Amazon Adds California Distribution Sites in Tax Accord

Amazon.com Inc. (AMZN) has begun making good on a deal with California officials, opening three distribution centers across the state and today announcing a fourth, 1.2 million square-foot (111,500 square-meter) facility east of Los Angeles.

The Moreno Valley hub will have about 1,000 full-time workers, according to Mike Roth, vice president of North American operations. That will bring total employment for the four facilities to more than 2,400.

The world’s largest online retailer pledged to build the centers as part of a 2011 compromise with Governor Jerry Brown and lawmakers ending a fight against a state law that taxes online sales. Amazon said it would spend $500 million on facilities and add 10,000 workers in California by December 2015.

“A lot of things have happened in California to make things right,” Brown said at a ceremony at the facility in San Bernardino, hailing it as another step in the state’s economic recovery. “What’s good is you have people working.”

The San Bernardino center opened last year as the city became the third-largest U.S. city to seek bankruptcy protection. Job growth in the distribution center may help cushion bankruptcy-related cuts in public services in the city of 209,000.

The San Bernardino site has about 1,400 employees, Kelly Cheeseman, a spokeswoman for Amazon, said by e-mail. There are “hundreds” at other new centers in Tracy and Patterson, both in California’s San Joaquin Valley southeast of San Francisco, that opened this month. She declined to be more specific.

Tax Delay

Amazon’s agreement in California, which allowed the company to delay collecting sales taxes there until September 2012, came in a compromise in which the company dropped a planned referendum to permanently exempt it from levying sales taxes on California customers.

California has the highest statewide sales tax rate, 7.5 percent, with an average local rate of 0.91 percent, according to the Tax Foundation. Cheeseman and Jerome Horton, chairman of the Board of Equalization, which collects sales taxes in California, declined to say how much the company has turned over.

Amazon and California leaders also agreed to push for a national standard on taxing online purchases. The U.S. Senate voted in May to authorize states to require online retailers to collect sales taxes. The measure hasn’t come up for a vote in the House.

California still loses more than $1 billion in tax revenue from sales by online and catalog merchants, the equalization board said in an August report. The sum amounts to $44 per household, the report said. Purchasers are supposed to self-report online transactions on tax forms and remit payments to the state. Few do, Horton said.

Roth declined to say what percentage of Amazon.com sales are fulfilled by third-party vendors. Brown said he was unaware of the board of equalization’s finding and would look into it.

The law that covers Amazon and other large retailers exempts companies with $10,000 or less in sales to California residents via in-state affiliate retailers, or with $1 million or less on total sales per year. Visitors to Amazon’s website may purchase items from affiliates that pay to be listed yet are separate from the Seattle-based company.

To contact the reporter on this story: James Nash in San Bernardino, California at jnash24@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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