Ryan Hagen, Staff Writer
Posted: 07/03/2012 07:16:05 PM PDT

SAN BERNARDINO – Kohl’s must pay the city a portion of what it earns from all shipments through the San Bernardino distribution center, despite the retailer’s argument that the requirement is unconstitutional.

The City Council on Monday denied an appeal from Kohl’s, which did not return calls Tuesday asking whether they would further appeal the decision.

The City Council’s decision was based on the agreement made when the company opened a so-called e-commerce fulfillment center on the site of the former Norton Air Force Base in 2010.

In that agreement, Kohl’s agreed to designate San Bernardino as the “point of sale” for items bought online and processed at the facility.

City officials have said they plan a similar deal when Amazon opens a distribution center in the city, potentially generating a great deal of revenue for the city.

It’s unclear whether the same dispute could arise regarding Amazon, said Telicia Lopez, San Bernardino business registration manager.

“It’s a similar type of business,” Lopez said Tuesday. “I don’t know the situation with their gross receipts and if they would raise the same issue.”

The city’s business registration fee is $60 per year plus 0.00075percent of all gross receipts – essentially, all business activities – over $15,000.

But Kohl’s paid only the $60 portion because the other portion is, in fact, a tax, and to charge a tax on items made and bought outside the city violates Supreme Court rulings that govern how that money is divided, said Kohl’s lawyer, Peter B. Kanter of the San Francisco law firm Morrison Foerster.

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