Amazon's sales-tax referendum challenged by California lawmakers

SACRAMENTO, Calif. — The dispute over Internet sales tax in California might wind up in court before it goes to the voters.

Two days after Amazon.com unveiled a ballot referendum to repeal California's new online-tax law, two Democratic lawmakers labeled Amazon's effort unconstitutional.

An Amazon lawyer defended the referendum attempt.

The referendum is in limbo until Monday, when state Attorney General Kamala Harris must rule on whether the referendum is proper. If she clears it, Amazon can start gathering signatures.

Either way she decides, the losing side could end up suing.

"I'm sure there will be litigation on this," said Assembly Majority Leader Charles Calderon, a Democrat.

Calderon, Assemblywoman Nancy Skinner and several retailers crowded into Swanberg's on J, a small Sacramento clothier that specializes in Hawaiian shirts, to blast Amazon's sales-tax stance. By not collecting the tax, Amazon is harming brick-and-mortar retailers, they said.

"It's a fairly big issue," said Swanberg's owner Lauren Lundsten.

The new law says Amazon and other online merchants with a physical presence in the state must collect sales tax from California customers. Amazon won't collect the tax and is trying to repeal it by referendum.

Calderon and Skinner, also a Democrat, said Amazon's effort violates a provision in the state constitution. That provision says budget-related laws, and laws that take effect immediately, can't be overturned by referendum.

But Steve Merksamer, a Sacramento lawyer representing Amazon, said the referendum is constitutional.

"The right to referendum is guaranteed in the constitution ... it's sacrosanct," he said.