California Booksellers Cheer Sales Tax Fairness Law

As the dust continues to settle in the wake of sales tax fairness becoming law in California [1], Bookselling This Week spoke with booksellers in the state about their feelings regarding their hard-fought victory. (Hint: They were pretty happy).

Last week, Gov. Jerry Brown signed a sales tax fairness provision into law that requires out-of-state retailers to collect sales tax on sales made to California customers. The provision, AB 28X, a compilation of three e-fairness bills in a budget trailer bill, now requires the state Board of Equalization (BOE) to issue rules and regulations that clarify the obligations under existing law for out-of-state retailers to collect and remit tax on sales of tangible personal property to California residents.

In response to the signing, Amazon.com announced that it was firing its affiliates in California. However, in a statement issued on June 30, Betty Yee, First District member of BOE, stressed that the company’s actions would not alter the effects of the new law. Noting that “there have been statements and actions made by Amazon.com and Overstock.com to sever ties with their California affiliates in their quest to continue to avoid state law,” she stated, “Actions to sever relationships with affiliates by Amazon.com will not change the fact that they still have nexus through the other provisions in the new law and will still need to collect sales tax.... We call on them to do the right thing and work with the state of California to comply with the law.”

While the BOE and Amazon.com squared off this past week, indie booksellers in California took a moment to revel in a victory that took some 12 years to accomplish.

“For the thousands of small businesses in California that provide goods and services, employ local residents, collect sales taxes, and pay our taxes, the passage of AB 28X comes as a great relief and offers a sense of hope that we may compete on a fair basis with, the 800-pound gorilla, Amazon,” said Clark Kepler of Kepler’s Books in Menlo Park, California [2]. “E-fairness can only improve our state’s woeful economy, add jobs, and help California’s struggling businesses.”

“As a second-generation bookseller, I want to say thank-you to the generation of booksellers and advocates before me who persevered in their fight to create a level playing field in California,” Casey Coonerty Protti of Bookshop Santa Cruz [3]in Santa Cruz, California, told BTW. “It took a long time but was well worth it. What a day for bricks-and-mortar [businesses]! Now all we have to do is get them to start collecting, and I think a tidal wave of other states will think harder about taking this step!”

Coonerty Protti reported that Bookshop Santa Cruz had sent out an e-mail applauding the budget and directing people to its affiliate program. “Overnight, we got at least a dozen positive replies, many from affiliates who were fired from Amazon but still like the outcome (one said, ‘fair is fair, they should have to pay’),” she said. “We also got at least 10 new affiliate applications as well as an article in our local online paper. We plan to greatly increase our marketing around our affiliate program and to develop new tools to make working with us as an affiliate even easier.”

John Evans of Diesel, A Bookstore [4] said having sales tax collected by all retailers not only makes sense for businesses, to ensure a level playing field, but is important to communities, which have been deprived of needed revenue for schools, roads, and other services.

“Continuing a business strategy of tax evasion, especially in this economy, is just being a bad corporate citizen,” Evans said. “It’s great to see state legislatures act responsibly and ethically for the state’s needs. It is also nice to hear many of the manipulated and abandoned affiliates placing their outrage where it belongs — with self-serving companies using tax avoidance to unfairly compete in the marketplace.  Allegiance to companies that harm our communities is not in our interest and it’s nice to see our customers and neighbors recognize this.”