Amazon Will Start Collecting Sales Tax In California

Amazon has apparently reached a deal with the state of California where the company will drop a proposed ballot initiative that would protect it from collecting sales tax on its transactions and in return, won’t start having to collect those taxes until next September.

I wrote in July that I thought Amazon had shifted the market enough that charging sales tax wouldn’t actually put it at a disadvantage with competing retailers, online or off — it has better stock than brick and mortar stores, and volume and corresponding price advantages over other online stores. And I wonder if the largely positive news that’s greeted reports of Amazon’s planned tablet launch, whether it’s TechCrunch’s declaration that it’ll be “huge, potentially,” or Tim Carmody’s explanation of how Amazon is fulfilling Steve Jobs’ vision in a way even Apple can’t, has made the company feel more confident.


Either way, collecting sales tax is the right thing for Amazon to do, no matter how secure the company feels about its market position. We’ll see where Amazon is as a company in 14 months when it starts collecting sales tax on that large market.