Capitol Alert: Deal to delay tax collection by Amazon.com clears Legislature

A last-minute deal to avoid a referendum on a new online tax collection law has won approval in the state Legislature.

The bill gives retailers like Amazon.com a one-year reprieve on collecting the taxes while they lobby for a federal collection measure.

The legislation, introduced via amendment on the final day of the legislative session, was the result of a deal hammered out between legislative leaders, Amazon and brick-and-mortar stores. Assembly Bill 155 puts the law on hold until at least Sept. 15, 2012 -- the delay could be extended until 2013 if Congress enacts a federal online sales collection law by next summer.

In exchange for the delay, Amazon has agreed to drop its effort to ask voters to overturn the tax law, which was approved as part of this year's state budget package.

While the move creates a $200 million hole in this year's budget, lawmakers said it was better to take a one-year loss than to risk a referendum that could overturn the law for good.

Democratic Sen. Loni Hancock, who pushed for the original tax measure, called the compromise a "huge, positive step forward."

"While this is a delay in what we passed as part of the budget, it is a fair solution that will prevent an unnecessary referendum that would cost the taxpayers millions of dollars," the Berkeley Democrat said.

The measure, Assembly Bill 155, cleared the Senate on a 36-1 vote. It passed the Assembly by a vote of 59-8.

Its passage won praise from both Amazon and the retail stores, which had previously found themselves on opposite sides of the online tax collection fight.

"This bipartisan, win-win legislation will allow Amazon to bring thousands of jobs and hundreds of millions of investment dollars to California, and welcome back to work tens of thousands of California-based advertising affiliates," Amazon Vice President for Global Public Policy Paul Misener said in a statement. "This legislation also will allow us to continue to work with Congress and the states to obtain a federal resolution to the sales tax issue as soon as possible."

The California Retailers Association called the bill in a statement a "significant achievement and ensures a fair marketplace where every company plays by the same rules."

"This legislation will ensure that out-of-state companies no longer have a competitive advantage over California businesses, and that Amazon.com will start collecting the sales tax next year like every other company in the state," the statement reads."

Brown has not signaled whether he will sign off on the compromise.

Editor's note: A previous version of this post identified Hancock as the bill's author. Assemblyman Charles Calderon authored the legislation.