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Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the stat

Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the state but if they have a distribution plant or other company owned assets this will give them time to relocate. I believe Amazon had already notified their affiliates that they were terminating the relationship when the law was passed (similar to what they do when other states passed nexus provisions).

gojomo 15y ago
Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot. I suspect Amazon sees the way things are going and (as in other states) have tried to get what forbearance they can while they can, and also expect a national harmonization of cross-state sales taxes at some point.
- nknight 15y ago
  You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail business.
  - gojomo 15y ago
    Most individual states would disagree, especially when the wholly-owned subsidiary exists primarily to avoid taxes. If Amazon's technique was legally unassailable, they wouldn't be paying sales tax even in the 5 states where they already do. They'd just assign whatever creates 'nexus' in those states to new 'non-selling' subsidiaries.
    - nknight 15y ago
      Piercing the corporate veil becomes easier the more closely integrated the companies and their management structure are. Amazon can maintain arms-length relations with most of their subsidiaries because those subsidiaries are not part of Amazon's core business, and can operate semi-independently with little to no loss in efficiency. Maintaining such a relationship with subsidiaries directly involved in the day-to-day operations of Amazon's retail business (maintaining stock, setting prices, making sales, packing and shipping product, etc.) would be much more difficult, costly, and risky.
  - aphexairlines 15y ago
    How are a9 and a2z not involved in retail?
    - nknight 15y ago
      Company A buys software from company B to carry on its business. Company B does not become liable for the acts of Company A. A9 and A2Z are providing software and/or services to Amazon.com which Amazon.com uses in its retail business. This is completely different from A9 and A2Z engaging in that business. They do not buy, sell, distribute, or ship the products Amazon.com does. So long as Amazon.com maintains arms-length dealings with A9 and A2Z (which is trivially easy for any company with semi-competent legal counsel to accomplish), the ownership of A9 and A2Z is irrelevant to Amazon.com's dealings with California.
      - rbranson 15y ago
        They have a single customer and single source of revenue, Amazon.com. It's pretty ridiculous.
        nknight 15y ago
        Not really, no. As far as I can tell, they all provide products or services in some for to end users outside Amazon.com's retail business. Not that it matters. The principles are well-enshrined in the common law system, codified and uncodified. You may think it's ridiculous, but the courts take it seriously.
        Greedy_Fools 15y ago
        The courts take the law seriously, it's the lawmakers that are ridiculous.
- cpeterso 15y ago
  Another wholly-owned subsidiary in California: Lab126, the Kindle company.

gojomo 15y ago

Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot. I suspect Amazon sees the way things are going and (as in other states) have tried to get what forbearance they can while they can, and also expect a national harmonization of cross-state sales taxes at some point.

nknight 15y ago
You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail business.
- gojomo 15y ago
  Most individual states would disagree, especially when the wholly-owned subsidiary exists primarily to avoid taxes. If Amazon's technique was legally unassailable, they wouldn't be paying sales tax even in the 5 states where they already do. They'd just assign whatever creates 'nexus' in those states to new 'non-selling' subsidiaries.
  - nknight 15y ago
    Piercing the corporate veil becomes easier the more closely integrated the companies and their management structure are. Amazon can maintain arms-length relations with most of their subsidiaries because those subsidiaries are not part of Amazon's core business, and can operate semi-independently with little to no loss in efficiency. Maintaining such a relationship with subsidiaries directly involved in the day-to-day operations of Amazon's retail business (maintaining stock, setting prices, making sales, packing and shipping product, etc.) would be much more difficult, costly, and risky.
- aphexairlines 15y ago
  How are a9 and a2z not involved in retail?
  - nknight 15y ago
    Company A buys software from company B to carry on its business. Company B does not become liable for the acts of Company A. A9 and A2Z are providing software and/or services to Amazon.com which Amazon.com uses in its retail business. This is completely different from A9 and A2Z engaging in that business. They do not buy, sell, distribute, or ship the products Amazon.com does. So long as Amazon.com maintains arms-length dealings with A9 and A2Z (which is trivially easy for any company with semi-competent legal counsel to accomplish), the ownership of A9 and A2Z is irrelevant to Amazon.com's dealings with California.
    - rbranson 15y ago
      They have a single customer and single source of revenue, Amazon.com. It's pretty ridiculous.
      - nknight 15y ago
        Not really, no. As far as I can tell, they all provide products or services in some for to end users outside Amazon.com's retail business. Not that it matters. The principles are well-enshrined in the common law system, codified and uncodified. You may think it's ridiculous, but the courts take it seriously.
        Greedy_Fools 15y ago
        The courts take the law seriously, it's the lawmakers that are ridiculous.
cpeterso 15y ago
Another wholly-owned subsidiary in California: Lab126, the Kindle company.