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It's .. complicated. It's not so much whether tax should be collected, it's where and who by. I can only speak for Michigan, the only state I've lived in, but
by soneil 10y ago
It's .. complicated. It's not so much whether tax should be collected, it's where and who by.
I can only speak for Michigan, the only state I've lived in, but it goes something like;
* Tax on interstate purchases (where the buyer and vendor are physically in different states) is owed in the state the buyer is physically in.
* Tax is not (was not?) collected at the point of sale.
* Buyer should declare (significant?) purchases on their (state) tax returns.
So the theory is that if I go into a shop and purchase something for $100, I pay $106 at the point of sale. If I purchase the same item from an out-of-state vendor online, I pay $100 at the point of sale, and owe the outstanding $6 on my state taxes.
As you can imagine, this is near-impossible to audit (hands up anyone who's ever declared those purchases?). There's been resistance to change nominally because taxes are very difficult to calculate (the same purchase can be covered by state, county and municipal taxes - it's not just a list of 50 numbers), but realistically because online vendors have enjoyed making it Someone Else's problem, with the lower prices also working in their favour (on significant, 4-digit purchases, whether the vendor had a presence in Michigan would factor into which vendor I chose).
- MagnumOpus 10y ago> this is near-impossible to audit This is only hard to audit because the Michigan tax authorities are criminally incompetent (or just criminal full stop). Subpoena Amazon (and jet.com, ebuyer, newegg) sales delivered to Michigan addresses, compare address list with the list of addresses that self-declared sales tax for out-of-state purchases, send automatic back tax and penalty notice to all all addresses which didn't. None of these steps are hard, it will increase compliance millionfold and bring it hundreds of millions in revenue.
- brianwawok 10y agoMy understanding of why this is all so tricky.. the Constitution specially gives only the federal govetnment the right to regulate interstate commerce. So Michigan could not force the records from Amazon, the federal government would need to.
- jjeaff 10y agoJust subpoena it? Under what authority? Amazon is WA based. Unless there is some sort of physical Nexus in MI, how do you enforce a subpoena? MI state police can't show up at Amazon headquarters and start siezing assets, it doesn't work that way. It's not Amazon's problem that it's customers aren't following state law. And MI has no authority to require an outside company to comply any more than they could force Alibaba to collect MI state sales tax. Note that I don't know if Amazon has facilities in MI or not, but there are plenty of states where they dont.