Amazon granted sales tax reprieve

California governor Jerry Brown signed compromise legislation granting Amazon a reprieve from collecting state sales tax, after the company offered the promise of thousands of jobs, a development that comes as the online retail giant takes up a broader sales tax fight on multiple fronts, reports The Wall Street Journal.

According to Bloomberg, in return, Seattle-based Amazon agreed to drop efforts to repeal the tax measure through a referendum drive that had cost it at least $5.25 million.

The company and the state agreed to work together for a national standard on taxing online sales.

Brown's signature on the bill ends a stare-down with Amazon over a June law treating Internet retailers the same as brick-and-mortar stores that collect the state's 7.25% levy.

The agreement will cost California $200 million in revenue it planned to use to help balance this year's budget.

Cnet reports this does not necessarily mean that all California consumers will see higher shopping cart bills today.

Although the bill is supposed to be effective immediately, merchants - including Amazon - are not required to collect sales taxes until 15 September 2012.

However, opponents to Amazon argued that it hurt small business owners, who are required by law to pay sales taxes, but sell the exact same products seen on the online mega store's Web site.