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Possible California Sales Tax Rebates for Amazon

  • May 21, 2012 | Will Frei

The Los Angeles Times reports that two California cities are poised to give Amazon most of the sales tax revenue that the online retailer will help them generate.

Amazon plans to build a warehouse in both Patterson and San Bernardino, California. According to the Los Angeles Times, each city stands to gain $8 million in new revenue from Amazon sales tax collections in addition to hundreds of new jobs. In exchange for this boon, both cities have promised Amazon a rebate of most of the new sales tax revenue.

From the Times: "Talks with Amazon about a so-called sales-tax rebate are still in the early stages. But in Patterson, a struggling Central California community of 21,000, Mayor Luis I. Molina said he's ready to do what it takes to help his city."

However, not everyone agrees with the idea of sales tax rebates. Critics argue that sales tax should go to support government, not to generating revenue for private retailers.

When Amazon builds the warehouses, 1.00% of the total sales tax collected by Amazon will go to the local jurisdictions (the total sales tax rate being 7.25%). Since it is likely that sales made by Amazon will be processed out of state, and the warehouses will serve as distribution centers, the local sales tax revenue will be allocated to the "...place where the sale is deemed to take place under the..." rules stated in Regulation 1802.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Will Frei
Avalara Author Will Frei
Will Frei covers sales tax news including best practices, legislation and sales tax technology. He is the Social Media Manager at Avalara.