16 ms·

CA Amazon Tax Signed Into Law

144 points by cmod 15y ago

phirephly 15y ago
Damn. There goes my $300-$400 a month passive income... And I already report my use-tax to begin with. Guess it's time to start calling up friends out-of-state for their mailing address.
- coin 15y ago
  And CA won't be collecting income tax on your $300-400 per month (since Amazon has canceled affiliates in CA), so their tax income is actually less.
  - phirephly 15y ago
    And if I have to start filing tax returns with every state and county my small business happens to do business with (~$1000 / year business), I'll probably shut that down entirely for not being worth the bother as well.
    - petercooper 15y ago
      Almost sounds inspired by crazy European Union VAT laws! American companies are technically required to register to collect EU VAT if their sales to any EU territory are over a certain amount. Thankfully, most smaller ones don't.
      - travem 15y ago
        The level above which you have to register to collect the VAT is there precisely to protect the smaller companies which make a few small sales to the EU. If you are making enough sales to be over the threshold you should be able to afford to abide by the law.
        petercooper 15y ago
        Except it's a bizarre law because those US companies are not necessarily in the EU themselves. It'd be like California demanding a business in Poland should charge local California sales taxes for any exports to that state.
- anon_lksdwex 15y ago
  You can also sign up for an account with a mail service like EarthClassMail for a small amount per month.
- Harkins 15y ago
  What do you run?
  - phirephly 15y ago
    A few small sites, but most of my Amazon earnings actually just come from one post: http://kennethfinnegan.blogspot.com/2011/06/so-you-want-to-build-electronics.html http://kennethfinnegan.blogspot.com/2011/06/so-you-want-to-b... The rest of the site pulls in about $20/mo in Adsense, which is still pretty nice, but them added together is much more interesting.
- deleted 15y ago
  [deleted]
zitterbewegung 15y ago
Hrm if all the states start to outlaw this will we see a tax haven somewhere being put up to absorb all of these retailers?
- nostromo 15y ago
  Well 5 states have no sales tax -- including Oregon and Delaware. And another 5 states already collect sales tax from Amazon -- including New York and Washington. So there's really no need to get fancy -- there are plenty of good options for places to locate your company.
  - btilly 15y ago
    And another 5 states already collect sales tax from Amazon -- including New York and Washington. http://www.amazon.com/gp/help/customer/display.html?nodeId=468512#which http://www.amazon.com/gp/help/customer/display.html?nodeId=4... verifies this. The other three are Kansas, Kentucky, and North Dakota.
    - starwed 15y ago
      Yup, I live in Kentucky and have to pay the sales tax. On the plus side, my orders often ship from the very city I live in.
- themal 15y ago
  If you look to Europe, we have a sales tax in every country and yet Amazon manages to operate an affiliate service without problem. If every state harmonised to a similar sales tax range and contributed a certain percentage of the earnings to a central pot (which is shared), then you wouldn't suffer from these problems. I know this is unpopular because people in the US tend to be strongly against tax, but it's a solution.
bennesvig 15y ago
This sucks for a lot of people who support their podcasts through Amazon's affiliate program.
dkokelley 15y ago
I wonder what authority CA claims over entities with no physical presence in the state. What I mean by that is this: if Amazon wants to ignore this, and still ships to CA residents, what recourse will the state have? If anything, wouldn't this all fall under the interstate commerce powers of the Federal government?
- smallblacksun 15y ago
  California is claiming that by having affiliates who are physically located in California , Amazon does have a physical presence in the state. If Amazon ignores it (and doesn't cancel the affiliate program in California, as they have said they will), California will sue them for unremitted taxes.
  - JustinJM 15y ago
    CA affiliates (myself included) received a termination email today. :/
    - z92 15y ago
      That should be a separate front page news.
    - Turing_Machine 15y ago
      They terminated affiliates in Illinois quite some time ago, for the same reason. I believe they've also done this in other states. I'm not sure why the California legislature thought they were going to be special in this respect.
    - leot 15y ago
      Yup, I did too. The email had a scary title and was filled with threats and dire warnings, even though nothing's likely to go down before Sep 30th.
- SoftwareMaven 15y ago
  It is likely interstate commerce, since the affiliates don't work for Amazon, but it would also likely land Amazon in court in a large court battle. That battle may eventually get to the US Supreme Court, but I don't think Amazon wants the distraction. I do wonder at what point loss of sales from affiliates will cost more than collecting taxes. Apparently, Amazon thinks it's a long way out given how readily they cut ties.
adebelov 15y ago
this is very anti-entrepreneurial. all the small business, affiliates (large and small) will now relocate to other states that are more friendly to their business. All that this is business is going to accomplish is that it will collect less tax dollars, drive jobs and businesses out of state. Thank you to big box retailers like Best Buy and Staples for driving to have this bill passed. Too bad California :(
- Steko 15y ago
  "this is very anti-entrepreneurial." This is the end result of the "pro-business" crowd pushing society's tax burden into regressive taxes like sales. Sooner or later those taxes have to go where the money is. "all the small business, affiliates (large and small) will now relocate to other states that are more friendly to their business." No, all of them won't. Many have physical locations in their state which they earn more from then they do from Amazon. "Too bad California :(" Maybe you missed it but it's also too bad for Amazon. Affiliates add value, 40% of their sales. Now some will relocate and some will fold but the majority will keep selling their stuff and trying to chip customers away from Amazon.
  - swaits 15y ago
    Businesses are leaving CA in droves. Amazon affiliate programs in business friendly states will prosper. Sacramento is killing this place.
  - protomyth 15y ago
    No, this is the end result of a government spending more money than its citizens are willing to pay for. California needs to seriously get its spending under control including the unfunded liabilities (e.g. public employee pensions). Of course they will threaten to cut fire and police to force the issue, when they have plenty of other budget expenses that can be cut first. Using fear to keep their donors in cash seems to be the current state tactic. At some point, states needs to their expense, assign use tax (e.g. gas tax) to repair the infrastructure it is fixing and increase those taxes if they don't cover the infrastructure (or quit raiding them if they have a surplus). PS: Depending on what the sales tax is actually taxing - it is not that bad on the poor. Going with that, "progressive" taxes aren't fair either. PPS: I still want to know why sales tax doesn't apply from the state the item is being sold from.
deleted 15y ago
[deleted]
justinsb 15y ago
Does anyone know why Amazon doesn't already have to charge sales tax, by virtue of their California offices (e.g IMDB, A9 & Alexa)?
- biot 15y ago
  If they're separate legal entities, they are responsible for collecting their own sales tax on what they sell in California.
- e40 15y ago
  Because those offices aren't involved in direct sales of products from amazon.com.
- xxpor 15y ago
  And Lab126
- brown9-2 15y ago
  IIRC Amazon has a pretty complicated legal structure where each of those companies - IMDB, A9, etc - are wholly owned subsidiaries of Amazon (or some other legal entity) and not considered the same entity as Amazon.com.
- tungwaiyip 15y ago
  And A2Z, Zappos, the Kindle group. Search the job board and you will find those Amazon subsidiary job come up often. The are enjoying huge tax advantage over other retailers. You can be sure they will make every legal maneuver to work around this.
blahblahblah 15y ago
Frankly, I wish Amazon would just give up the fight and go ahead and charge sales tax for all 50 states. They're the only retailer that I do any business with that doesn't charge sales tax and, because it's a PITA to remember to save every single receipt from them for tax purposes I don't do so and, therefore, I end up paying stupid use taxes which probably end up costing me more than what it would've cost me if Amazon had just collected the sales tax in the first place.
- kin 15y ago
  How do you end up paying more in taxes? A majority of my spending this year was made on Amazon and in my tax return I didn't enter a single one of those purchases as "Out of State Untaxed Purchase" so I didn't get taxed, which I think was illegal but apparently I'm not the only one who neglects to do this. In any case, all Amazon receipts can be viewed in your account history.
  - blahblahblah 15y ago
    How do I end up paying more in taxes? Because I'm aware that I undoubtedly bought something from Amazon in the past fiscal year and, therefore, in compliance with my state's laws, I check "yes" in the box and pay the flat fee for use tax. That flat fee is set at a level that reflects what the state thinks an average taxpayer owes for their "out of state untaxed" purchases, but the "average" taxpayer in their model buys more stuff than what I would ever actually buy and, thus, they charge me more in use taxes than what it would have cost me if I had just been charged sales tax in the first place. I guess it just plain never occurred to me to look up my account history and compute an exact value instead.
    - cschmidt 15y ago
      That's what I do. Being the overly honest person that I am, I go through and total up all my Amazon purchases for the year. They should really have a way to compute the total automatically. It always takes me a while to do it by hand. But at least that way, you're paying the right amount.
e40 15y ago
Can someone explain the redevelopment issue?
- gcb 15y ago
  apparently the state allowed you to spend property taxes owned into building renewal if the building area qualified.
consultutah 15y ago
I'd be interested in buying anyone's amazon affiliate store. If you are interested, contact me privately.
newchimedes 15y ago
Why does legislation have to be some confusing. So I get that certain parts of the law have been signed, but what about the affiliate tax? Is that now the law. The article says "Brown announced signing eight separate pieces of that package Wednesday, though not the main spending plan itself. The online sales tax law, AB 28 1x, would seek to force online retailers who have no physical presence in California, such as Amazon.com, to collect the same levies as bricks-and-mortar stores." The use of "would seek to force" seems to suggest this part hasn't passed yet. So the real question is did it pass or not?
gojomo 15y ago
The battle over similar issues in Texas has also been fun: • Amazon has a distribution center in Irving, Texas but argued its clever legal structure freed it from having to pay sales taxes. • The Republican Comptroller Susan Combs insisted on payment of a past tax bill, based on these operations. • Amazon said it'd thus need to close the facility, and Republican Governor Rick Perry announced his opposition to the Comptroller's decision. • The Republican-dominated legislature then passed a bill, similar to this California bill, further establishing Amazon's sales tax obligations, for not just the distribution center but the affiliates. • Perry vetoed it. • Amazon's hometown newspaper, the Seattle Times, then editorialized that it should stop dodging state sales taxes nationwide. • The Texas legislature started working on a veto-proof way to obligate Amazon, perhaps by attaching the obligation to a larger budget bill. • Amazon offered the legislature a bigger new distribution center, with 5000 (and then 6000) new jobs, in return for a full legislative exemption from sales taxes for the next few years. The part-time legislature, which usually only meets every other year and (with no state income tax) takes sales taxes very seriously, has so far declined Amazon's offers. Some of the coverage: http://www.techflash.com/seattle/2011/02/texas-governor-backs-amazon-seattle.html http://www.techflash.com/seattle/2011/02/texas-governor-back... http://www.statesman.com/news/texas-politics/amazon-sweetens-job-offer-texas-lawmakers-dont-bite-1558831.html http://www.statesman.com/news/texas-politics/amazon-sweetens...
- impendia 15y ago
  Good for Texas. Elsewhere on HN, I've read Amazon's claim that they would be happy to pay sales taxes, but that dealing with all the local taxing authorities would be a nightmare. If this is true, it makes me quite sympathetic to their position. But if I understood you right, it looks like Amazon outright attempted to bribe the legislature for special treatment which other retailers in the state don't get. I realize this kind of shit happens all the time, but that doesn't make it right. And the Texas legislature refused to play ball. If I lived in Texas I would be standing in line to re-elect these people.
  - unshift 15y ago
    why? i'd rather keep the money than give it to the state. why vote for people who want to tax you more? i realize it's nice to believe in integrity but i don't think this is an example of it
RandyHelzerman 15y ago
Stop whining already. Whatever burdens these new taxes impose they are imposed on both you and your competition. Moreover, don't forget that in CA the sales tax is actually dropping by a percentage point, so your expenses are lower as well. In addition, there is a huge advantage of having an on-time and balanced budget. This fiscal responsibility creates a business climate in which we all can have some modicum of confidence that our state isn't being run by lunatics. I can't see how any of this is a bad thing whatsoever.
deleted 15y ago
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FilterJoe 15y ago
Here is the law, marked up: http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_28_bill_20110615_amended_sen_v97.html http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_2... I read parts of this and noticed the following exception for small retailers (<$10,000 annually), which may or may not be applicable to Amazon Affiliates (could be interpreted either way, because "retailer" includes "an entity affiliated with a retailer within the meaning of Section 1504 of the Internal Revenue Code."): "This bill would include in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by an Internet-based link or an Internet Web site, or otherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 within the preceding 12 months, and provided further that the retailer has cumulative sales of tangible personal property to purchasers in this state of over $500,000, within the preceding 12 months, except as specified. This bill would also provide that a retailer entering into specified agreements to purchase advertising is not a retailer engaged in business in this state and would define a retailer to include an entity affiliated with a retailer under federal income tax law, as specified. This bill would further provide that these provisions would not apply if the retailer can demonstrate that the referrals wold not satisfy specified United States constitutional requirements,as provided."
ajays 15y ago
Amazon has it's search engine A9 based in Palo Alto, CA. Amazon refers to A9 as "our search engine" in its own documentation: http://www.amazon.com/gp/xs/sharethepi.html http://www.amazon.com/gp/xs/sharethepi.html How can it then claim that it has no offices in California?
- ardit33 15y ago
  it is a subsidiary. Ie. Amazon pays A9 for the technology, but A9 is a separate legal entity. I worked developing for the Kindle, which is designed/engineering in Cupertino, by a company called Lab126, which is a subsidiary of Amazon. (basically Amazon pays Lab126 for technology transfer on the books, but really, internally amazon controls everything). The Parent company/legal entity of the CA subsidiaries is called A2Z. We were instructed not to travel around, we couldn't attract recruits by saying we were working for Amazon, etc. etc. But internally Amazon was controlling pretty much everything.
DanLivesHere 15y ago
Amazon's doing the right thing here. California has no way of charging them sales tax, nor should they, without a nexus. Imagine if you, living in CA, ordered something from a brick-and-mortar store in New York. If that store had to charge you sales tax and remit it to California, they'd simply say "no thanks" to your business. It's just not worth it for them to have to do all that work so you can get a $10 item (and so California can get their 82.5 cents). Amazon shouldn't be treated any differently simply because they do a lot of business in the state. California knows this, so they come up with (well, Illinois came up with it) the idea that if some third party runs ads on their website for products on Amazon, that third party (an "affiliate") is actually an agent of Amazon. That's preposterous. Amazon doesn't really have a choice, though. If they sue and lose, the entire affiliate program goes away. So they instead just drop the affiliates. They have to -- they're paying affiliates 6% of all qualified sales and paying the state 8.25%. And they are then open to audits and other nonsense from the state. It's just not worth the leads any more.
- leot 15y ago
  You can't be serious. It's not really the affiliates that make the difference here -- it's all of Amazon's operations in CA. We're all futurists here except when that means losing affiliate revenue and/or no longer having a tax dodge. It's just a matter of time before there's uniformity between the online and brick and mortar worlds, and Amazon is simply seeking delay. Per Sinclair "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
  - gergles 15y ago
    What operations in CA? (Almost) Everything I purchase from Amazon comes from Nevada. And no, Lab126/A9/their other affiliates don't count, as they are not the company selling you the product.
    - leot 15y ago
      No, you're right, they're the shell companies designed to avoid asking customers to pay CA sales tax. Virtual presence is fun until it means you have to start competing on a level playing field. The affiliate program might be the strongest legal argument for in-state presence, but it's far from the only one. Apart from the subsidiaries, there's also the more than $3 billion they get from CA residents. I think everyone here should have to disclose competing interests on this topic: full disclosure: I work for a company (part time) that makes most of its money from Amazon affiliate revenue (but I personally am not taking Amazon's threats very seriously).
meow 15y ago
I'm curious, how is Amazon selling things online different from software companies offering software and services online ? Does this law pave way in future to tax these kind of services too ? Or is it that software companies already pay a sales tax for Software...
sabat 15y ago
That's pretty much the end of all affiliate programs for people in CA, no?
eftpotrm 15y ago
The core problem, from an outsiders' perspective, appears to be jurisdictional fragmentation. Amazon, not unreasonably, want to be able to regard the USA as a single market, yet this gives them 50 different sets of legislation and 50 tax codes under which to operate. However politically unpopular this idea might be (it's certainly not popular in Britain with the EU, which itself started as a common market and legislation / regulation area) the most business friendly idea seems to be centralisation. Remove competency for this sort of issue from the individual states, create common legal frameworks, allow a one-size-fits-all management model rather than having to individually cater for the requirements of Wyoming, Vermont, Alaska, North and South Dakota, Delaware and Montana. Seven jurisdictions, seven legal codes, seven sets of tax law. Yet only one has enough population that it would even qualify for the top ten cities by population and even combined they would only be twenty-second in population ranking. They're not major markets and a legal framework designed like this is unduly expensive.
- Symmetry 15y ago
  Way more than 50 different tax codes (Amazon could probably deal with that), many counties and municipalities have their own laws regarding sales tax too.
  - camiller 15y ago
    On top of that how would Amazon identify if I live inside Omaha 7% (state+local) sales tax, or just outside Omaha 5.5% (state only) sales tax? Nothing changed about my address between when I lived in an un-annexed suburb and after I was annexed.
AAABBB 15y ago
It's amazing how 90% of the people here are so incredibly ignorant that they don't know that states don't have jurisdiction over the activities of their residents and non residents in other states. This community is not very smart.

144 points by cmod 15y ago

Damn. There goes my $300-$400 a month passive income... And I already report my use-tax to begin with. Guess it's time to start calling up friends out-of-state for their mailing address.

coin 15y ago
And CA won't be collecting income tax on your $300-400 per month (since Amazon has canceled affiliates in CA), so their tax income is actually less.
- phirephly 15y ago
  And if I have to start filing tax returns with every state and county my small business happens to do business with (~$1000 / year business), I'll probably shut that down entirely for not being worth the bother as well.
  - petercooper 15y ago
    Almost sounds inspired by crazy European Union VAT laws! American companies are technically required to register to collect EU VAT if their sales to any EU territory are over a certain amount. Thankfully, most smaller ones don't.
    - travem 15y ago
      The level above which you have to register to collect the VAT is there precisely to protect the smaller companies which make a few small sales to the EU. If you are making enough sales to be over the threshold you should be able to afford to abide by the law.
      - petercooper 15y ago
        Except it's a bizarre law because those US companies are not necessarily in the EU themselves. It'd be like California demanding a business in Poland should charge local California sales taxes for any exports to that state.
anon_lksdwex 15y ago
You can also sign up for an account with a mail service like EarthClassMail for a small amount per month.
Harkins 15y ago
What do you run?
- phirephly 15y ago
  A few small sites, but most of my Amazon earnings actually just come from one post: http://kennethfinnegan.blogspot.com/2011/06/so-you-want-to-build-electronics.html http://kennethfinnegan.blogspot.com/2011/06/so-you-want-to-b... The rest of the site pulls in about $20/mo in Adsense, which is still pretty nice, but them added together is much more interesting.
deleted 15y ago
[deleted]

zitterbewegung 15y ago

Hrm if all the states start to outlaw this will we see a tax haven somewhere being put up to absorb all of these retailers?

nostromo 15y ago
Well 5 states have no sales tax -- including Oregon and Delaware. And another 5 states already collect sales tax from Amazon -- including New York and Washington. So there's really no need to get fancy -- there are plenty of good options for places to locate your company.
- btilly 15y ago
  And another 5 states already collect sales tax from Amazon -- including New York and Washington. http://www.amazon.com/gp/help/customer/display.html?nodeId=468512#which http://www.amazon.com/gp/help/customer/display.html?nodeId=4... verifies this. The other three are Kansas, Kentucky, and North Dakota.
  - starwed 15y ago
    Yup, I live in Kentucky and have to pay the sales tax. On the plus side, my orders often ship from the very city I live in.
themal 15y ago
If you look to Europe, we have a sales tax in every country and yet Amazon manages to operate an affiliate service without problem. If every state harmonised to a similar sales tax range and contributed a certain percentage of the earnings to a central pot (which is shared), then you wouldn't suffer from these problems. I know this is unpopular because people in the US tend to be strongly against tax, but it's a solution.

bennesvig 15y ago

This sucks for a lot of people who support their podcasts through Amazon's affiliate program.

dkokelley 15y ago

I wonder what authority CA claims over entities with no physical presence in the state. What I mean by that is this: if Amazon wants to ignore this, and still ships to CA residents, what recourse will the state have? If anything, wouldn't this all fall under the interstate commerce powers of the Federal government?

smallblacksun 15y ago
California is claiming that by having affiliates who are physically located in California , Amazon does have a physical presence in the state. If Amazon ignores it (and doesn't cancel the affiliate program in California, as they have said they will), California will sue them for unremitted taxes.
- JustinJM 15y ago
  CA affiliates (myself included) received a termination email today. :/
  - z92 15y ago
    That should be a separate front page news.
  - Turing_Machine 15y ago
    They terminated affiliates in Illinois quite some time ago, for the same reason. I believe they've also done this in other states. I'm not sure why the California legislature thought they were going to be special in this respect.
  - leot 15y ago
    Yup, I did too. The email had a scary title and was filled with threats and dire warnings, even though nothing's likely to go down before Sep 30th.
SoftwareMaven 15y ago
It is likely interstate commerce, since the affiliates don't work for Amazon, but it would also likely land Amazon in court in a large court battle. That battle may eventually get to the US Supreme Court, but I don't think Amazon wants the distraction. I do wonder at what point loss of sales from affiliates will cost more than collecting taxes. Apparently, Amazon thinks it's a long way out given how readily they cut ties.

adebelov 15y ago

this is very anti-entrepreneurial. all the small business, affiliates (large and small) will now relocate to other states that are more friendly to their business. All that this is business is going to accomplish is that it will collect less tax dollars, drive jobs and businesses out of state. Thank you to big box retailers like Best Buy and Staples for driving to have this bill passed. Too bad California :(

Steko 15y ago
"this is very anti-entrepreneurial." This is the end result of the "pro-business" crowd pushing society's tax burden into regressive taxes like sales. Sooner or later those taxes have to go where the money is. "all the small business, affiliates (large and small) will now relocate to other states that are more friendly to their business." No, all of them won't. Many have physical locations in their state which they earn more from then they do from Amazon. "Too bad California :(" Maybe you missed it but it's also too bad for Amazon. Affiliates add value, 40% of their sales. Now some will relocate and some will fold but the majority will keep selling their stuff and trying to chip customers away from Amazon.
- swaits 15y ago
  Businesses are leaving CA in droves. Amazon affiliate programs in business friendly states will prosper. Sacramento is killing this place.
- protomyth 15y ago
  No, this is the end result of a government spending more money than its citizens are willing to pay for. California needs to seriously get its spending under control including the unfunded liabilities (e.g. public employee pensions). Of course they will threaten to cut fire and police to force the issue, when they have plenty of other budget expenses that can be cut first. Using fear to keep their donors in cash seems to be the current state tactic. At some point, states needs to their expense, assign use tax (e.g. gas tax) to repair the infrastructure it is fixing and increase those taxes if they don't cover the infrastructure (or quit raiding them if they have a surplus). PS: Depending on what the sales tax is actually taxing - it is not that bad on the poor. Going with that, "progressive" taxes aren't fair either. PPS: I still want to know why sales tax doesn't apply from the state the item is being sold from.

deleted 15y ago

[deleted]

justinsb 15y ago

Does anyone know why Amazon doesn't already have to charge sales tax, by virtue of their California offices (e.g IMDB, A9 & Alexa)?

biot 15y ago
If they're separate legal entities, they are responsible for collecting their own sales tax on what they sell in California.
e40 15y ago
Because those offices aren't involved in direct sales of products from amazon.com.
xxpor 15y ago
And Lab126
brown9-2 15y ago
IIRC Amazon has a pretty complicated legal structure where each of those companies - IMDB, A9, etc - are wholly owned subsidiaries of Amazon (or some other legal entity) and not considered the same entity as Amazon.com.
tungwaiyip 15y ago
And A2Z, Zappos, the Kindle group. Search the job board and you will find those Amazon subsidiary job come up often. The are enjoying huge tax advantage over other retailers. You can be sure they will make every legal maneuver to work around this.

blahblahblah 15y ago

Frankly, I wish Amazon would just give up the fight and go ahead and charge sales tax for all 50 states. They're the only retailer that I do any business with that doesn't charge sales tax and, because it's a PITA to remember to save every single receipt from them for tax purposes I don't do so and, therefore, I end up paying stupid use taxes which probably end up costing me more than what it would've cost me if Amazon had just collected the sales tax in the first place.

kin 15y ago
How do you end up paying more in taxes? A majority of my spending this year was made on Amazon and in my tax return I didn't enter a single one of those purchases as "Out of State Untaxed Purchase" so I didn't get taxed, which I think was illegal but apparently I'm not the only one who neglects to do this. In any case, all Amazon receipts can be viewed in your account history.
- blahblahblah 15y ago
  How do I end up paying more in taxes? Because I'm aware that I undoubtedly bought something from Amazon in the past fiscal year and, therefore, in compliance with my state's laws, I check "yes" in the box and pay the flat fee for use tax. That flat fee is set at a level that reflects what the state thinks an average taxpayer owes for their "out of state untaxed" purchases, but the "average" taxpayer in their model buys more stuff than what I would ever actually buy and, thus, they charge me more in use taxes than what it would have cost me if I had just been charged sales tax in the first place. I guess it just plain never occurred to me to look up my account history and compute an exact value instead.
  - cschmidt 15y ago
    That's what I do. Being the overly honest person that I am, I go through and total up all my Amazon purchases for the year. They should really have a way to compute the total automatically. It always takes me a while to do it by hand. But at least that way, you're paying the right amount.

e40 15y ago

Can someone explain the redevelopment issue?

gcb 15y ago
apparently the state allowed you to spend property taxes owned into building renewal if the building area qualified.

consultutah 15y ago

I'd be interested in buying anyone's amazon affiliate store. If you are interested, contact me privately.

newchimedes 15y ago

Why does legislation have to be some confusing. So I get that certain parts of the law have been signed, but what about the affiliate tax? Is that now the law. The article says "Brown announced signing eight separate pieces of that package Wednesday, though not the main spending plan itself. The online sales tax law, AB 28 1x, would seek to force online retailers who have no physical presence in California, such as Amazon.com, to collect the same levies as bricks-and-mortar stores." The use of "would seek to force" seems to suggest this part hasn't passed yet. So the real question is did it pass or not?

gojomo 15y ago

The battle over similar issues in Texas has also been fun: • Amazon has a distribution center in Irving, Texas but argued its clever legal structure freed it from having to pay sales taxes. • The Republican Comptroller Susan Combs insisted on payment of a past tax bill, based on these operations. • Amazon said it'd thus need to close the facility, and Republican Governor Rick Perry announced his opposition to the Comptroller's decision. • The Republican-dominated legislature then passed a bill, similar to this California bill, further establishing Amazon's sales tax obligations, for not just the distribution center but the affiliates. • Perry vetoed it. • Amazon's hometown newspaper, the Seattle Times, then editorialized that it should stop dodging state sales taxes nationwide. • The Texas legislature started working on a veto-proof way to obligate Amazon, perhaps by attaching the obligation to a larger budget bill. • Amazon offered the legislature a bigger new distribution center, with 5000 (and then 6000) new jobs, in return for a full legislative exemption from sales taxes for the next few years. The part-time legislature, which usually only meets every other year and (with no state income tax) takes sales taxes very seriously, has so far declined Amazon's offers. Some of the coverage: http://www.techflash.com/seattle/2011/02/texas-governor-backs-amazon-seattle.html http://www.techflash.com/seattle/2011/02/texas-governor-back... http://www.statesman.com/news/texas-politics/amazon-sweetens-job-offer-texas-lawmakers-dont-bite-1558831.html http://www.statesman.com/news/texas-politics/amazon-sweetens...

impendia 15y ago
Good for Texas. Elsewhere on HN, I've read Amazon's claim that they would be happy to pay sales taxes, but that dealing with all the local taxing authorities would be a nightmare. If this is true, it makes me quite sympathetic to their position. But if I understood you right, it looks like Amazon outright attempted to bribe the legislature for special treatment which other retailers in the state don't get. I realize this kind of shit happens all the time, but that doesn't make it right. And the Texas legislature refused to play ball. If I lived in Texas I would be standing in line to re-elect these people.
- unshift 15y ago
  why? i'd rather keep the money than give it to the state. why vote for people who want to tax you more? i realize it's nice to believe in integrity but i don't think this is an example of it

RandyHelzerman 15y ago

Stop whining already. Whatever burdens these new taxes impose they are imposed on both you and your competition. Moreover, don't forget that in CA the sales tax is actually dropping by a percentage point, so your expenses are lower as well. In addition, there is a huge advantage of having an on-time and balanced budget. This fiscal responsibility creates a business climate in which we all can have some modicum of confidence that our state isn't being run by lunatics. I can't see how any of this is a bad thing whatsoever.

deleted 15y ago

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FilterJoe 15y ago

Here is the law, marked up: http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_28_bill_20110615_amended_sen_v97.html http://leginfo.ca.gov/pub/11-12/bill/asm/ab_0001-0050/abx1_2... I read parts of this and noticed the following exception for small retailers (<$10,000 annually), which may or may not be applicable to Amazon Affiliates (could be interpreted either way, because "retailer" includes "an entity affiliated with a retailer within the meaning of Section 1504 of the Internal Revenue Code."): "This bill would include in the definition of a retailer engaged in business in this state any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers, whether by an Internet-based link or an Internet Web site, or otherwise, to the retailer, provided the total cumulative sales price from all sales by the retailer to purchasers in this state that are referred pursuant to these agreements is in excess of $10,000 within the preceding 12 months, and provided further that the retailer has cumulative sales of tangible personal property to purchasers in this state of over $500,000, within the preceding 12 months, except as specified. This bill would also provide that a retailer entering into specified agreements to purchase advertising is not a retailer engaged in business in this state and would define a retailer to include an entity affiliated with a retailer under federal income tax law, as specified. This bill would further provide that these provisions would not apply if the retailer can demonstrate that the referrals wold not satisfy specified United States constitutional requirements,as provided."

ajays 15y ago

Amazon has it's search engine A9 based in Palo Alto, CA. Amazon refers to A9 as "our search engine" in its own documentation: http://www.amazon.com/gp/xs/sharethepi.html http://www.amazon.com/gp/xs/sharethepi.html How can it then claim that it has no offices in California?

ardit33 15y ago
it is a subsidiary. Ie. Amazon pays A9 for the technology, but A9 is a separate legal entity. I worked developing for the Kindle, which is designed/engineering in Cupertino, by a company called Lab126, which is a subsidiary of Amazon. (basically Amazon pays Lab126 for technology transfer on the books, but really, internally amazon controls everything). The Parent company/legal entity of the CA subsidiaries is called A2Z. We were instructed not to travel around, we couldn't attract recruits by saying we were working for Amazon, etc. etc. But internally Amazon was controlling pretty much everything.

DanLivesHere 15y ago

Amazon's doing the right thing here. California has no way of charging them sales tax, nor should they, without a nexus. Imagine if you, living in CA, ordered something from a brick-and-mortar store in New York. If that store had to charge you sales tax and remit it to California, they'd simply say "no thanks" to your business. It's just not worth it for them to have to do all that work so you can get a $10 item (and so California can get their 82.5 cents). Amazon shouldn't be treated any differently simply because they do a lot of business in the state. California knows this, so they come up with (well, Illinois came up with it) the idea that if some third party runs ads on their website for products on Amazon, that third party (an "affiliate") is actually an agent of Amazon. That's preposterous. Amazon doesn't really have a choice, though. If they sue and lose, the entire affiliate program goes away. So they instead just drop the affiliates. They have to -- they're paying affiliates 6% of all qualified sales and paying the state 8.25%. And they are then open to audits and other nonsense from the state. It's just not worth the leads any more.

leot 15y ago
You can't be serious. It's not really the affiliates that make the difference here -- it's all of Amazon's operations in CA. We're all futurists here except when that means losing affiliate revenue and/or no longer having a tax dodge. It's just a matter of time before there's uniformity between the online and brick and mortar worlds, and Amazon is simply seeking delay. Per Sinclair "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
- gergles 15y ago
  What operations in CA? (Almost) Everything I purchase from Amazon comes from Nevada. And no, Lab126/A9/their other affiliates don't count, as they are not the company selling you the product.
  - leot 15y ago
    No, you're right, they're the shell companies designed to avoid asking customers to pay CA sales tax. Virtual presence is fun until it means you have to start competing on a level playing field. The affiliate program might be the strongest legal argument for in-state presence, but it's far from the only one. Apart from the subsidiaries, there's also the more than $3 billion they get from CA residents. I think everyone here should have to disclose competing interests on this topic: full disclosure: I work for a company (part time) that makes most of its money from Amazon affiliate revenue (but I personally am not taking Amazon's threats very seriously).

meow 15y ago

I'm curious, how is Amazon selling things online different from software companies offering software and services online ? Does this law pave way in future to tax these kind of services too ? Or is it that software companies already pay a sales tax for Software...

sabat 15y ago

That's pretty much the end of all affiliate programs for people in CA, no?

eftpotrm 15y ago

The core problem, from an outsiders' perspective, appears to be jurisdictional fragmentation. Amazon, not unreasonably, want to be able to regard the USA as a single market, yet this gives them 50 different sets of legislation and 50 tax codes under which to operate. However politically unpopular this idea might be (it's certainly not popular in Britain with the EU, which itself started as a common market and legislation / regulation area) the most business friendly idea seems to be centralisation. Remove competency for this sort of issue from the individual states, create common legal frameworks, allow a one-size-fits-all management model rather than having to individually cater for the requirements of Wyoming, Vermont, Alaska, North and South Dakota, Delaware and Montana. Seven jurisdictions, seven legal codes, seven sets of tax law. Yet only one has enough population that it would even qualify for the top ten cities by population and even combined they would only be twenty-second in population ranking. They're not major markets and a legal framework designed like this is unduly expensive.

Symmetry 15y ago
Way more than 50 different tax codes (Amazon could probably deal with that), many counties and municipalities have their own laws regarding sales tax too.
- camiller 15y ago
  On top of that how would Amazon identify if I live inside Omaha 7% (state+local) sales tax, or just outside Omaha 5.5% (state only) sales tax? Nothing changed about my address between when I lived in an un-annexed suburb and after I was annexed.

AAABBB 15y ago

It's amazing how 90% of the people here are so incredibly ignorant that they don't know that states don't have jurisdiction over the activities of their residents and non residents in other states. This community is not very smart.