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Retailers, on-line or otherwise, have to pay sales tax on sales within a state where they have a physical presence. That's the way it is. The problem in this ca
by mikiem 15y ago
Retailers, on-line or otherwise, have to pay sales tax on sales within a state where they have a physical presence. That's the way it is. The problem in this case is that CT wants sales tax on a sale that was referred by an affiliate... Even when the retailer (Amazon) and the customer are both not located in CT. In states that charge sales tax, most (all?) charge "use tax" of the same amount as sales tax, on items shipped to them from an out-of-state retailer that did not charge sales tax. Retailer customers almost never pay it, probably don't know it exists. Sates usually don't go after the tax for consumers, but they do go after businesses for it (at least they do in CA) presumably because the amount of tax is potentially much higher.
In other words, technically, you have to pay sales tax when you buy something, and if you don't then you're supposed to pay the equivalent amount in "use tax". In this case, CT is trying to wedge in there and get tax when neither the buyer or the retailer are in CT.
It's not a business killer for Amazon to charge and pay the taxes for every state. Many on-line retailers do. There is software and subscription services to keep billing systems up to date with current tax tables. But, who pays sales/use tax on what when a guy in CA buys something from Amazon that was referred by a CT affiliate? What about when someone in a state where Amazon has no physical presence buys from Amazon through a CT affiliate? My brain hurts and I suspect someone's getting screwed.
- mtumbrel 15y agoI think the point is that very few CT residents actually pay the use tax, and the situation they're trying to catch is where the buyer is in CT. If Amazon had a retail presence, it would be collecting that tax and forwarding it to CT, and this law was an attempt to define affiliates as a retail presence. I agree that it's not a "business killer", but lower prices drive sales, and that's why they've fought so hard to collect nothing. Frankly I found the one-sided slant of the article a little nauseating. Couldn't you as easily say that Amazon has been abetting tax evasion for years? Who moved your cheese? Was it the Connecticut legislature or Amazon? Well, yes. Connecticut wants that 6%. Not sometimes. Always. So they passed a law. Given a choice between collecting a 6% tax and hanging out their long-time affiliates partners to dry, Amazon picked the latter. Even though I live in a high-tax state with a similar use tax requirement, I don't think Amazon's position is reasonable. Use tax compliance rates are generally pitiful. Both state and the federal Internet Tax Freedom Act allow for this kind of use tax. Local sales tax collection is not optional. The goods in question do not magically teleport into the homes of Connecticut residents. They come over state roads, often carried by state residents in big trucks. If they weren't bought over the internet, they'd be bought at stores where residents would be paying 6% or more.