"It will remove one incentive for not buying local," California Retailers Association president Bill Dombrowski said. "Retailers are looking forward to it, but we don't go out and buy champagne on September 15."
Colin Sebastian, an analyst with Baird Equity Research, predicts Amazon will be able to make up for the loss in sales tax advantage by carpeting the state with distribution centers.
"The irony in this is the closer Amazon gets to its customers, the more success it seems to have," he said.
Amazon spokesman Scott Stanzel said the company will continue to offer lower prices, even without the sales tax advantage, and is not worried about losing business. He would not say whether the tax deadline has affected sales.
More change may be on the way. Amazon is lobbying Congress to cut through the web of state-specific rules and devise a national policy for Internet taxation.
Sales tax rates in California reach 9.75 percent and are among the highest in the country. The new rules, which may affect more than 200 out-of-state businesses, are expected to bring in more than $200 million annually, with at least $80 million coming from Amazon alone.
California's tax authority is preparing to hire 30 specialists to make sure the state collects the revenue it is due. Jerome Horton, chairman of the state Board of Equalization, said the change will allow out of state companies to "contribute their fair share" toward schools and other public services.
Amazon has been tax-free for nearly two decades; an adult lifetime for some customers.
Amateur photographer Joe Chin, 27, saved more than a hundred dollars last week when he used Amazon to buy a $1,400 Fujifilm digital camera. A world without tax-free shopping will be an adjustment, he said.
"It's kind of like going back to how it was when I was a kid," he said.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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