4 ms·

I'm guessing for California they'll lobby to extend it for another year, and another year, etc... Nationally, I'm not sure Congress can force non-taxation on t

by bh42222 15y ago

I'm guessing for California they'll lobby to extend it for another year, and another year, etc... Nationally, I'm not sure Congress can force non-taxation on the sates, I think that's a constitutional issue. I think Amazon's plan there is just to use their market dominance and hope the states fold.

gte910h 15y ago
Interstate commerce clause allows them to most likely.
msumpter 15y ago
Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the state but if they have a distribution plant or other company owned assets this will give them time to relocate. I believe Amazon had already notified their affiliates that they were terminating the relationship when the law was passed (similar to what they do when other states passed nexus provisions).
- gojomo 15y ago
  Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot. I suspect Amazon sees the way things are going and (as in other states) have tried to get what forbearance they can while they can, and also expect a national harmonization of cross-state sales taxes at some point.
  - nknight 15y ago
    You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail business.
    - gojomo 15y ago
      Most individual states would disagree, especially when the wholly-owned subsidiary exists primarily to avoid taxes. If Amazon's technique was legally unassailable, they wouldn't be paying sales tax even in the 5 states where they already do. They'd just assign whatever creates 'nexus' in those states to new 'non-selling' subsidiaries.
      - nknight 15y ago
        Piercing the corporate veil becomes easier the more closely integrated the companies and their management structure are. Amazon can maintain arms-length relations with most of their subsidiaries because those subsidiaries are not part of Amazon's core business, and can operate semi-independently with little to no loss in efficiency. Maintaining such a relationship with subsidiaries directly involved in the day-to-day operations of Amazon's retail business (maintaining stock, setting prices, making sales, packing and shipping product, etc.) would be much more difficult, costly, and risky.
    - aphexairlines 15y ago
      How are a9 and a2z not involved in retail?
      - nknight 15y ago
        Company A buys software from company B to carry on its business. Company B does not become liable for the acts of Company A. A9 and A2Z are providing software and/or services to Amazon.com which Amazon.com uses in its retail business. This is completely different from A9 and A2Z engaging in that business. They do not buy, sell, distribute, or ship the products Amazon.com does. So long as Amazon.com maintains arms-length dealings with A9 and A2Z (which is trivially easy for any company with semi-competent legal counsel to accomplish), the ownership of A9 and A2Z is irrelevant to Amazon.com's dealings with California.
        rbranson 15y ago
        They have a single customer and single source of revenue, Amazon.com. It's pretty ridiculous.
  - cpeterso 15y ago
    Another wholly-owned subsidiary in California: Lab126, the Kindle company.
nknight 15y ago
It's not even non-taxation. It's the fact that no two states with sales taxes have the same rates (which can also vary by locality), rules about what it applies to, or filing mechanism. Amazon and everyone else involved in ecommerce would be a lot happier if there were a unified system/database for dealing with sales taxes in the US. Rates and rules wouldn't necessarily have to be the same, but there at least has to be one system with unified categorization of products and a unified filing mechanism which can be automatically queried, and as long as the merchants use that system in good faith, they would need to be immune to any sort of lawsuit or prosecution for not meeting the actual legal requirements of any particular state/locality.
- halostatue 15y ago
  The varying rates aren't a problem, for certain; Amazon deals with those just fine in various localities (Canada has approximately 10 different rates; I don't think that cities are allowed to put additional sales taxes, as that's reserved to the federal government and the provinces/territories). What's problematic for Amazon (IMO) is the wildly varying applicability rules and filing mechanisms. I think your idea of a unified sales tax database/system is spot on.
  - weaksauce 15y ago
    In California there are different tax rates for every county in the state. see http://www.boe.ca.gov/cgi-bin/rates.cgi http://www.boe.ca.gov/cgi-bin/rates.cgi
    - shoota 15y ago
      They have different rates even down to the city level take a look here http://www.boe.ca.gov/cgi-bin/rates.cgi?LETTER=A&LIST=CITY http://www.boe.ca.gov/cgi-bin/rates.cgi?LETTER=A&LIST=CI...
      - hga 15y ago
        In my home town of only 50K (before the tornado, it's Joplin, MO) there are sections of the town with their own additional sales tax, the theory is to improve that particular business district or to pay for the city's contributions to it (e.g. intersection upgrades). On thing I'm noticing as I work with receipts for my insurance claim is that of the three Wal-Marts in two cities we did and now shop at (the one we used to exclusively go to was destroyed and is rebuilding) each has two different sales tax rates (don't forget that rates also depend on what is being bought, e.g. food of certain types is taxed less). And then there is the statewide state sales tax holiday for certain back to school supplied in late August.... This is serious nightmare ... but much less so for a company of Amazon.com's scale than a potentially dangerous to it upstart.

by bh42222 15y ago

gte910h 15y ago

Interstate commerce clause allows them to most likely.

msumpter 15y ago

Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the state but if they have a distribution plant or other company owned assets this will give them time to relocate. I believe Amazon had already notified their affiliates that they were terminating the relationship when the law was passed (similar to what they do when other states passed nexus provisions).

gojomo 15y ago
Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot. I suspect Amazon sees the way things are going and (as in other states) have tried to get what forbearance they can while they can, and also expect a national harmonization of cross-state sales taxes at some point.
- nknight 15y ago
  You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail business.
  - gojomo 15y ago
    Most individual states would disagree, especially when the wholly-owned subsidiary exists primarily to avoid taxes. If Amazon's technique was legally unassailable, they wouldn't be paying sales tax even in the 5 states where they already do. They'd just assign whatever creates 'nexus' in those states to new 'non-selling' subsidiaries.
    - nknight 15y ago
      Piercing the corporate veil becomes easier the more closely integrated the companies and their management structure are. Amazon can maintain arms-length relations with most of their subsidiaries because those subsidiaries are not part of Amazon's core business, and can operate semi-independently with little to no loss in efficiency. Maintaining such a relationship with subsidiaries directly involved in the day-to-day operations of Amazon's retail business (maintaining stock, setting prices, making sales, packing and shipping product, etc.) would be much more difficult, costly, and risky.
  - aphexairlines 15y ago
    How are a9 and a2z not involved in retail?
    - nknight 15y ago
      Company A buys software from company B to carry on its business. Company B does not become liable for the acts of Company A. A9 and A2Z are providing software and/or services to Amazon.com which Amazon.com uses in its retail business. This is completely different from A9 and A2Z engaging in that business. They do not buy, sell, distribute, or ship the products Amazon.com does. So long as Amazon.com maintains arms-length dealings with A9 and A2Z (which is trivially easy for any company with semi-competent legal counsel to accomplish), the ownership of A9 and A2Z is irrelevant to Amazon.com's dealings with California.
      - rbranson 15y ago
        They have a single customer and single source of revenue, Amazon.com. It's pretty ridiculous.
- cpeterso 15y ago
  Another wholly-owned subsidiary in California: Lab126, the Kindle company.

nknight 15y ago

It's not even non-taxation. It's the fact that no two states with sales taxes have the same rates (which can also vary by locality), rules about what it applies to, or filing mechanism. Amazon and everyone else involved in ecommerce would be a lot happier if there were a unified system/database for dealing with sales taxes in the US. Rates and rules wouldn't necessarily have to be the same, but there at least has to be one system with unified categorization of products and a unified filing mechanism which can be automatically queried, and as long as the merchants use that system in good faith, they would need to be immune to any sort of lawsuit or prosecution for not meeting the actual legal requirements of any particular state/locality.

halostatue 15y ago
The varying rates aren't a problem, for certain; Amazon deals with those just fine in various localities (Canada has approximately 10 different rates; I don't think that cities are allowed to put additional sales taxes, as that's reserved to the federal government and the provinces/territories). What's problematic for Amazon (IMO) is the wildly varying applicability rules and filing mechanisms. I think your idea of a unified sales tax database/system is spot on.
- weaksauce 15y ago
  In California there are different tax rates for every county in the state. see http://www.boe.ca.gov/cgi-bin/rates.cgi http://www.boe.ca.gov/cgi-bin/rates.cgi
  - shoota 15y ago
    They have different rates even down to the city level take a look here http://www.boe.ca.gov/cgi-bin/rates.cgi?LETTER=A&LIST=CITY http://www.boe.ca.gov/cgi-bin/rates.cgi?LETTER=A&LIST=CI...
    - hga 15y ago
      In my home town of only 50K (before the tornado, it's Joplin, MO) there are sections of the town with their own additional sales tax, the theory is to improve that particular business district or to pay for the city's contributions to it (e.g. intersection upgrades). On thing I'm noticing as I work with receipts for my insurance claim is that of the three Wal-Marts in two cities we did and now shop at (the one we used to exclusively go to was destroyed and is rebuilding) each has two different sales tax rates (don't forget that rates also depend on what is being bought, e.g. food of certain types is taxed less). And then there is the statewide state sales tax holiday for certain back to school supplied in late August.... This is serious nightmare ... but much less so for a company of Amazon.com's scale than a potentially dangerous to it upstart.