On the one hand, Amazon.com -- a $96 billion Seattle company -- that doesn't think it should have to collect sales tax from California customers under the new law because it has no stores. The other side is led by Wal-Mart -- a $186 billion chain -- that does collect sales tax, even from online customers, because it has physical storefronts in California.
The California Retailers Association includes Wal-Mart, Target and the Gap, which will have to put together a sizeable multi-million-dollar war chest to fight Amazon's effort to overturn the online sales tax. Without tax fairness, the group says, more stores will follow Borders' path and close for good.
"What we're seeing is customers using our retail stores as showrooms, coming in, looking at the merchandise, looking at stereos, looking at TVs, and then going out and buying it online because they don't have to pay the sales tax," said Bill Dombrowski from the California Retailers Association.
If Amazon can get more than 504,000 valid signature by Sept. 27th, the online sales tax law will be put on hold until California voters can weigh in next year on whether e-tailers should collect the sales tax. Its strategy is to frame the tax as a job killer.
In a statement, Amazon spokeswoman, Mary Osako said: "With state unemployment at well over 11 percent, we're glad the people of California now have an opportunity to have their voices heard on this issue."
Savings.com CEO Loren Bendele hopes voters agree the Amazon tax law is hurting the economy. The Santa Monica-based website was one of 25,000 California affiliates that once provided links to Amazon and other e-tailers, before those e-tailers fired them to avoid having to collect the sales tax.
"It doesn't make Amazon start collecting sales tax. All it does is make them stop working with California businesses and make it uncompetitive for us to operate in California," said Loren Bendele, a former Amazon.com affiliate.
The brick and mortar stores' challenge is to get Californians to understand this is as not a new tax. There's been a line on the state income tax form for years for "use tax" -- sales tax you didn't pay for online purchases. Hardly anyone fills it out though.