SACRAMENTO -- In a move that could forestall a big ballot box showdown, Amazon.com has told traditional retailers it would agree to an online sales tax -- but only if it's delayed two years to give Congress time to pass a national law.
Under Amazon's proposal, the company would go along with a sales tax for goods purchased online -- as long as the tax is uniformly enforced across the country, according to sources involved in talks with the company. As part of the possible deal, Amazon is also offering to create 7,000 distribution center jobs in California and drop its push for an initiative to bar such a tax.
Amazon's new position emerged from intense Capitol efforts to call a truce in a war that has seen California vote to impose the tax, Amazon respond by circulating petitions for a referendum to overturn the tax, and legislators taking steps to invalidate any such referendum.
"We're trying to find a way to not have World War III," said one brick-and-mortar retailer, whose group believes it's unfair that Amazon doesn't have to collect the tax. "There seems to be real interest in reaching an accord."
A spokesman for Amazon declined to comment on the developments.
The political obstacles to a national agreement on online taxes are steep, and some Democratic leaders in California worried Wednesday that Amazon's proposal for a two-year delay in California's efforts to impose its own online sales tax is too much to pay for an uncertain outcome in Washington, D.C.
One leader of the group of traditional retailers said he was wary of Amazon's offer.
"The so-called deal that Amazon has proposed is not serious," Bill Dombrowski, president of the California Retailers Association, said in a statement. "Amazon is an out-of-state company with an unfair advantage over California businesses, and it is seeking a complete repeal of the law and another exemption from any further state action.
"Again and again, Amazon continues to demonstrate that they do not care about California businesses, taxpayers or communities," Dombrowski said. "This deal will only prolong the harm to small businesses that employ Californians."
It was not immediately clear how the Legislature would make up for the $200 million in revenues it is expecting to get from sales taxes Amazon was supposed to collect in the fiscal year that began July 1. Top Democrats such as state Senate President Pro Tem Darrell Steinberg, D-Sacramento, have said that the state desperately needs that revenue.
But Republican leader Bob Dutton, R-Rancho Cucamonga, said Steinberg was working with him to put together a bill that could gain bipartisan support.
"They had a very informative meeting," Dutton said. "I wanted to encourage the individual retailers and their associations to get together with Amazon to work this out. It would be a win-win for them and people of California."
In reaching out to traditional retailers for a possible deal, Amazon may have opened the door a crack to suggest that they want to avoid a messy public fight, said Dan Schnur, director of the Jesse Unruh Institute of Politics at USC, whose July poll showed voters evenly split on support for an online tax.
"The only reason to sit down for negotiations is to see how hard a bargain they can drive, see what they could get out of retailers," Schnur said. " If they can get 80 percent of what they want without spending money on a ballot fight, that might be better than going for everything they want at a cost of tens of millions of dollars."
The online sales tax battle began after the Legislature approved a budget in June that included a requirement for online retailers to collect sales taxes. Amazon responded by threatening a referendum on the law -- and is well on its way to collecting enough signatures to get it on the ballot next year.
Democrats and traditional retailers are trying to thwart the referendum with Assembly Bill 155, which would require businesses to collect sales taxes only if they have $1 million in annual sales -- a move that won the support of eBay, the San Jose-based online auction giant. The key is to win enough Republican support to get a two-thirds vote, which would prevent a referendum on the issue.
Traditional retailers such as Wal-Mart and Target have been lobbying Republicans heavily, arguing that it's unfair for them to have to collect the tax while exempting Internet giants like Amazon.
Earlier this week, Senate caucus leader Bob Huff, R-Diamond Bar, said he doubted Republicans would sign on to the effort to stop Amazon's referendum.
"My guess is the caucus will take a position against (AB 155) in favor of letting the political process work," Huff said. "As much as there might be merit in policy and we want to protect brick-and-mortar stores, there's a bigger play in motion now. This bill is an end run around the political process."
Huff indicated he would be in favor of allowing Congress to settle the issue.
"The retailers have made some good arguments, but this is one that would be better addressed nationally, or in the context of some kind of tax reform that makes a more level playing field for everybody," Huff said.
Republicans may be hesitant to agree to any deal. Grover Norquist, the father of anti-tax pledges that Republicans break at risk of political retribution, sent a letter earlier this week to Republicans telling them that a vote to thwart their referendum was as good as a vote for taxes.
Here is a framework for a possible deal aimed at avoiding a costly ballot war between Amazon.com and brick-and-mortar retailers. Under Amazon's proposal, the online retail giant would: