Amazon gets Tax Break- Two Fulfillment Centers to Come to California

For years Amazon.com has fought government efforts to tax e-commerce and may have finally found a solution to combat online sales tax. Although Amazon.com hasn’t announced it publicly, developers have announced details to build two fulfillment centers in Patterson and San Bernardino, CA. The # 1 Internet Retailer is slated to pocket millions of dollars in sales taxes paid by California customers.

The move comes after California signed a law in September that requires large online retailers ($500,000 or more a year in online sales tax) to begin collecting sales tax from state residents next year. Amazon.com had promised, after winning a postponement of sales-tax collection, to build warehouses in the state, creating at least 10,000 new full-time jobs and hiring 25,000 seasonal works by the end of 2015. This incentive package allows Amazon to delay its collection of sales taxes until 2013 because of its creation of jobs.

Over the next year or so, Amazon.com plans to take over a 950,000 square-foot facility in San Bernardino, CA—Located east of Los Angeles—and a 1-million square-foot fulfillment center in Patterson, CA—located near San Francisco.

“This is huge. This is monumental, not only for the city but for the county and the region,” Mayor Luis I. Molina of Patterson, CA said. “We’re up to 20% unemployment and this is going to make a dent.”

The two new FBA centers represent only the preliminary efforts by Amazon in California. “We expect Amazon to open 5 to 10 facilities in California over the next three years,” says Colin Sebastian, an investment analyst for Baird Equity Research. “We note that ongoing 30%+ revenue growth requires Amazon to invest continuously in fulfillment efficiencies and additional capacity.”

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