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Amazon Takes Sales Tax War to California

29 points by aarghh 15y ago

babl 15y ago
With 2 day shipping through the prime service, they pretty much emulate a local retailer. The prices are awesome but I can see how their tax advantages give them an unfair advantage on local competition.
- X-Istence 15y ago
  Because the user that is receiving the item is tax dodging Amazon should be punished?
  - awa 15y ago
    Not punished, just asked that they collect sales tax instead of relying on customers to pay use tax.
    - NoPiece 15y ago
      Look at this not in terms of a big company like Amazon, but a start up or mom and pop web retailer which would be required to collect and distribute taxes to 50 different states. What a nightmare. The "no physical presence" exemption makes sense, and is very important.
      - babl 15y ago
        True, but Amazon probably makes close to a billion in annual revenue in CA, I feel like that must account for some kind of taxable "presence."
      - dangrossman 15y ago
        50 different states and at least several thousand distinct regions (counties, cities, townships, etc) with different sales tax rates and different taxable item classifications. You can't even tell which one a customer lives in by their address.
        awa 15y ago
        uhmm.. so you mean to say Walmart.com have people who can handle problem this but Amazon cannot!? To me, the implicit 10% discount to customer seems like major incentive for Amazon to not to do this rather than the technical difficulty of the issue. I understand a startup having difficulty spending resources doing this, but not many startups have affiliates, Also, we should be worried that Amazon will cause states to make laws which will ultimately harm startups.
      - aphexairlines 15y ago
        This is why Amazon's management has stated several times that they would prefer a national sales tax than dealing with this mess.
      - r00fus 15y ago
        Amazon ran Target.com's web store... They know well how to solve this problem because they already did it! Complexity is a flimsy excuse for a giant like Amazon.
  - babl 15y ago
    I wasn't aware anyone actually declared their Amazon purchases at tax time.
    - deleted 15y ago
      [deleted]
      - Anechoic 15y ago
        I do. Seriously.
      - dangrossman 15y ago
        I do. Amazon purchases are usually all I end up reporting, too -- not many other sites I buy things from that aren't the sites of brick-and-mortar stores (which collect the sales tax). Especially if you are self-employed or own a business, the chances of NOT being audited eventually while never reporting any use taxes are not good.
    - dprice1 15y ago
      I do as well. I sum up my online purchases from Amazon, add my wife's in, and pay the money. It goes to funding the things I use: Roads, firefighters, the library, the park next to my house. Heck, there was a fire two weeks ago in the apartment building next to where I live-- we sure as hell appreciated the firemen who came at 4:00am to prevent a catastrophe. The argument above about how it's impossible/expensive/complicated/etc. to collect sales tax seems exceedingly bogus to me especially given the nature of HN: Sounds like a business problem to be solved, not some byzantine task. Someone should go make an online sales-tax-computing web service and be done with it. Oh wait, someone did: http://salestaxwebservice.com/ http://salestaxwebservice.com/, http://www.avalara.com/products/avatax/calc http://www.avalara.com/products/avatax/calc, et cetera.
ajkessler 15y ago
I found this quote hilarious: “I don’t think we want to send the message that companies can fund a political campaign for a referendum and maybe your customers won’t be subject to sales tax.” Because it's not like some companies funded political campaigns to get this measure passed in the first place. (http://online.wsj.com/article/SB10001424052748704396504576204791377862836.html http://online.wsj.com/article/SB1000142405274870439650457620...) Heaven forbid another big company ask what the citizenry thinks...
blahedo 15y ago
It's really patently unfair for purchases from Amazon.com not to require sales taxes while purchases from BarnesAndNoble.com do require sales taxes. That's what this all boils down to. Amazon is not, on some level, competing directly with your local friendly indy bookshop (if you still have one), and that's not the right direction to look for a comparison... but they are competing with other online booksellers, who have to pay sales tax on their online book sales if and only if they also have a bricks-and-mortar business. That's dumb.
- kevinskii 15y ago
  Sales taxes fund local infrastructure. Why should Amazon have to pay for a fire department that it will never possibly need? In regards to the "fairness" question, put it a different way: It's unfair that brick and mortar companies can offer their customers immediate gratification and the ability to physically inspect items before buying. Amazon can do neither.
  - Anechoic 15y ago
    Why should Amazon have to pay for a fire department that it will never possibly need? It's certainly in Amazon's interest that their customers have access to those local FD's. Even if one doesn't agree with the FD example, those sales taxes also pay for local roads and surely Amazon makes use of those. (Lest I be accused of being a hypocrite, I do pay the local sales tax for internet purchases via the Massachusetts 'safe harbor' provision for small purchases and itemized listings of my larger purchases with my state tax filings)
    - yummyfajitas 15y ago
      Amazon doesn't use local roads. Fedex, UPS, etc do. Those companies all have a local presence and (presumably) pay their taxes to the state in which they operate. The taxes are then passed on to Amazon or the consumer in the form of higher prices on shipping. As for local fire departments, I use Pivotal Tracker. Should Pivotal Labs be forced to pay Maharashtra taxes since it's in their best interest that my company not burn down?
earl 15y ago
What's even more annoying is amazon damn well does have a large physical presence in CA: a2z: http://a2z.com/ http://a2z.com/ : SF, OC, and San Luis Obispo; A9: near caltrain, and from their page, "As A9 is a wholly owned and operated subsidiary of Amazon.com, we have the strength that comes from being part of a Fortune 500 company, and the flexibility and energy of a Silicon Valley start-up." I'm ambivalent about the exception to collecting taxes for companies without an instate presence, but this is pure bullshit. Amazon operates multiple companies with hundreds of employees in CA. Just like other companies that take advantage of what CA has to offer, they should be forced to pay the tax man.
- dangrossman 15y ago
  It's not as if Amazon is arguing that if the subsidiaries sell products in California they wouldn't be subject to sales tax. If you (earl) bought stock in a company in another state, does that give you a physical presence there and make whatever you sell subject to their sales tax? That company you are a partial (or full) owner of already pays sales tax in its state.
  - aphexairlines 15y ago
    a2z makes the Amazon Appstore and Android MP3 player. So who gets taxed on those digital purchases?
    - dangrossman 15y ago
      Appstore apps are sold by Amazon Digital Services Inc. They also sell all the downloadable games and such on Amazon.com. I don't know what state that company is in, but that'd be the state that gets taxed.
- burgerbrain 15y ago
  None of those companies are the companies that are selling you things when you buy stuff off of Amazon.com. If that company actually had a presence in CA (as it does in for example WA) you would pay sales tax in CA (as you do in WA). This is exceedingly cut and dry. I don't understand why people have a hard time groking it. Even the Californian government gets it. That's why they have to go out of their way to drag Amazon Associates into the mess.
originalgeek 15y ago
You guys are really missing the point. This isn't about Amazon, it's about affiliate marketers. You know, these guys who run websites and for a fee, provide a link to a merchant website to generate a sale. When the Franchise Tax Board finally figures out that California is no different than New York, North Carolina, Rhode Island, etc. and discover there is no net gain in revenue as a result of this law, they will set their sites on the one large California company in the "provide links to make sales for a fee" business, Google. Suddenly every company across the nation buying keywords from Google will have a nexus established in California simply by the keyword buys. So if you are not in California, and you like doing some keyword buys to enhance your business on your website, get ready to bend over and pay sales and use tax to California. Because that is what is going to change the pattern of miserable failures this law has been in other states.

29 points by aarghh 15y ago

babl 15y ago

With 2 day shipping through the prime service, they pretty much emulate a local retailer. The prices are awesome but I can see how their tax advantages give them an unfair advantage on local competition.

X-Istence 15y ago
Because the user that is receiving the item is tax dodging Amazon should be punished?
- awa 15y ago
  Not punished, just asked that they collect sales tax instead of relying on customers to pay use tax.
  - NoPiece 15y ago
    Look at this not in terms of a big company like Amazon, but a start up or mom and pop web retailer which would be required to collect and distribute taxes to 50 different states. What a nightmare. The "no physical presence" exemption makes sense, and is very important.
    - babl 15y ago
      True, but Amazon probably makes close to a billion in annual revenue in CA, I feel like that must account for some kind of taxable "presence."
    - dangrossman 15y ago
      50 different states and at least several thousand distinct regions (counties, cities, townships, etc) with different sales tax rates and different taxable item classifications. You can't even tell which one a customer lives in by their address.
      - awa 15y ago
        uhmm.. so you mean to say Walmart.com have people who can handle problem this but Amazon cannot!? To me, the implicit 10% discount to customer seems like major incentive for Amazon to not to do this rather than the technical difficulty of the issue. I understand a startup having difficulty spending resources doing this, but not many startups have affiliates, Also, we should be worried that Amazon will cause states to make laws which will ultimately harm startups.
    - aphexairlines 15y ago
      This is why Amazon's management has stated several times that they would prefer a national sales tax than dealing with this mess.
    - r00fus 15y ago
      Amazon ran Target.com's web store... They know well how to solve this problem because they already did it! Complexity is a flimsy excuse for a giant like Amazon.
- babl 15y ago
  I wasn't aware anyone actually declared their Amazon purchases at tax time.
  - deleted 15y ago
    [deleted]
    - Anechoic 15y ago
      I do. Seriously.
    - dangrossman 15y ago
      I do. Amazon purchases are usually all I end up reporting, too -- not many other sites I buy things from that aren't the sites of brick-and-mortar stores (which collect the sales tax). Especially if you are self-employed or own a business, the chances of NOT being audited eventually while never reporting any use taxes are not good.
  - dprice1 15y ago
    I do as well. I sum up my online purchases from Amazon, add my wife's in, and pay the money. It goes to funding the things I use: Roads, firefighters, the library, the park next to my house. Heck, there was a fire two weeks ago in the apartment building next to where I live-- we sure as hell appreciated the firemen who came at 4:00am to prevent a catastrophe. The argument above about how it's impossible/expensive/complicated/etc. to collect sales tax seems exceedingly bogus to me especially given the nature of HN: Sounds like a business problem to be solved, not some byzantine task. Someone should go make an online sales-tax-computing web service and be done with it. Oh wait, someone did: http://salestaxwebservice.com/ http://salestaxwebservice.com/, http://www.avalara.com/products/avatax/calc http://www.avalara.com/products/avatax/calc, et cetera.

ajkessler 15y ago

I found this quote hilarious: “I don’t think we want to send the message that companies can fund a political campaign for a referendum and maybe your customers won’t be subject to sales tax.” Because it's not like some companies funded political campaigns to get this measure passed in the first place. (http://online.wsj.com/article/SB10001424052748704396504576204791377862836.html http://online.wsj.com/article/SB1000142405274870439650457620...) Heaven forbid another big company ask what the citizenry thinks...

blahedo 15y ago

It's really patently unfair for purchases from Amazon.com not to require sales taxes while purchases from BarnesAndNoble.com do require sales taxes. That's what this all boils down to. Amazon is not, on some level, competing directly with your local friendly indy bookshop (if you still have one), and that's not the right direction to look for a comparison... but they are competing with other online booksellers, who have to pay sales tax on their online book sales if and only if they also have a bricks-and-mortar business. That's dumb.

kevinskii 15y ago
Sales taxes fund local infrastructure. Why should Amazon have to pay for a fire department that it will never possibly need? In regards to the "fairness" question, put it a different way: It's unfair that brick and mortar companies can offer their customers immediate gratification and the ability to physically inspect items before buying. Amazon can do neither.
- Anechoic 15y ago
  Why should Amazon have to pay for a fire department that it will never possibly need? It's certainly in Amazon's interest that their customers have access to those local FD's. Even if one doesn't agree with the FD example, those sales taxes also pay for local roads and surely Amazon makes use of those. (Lest I be accused of being a hypocrite, I do pay the local sales tax for internet purchases via the Massachusetts 'safe harbor' provision for small purchases and itemized listings of my larger purchases with my state tax filings)
  - yummyfajitas 15y ago
    Amazon doesn't use local roads. Fedex, UPS, etc do. Those companies all have a local presence and (presumably) pay their taxes to the state in which they operate. The taxes are then passed on to Amazon or the consumer in the form of higher prices on shipping. As for local fire departments, I use Pivotal Tracker. Should Pivotal Labs be forced to pay Maharashtra taxes since it's in their best interest that my company not burn down?

earl 15y ago

What's even more annoying is amazon damn well does have a large physical presence in CA: a2z: http://a2z.com/ http://a2z.com/ : SF, OC, and San Luis Obispo; A9: near caltrain, and from their page, "As A9 is a wholly owned and operated subsidiary of Amazon.com, we have the strength that comes from being part of a Fortune 500 company, and the flexibility and energy of a Silicon Valley start-up." I'm ambivalent about the exception to collecting taxes for companies without an instate presence, but this is pure bullshit. Amazon operates multiple companies with hundreds of employees in CA. Just like other companies that take advantage of what CA has to offer, they should be forced to pay the tax man.

dangrossman 15y ago
It's not as if Amazon is arguing that if the subsidiaries sell products in California they wouldn't be subject to sales tax. If you (earl) bought stock in a company in another state, does that give you a physical presence there and make whatever you sell subject to their sales tax? That company you are a partial (or full) owner of already pays sales tax in its state.
- aphexairlines 15y ago
  a2z makes the Amazon Appstore and Android MP3 player. So who gets taxed on those digital purchases?
  - dangrossman 15y ago
    Appstore apps are sold by Amazon Digital Services Inc. They also sell all the downloadable games and such on Amazon.com. I don't know what state that company is in, but that'd be the state that gets taxed.
burgerbrain 15y ago
None of those companies are the companies that are selling you things when you buy stuff off of Amazon.com. If that company actually had a presence in CA (as it does in for example WA) you would pay sales tax in CA (as you do in WA). This is exceedingly cut and dry. I don't understand why people have a hard time groking it. Even the Californian government gets it. That's why they have to go out of their way to drag Amazon Associates into the mess.

originalgeek 15y ago

You guys are really missing the point. This isn't about Amazon, it's about affiliate marketers. You know, these guys who run websites and for a fee, provide a link to a merchant website to generate a sale. When the Franchise Tax Board finally figures out that California is no different than New York, North Carolina, Rhode Island, etc. and discover there is no net gain in revenue as a result of this law, they will set their sites on the one large California company in the "provide links to make sales for a fee" business, Google. Suddenly every company across the nation buying keywords from Google will have a nexus established in California simply by the keyword buys. So if you are not in California, and you like doing some keyword buys to enhance your business on your website, get ready to bend over and pay sales and use tax to California. Because that is what is going to change the pattern of miserable failures this law has been in other states.