the bill on the committee's "suspense file" after a lengthy hearing but the committee's majority Democrats appear from their comments to be ready to approve it. Perea said the vote may come within a few weeks.

Backed by a coalition of public employee unions and California's brick-and-mortar retailers, including Wal-Mart and The Home Depot, Assembly Bill 153 is patterned after a New York law that is now undergoing judicial scrutiny. The Board of Equalization, which collects sales taxes, pegs the potential revenue gain at several hundred million dollars a year, depending on how Amazon and other online sellers react. Advocates of the measure are more expansive with some saying it could raise as much as a billion dollars a year if enacted.

Technically, Californians who buy goods from out-of-state on-line sellers are liable for "use taxes," equivalent to sales taxes, on their purchases, and there's a line on personal income tax returns for reporting such purchases. But very few buyers pay use taxes, and state officials say there's no practical way to collect them.

The Supreme Court ruled in 1992 that states cannot compel mail order retailers to collect sales taxes unless they have a "physical presence" in the state, such as a store. New York's law contends that when Amazon or another on-line retailer uses "affiliates" in the state to serve customers, it creates a "nexus" that satisfies the Supreme Court decision.

Amazon, however, warned in a letter to state officials last week that if Skinner's bill, or one of the other similar measures, becomes law, it will cancel its contracts with thousands of California affiliates. Other mail order networks have made similar threats, the committee was told.

Assemblywoman Nancy Skinner, D-Berkeley, is carrying AB 153, details of which, including the Revenue and Taxation Committee analysis, are available here.

Updated to reflect Board of Equalization revenue numbers



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