Wang Solutions

Amazon could soon be your next-door neighbor. The online retailer already has plans to build fulfillment centers in San Bernardino and Patterson, CA. While these huge brick and mortar warehouses won’t attract tourists, they will generate much-needed local jobs and, even better, about $8 million for each city.

That’s because Amazon agreed to start collecting sales tax starting Sept. 15. Since all Amazon purchases by California customers will “originate” from San Bernardino and Patterson, those two cities will earn 100% of the city portion of the state-wide, standard sales tax that will be charged by the online merchant.

Except the cities won’t be keeping the full 100% – after all, Amazon needs a housewarming gift. Specifically, a sales-tax rebate of 75% from Patterson and 80% from San Bernardino. These deals are still in the works, but the high numbers are indicative of how desperate cities are to welcome major online retailers to the neighborhood.

However, Amazon as the new kid on the block isn’t necessarily a win-win situation. California law leaves it up to the merchant to pick the point of sale – that is, the community where they are physically housed which gets the share of the sales taxes. That means that online merchants can shop around the state for the best sales-tax rebate deal, while cities butt heads and try to out-bargain each other.