Amazon.com Gets Reprieve on California Tax (AMZN)

Amazon.com Inc. (NASDAQ: AMZN), on Friday, got a relief on California tax after the state’s governor Jerry Brown signed a compromise legislation grating the Seattle, Washington-based company a reprieve from collecting state sales tax.

In exchange for the tax relief, Amazon offered the promise of creating thousands of jobs in the state. The tax relief comes as the online retailer takes up wider sales-tax fight on multiple fronts.

Governor Brown’s bill pushed back by a year the time when Amazon and other online retailers would have to start collecting sales tax in the state of California. The bill says that online retailers will have to start collecting sales tax in state of California by September 2012; however, this would happen only if Congress fails to act on a federal online sales-tax measure.

Amazon, in exchange for the tax relief, has agreed to create a minimum of 10,000 full time jobs in California. The company has also agreed to hire 25,000 seasonal employees by the end of 2015.

Governor Brown’s bill comes as Amazon continues to fight against efforts by a number of states, including California, to implement new measures which would require online retailers to collect sales taxes on purchases. Amazon has said that the issue should be covered by federal law and not by states.

In California, Amazon had initially proposed to create 7,000 full-time jobs by 2015 in exchange for a relief on the sales tax issue until 2014.

In a statement released on Friday, Governor Brown said that a prolonged, costly ballot is a benefit to no one. Amazon has also given its approval to the compromise. In a statement, the company said that it is grateful to Governor Brown and legislature’s bipartisan leadership for a win-win law.

Amazon shares ended marginally higher on Friday. The stock touched an intra-day high of $224.49 and finished 0.17% higher at $223.61.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.