News & Links/ California Amazon Reach A Deal

Online retailer in California takes on a role it has fought against for years: tax collection conduit.

The change, which took effect September 2012, comes after years of battling between the world's largest online mall and the State of California over whether Internet retailers should have to charge sales tax. The two sides reached a deal in 2011 that included a one-year grace period.

Lawmakers have watched the increasingly popular e-retailer was depriving the state of millions of dollars by refusing to charge taxes, which were protected by a U.S. Supreme Court ruling that prohibits states from forcing businesses without a physical presence in the area to collect sales tax.

Now Amazon enters treaties across the country, paving the way to start opening warehouses and offering faster shipping in areas where tax disputes had previously prevented it from putting down roots.

The resolution of Amazon's tax fight in California has allowed the company to start building a network of distribution centers. Soon, customers in the nation's most populous state will receive shipments from warehouses in San Bernardino, which is near Los Angeles, and Patterson, near the San Francisco Bay Area – instead of from Reno, Nev. or Phoenix. Each new center is expected to bring hundreds of jobs to California.

The brick-and-mortar stores that pushed for the "Amazon tax" to level the business playing field hope the changes will end the dispiriting practice of "show-rooming," when people browse electronics or books in a store but make their purchases online.

Amazon has been tax-free for nearly two decades.