8 ms·

Amazon Sales Take a Hit in States With Online Tax

82 points by IBM 13y ago

coreymgilmore 13y ago
The push to tax Amazon is so online and brick-and-mortars are treated equally in a tax sense. Yet the states that have enacted taxes on Amazon, do not collect taxes unanimously from all businesses selling online within their borders. It seems to me that states need to find a new method to treat all online sales equally as well, and not separate Amazon into its own tax bracket. Is each company that faces a legislature going to have to fight for its tax rate separately and work their won deals? This is ambiguous to buyers and hurts smaller businesses that don't have the legal funds or ability to negotiate.
- bbq 13y ago
  The problem is taxes are incredibly complicated. There are companies that do "tax as a service"[1]. Governments should pass tax laws in some sort of industry standard tax rules specification[2]. This way, companies and the open source world can write rules engines to process taxes and online stores can pick among the competitors, not having to worry about the complexities themselves. Costs are reduced, competition increased, and consumers win. [1] http://www.avalara.com/ http://www.avalara.com/ [2] this might also make taxes simpler. If legislators can't encode (compile) it, they can't legislate it!
  - dangrossman 13y ago
    That's basically the Marketplace Fairness Act, which is the most likely "internet sales tax" bill to pass in the near future. http://www.marketplacefairness.org/ http://www.marketplacefairness.org/ It requires each state that wants to collect from foreign sellers to provide a uniform state-wide sales tax policy, a single organization in each state to handle registrations/filings/audits, and free tax compliance software. It also builds a mechanism to certify companies (like Avalara) to take care of internet sales tax for you, and relieves businesses of liability for mistakes if they use one of these companies to compute/file their taxes.
    - thatthatis 13y ago
      For true fairness there needs to be a single organization nationally that can collect and process the tax. 50 different filings is an unduly onerous and inefficient hurdle for setting up shop.
      - dangrossman 13y ago
        That's what the certified companies are for. This one set up that site: https://taxcloud.net/ https://taxcloud.net/ They calculate and file your returns for you. They get paid a commission directly by the states for facilitating it, so they're free to businesses.
      - walshemj 13y ago
        Unfortunetly the distrubuted nature of the political system acts aainst this its the same with emplyment having 53 diferent sets of employment laws is very ineficient. From an outsiders perspective what the USA needs is a proper reform of the constitution and remove a lot of thinkgs from the perview of the individual states. A maximum age for senators, congessmen and judges would also be a good thing.
        bruceb 13y ago
        So you are pro age discrimination is what you are saying.
        jdminhbg 13y ago
        There is already age discrimination: http://en.wikipedia.org/wiki/Age_of_candidacy_laws_in_the_United_States http://en.wikipedia.org/wiki/Age_of_candidacy_laws_in_the_Un...
        awda 13y ago
        And you can be tried as an adult at 15 or 16 years old, but you can't vote until you're 18. What kind of bullshit is that?
- deleted 13y ago
  [deleted]
- brc 13y ago
  If it were up to me I'd just can the sales tax on the brick and mortar stores as well. There is always some spending you can cut somewhere.
  - jasomill 13y ago
    "Some spending" is a bit of an understatement — sales taxes represent the single largest revenue source for state governments other than "transfers from the federal government"[1]. [1] http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk http://factfinder2.census.gov/faces/tableservices/jsf/pages/...
- venomsnake 13y ago
  >It seems to me that states need to find a new method to treat all online sales equally as well, and not separate Amazon into its own tax bracket VAT works fine once you have the infrastructure in place.
mrcharles 13y ago
Honestly, Amazon has a lot to offer even beyond "No Tax". And I say this as a Canadian who has had to pay taxes and duties on amazon orders since day 1. People may gripe about it for a bit... but amazon is still the best way to shop, and also has the best selection and prices.
- justinsb 13y ago
  I agree that Amazon is often the most convenient option. But their prices simply aren't the best any more (at least for things other than books). Try a price comparison next time and see if you agree! (Another change is that Google Shopping has improved a lot over the last few years, so price comparison is less painful as well.) One thing Amazon still does best: their deliveries arrive on time, and seem a lot less likely to get stuck in UPS limbo.
  - ekianjo 13y ago
    Yeah, even in Japan, they are not the cheapest option anymore, there are usually smaller retailers for specific items that get you better deals, but think about the following cost: - cost to register on a different website - cost to "trust" a minor player you have never used before - cost of time lost because of delay in delivery - cost of how they handle returns Most of the time, I think a few seconds about the difference in price between amazon and that minor retailer, and unless the difference is huge (which is usually not the case), I'll go for Amazon. Even when I had issues with what I got from Amazon they sent me the replacement item BEFORE I even send back the defectuous item. Who else does that?
  - mrcharles 13y ago
    Possibly true in the US; but in Canada where we get stuck paying bullshit exchange rate premiums all the time, I can still usually save a bit of money. Just recently I bought some audio equipment from amazon.com, which, with duties and taxes prepaid, still came to less than the pre-tax price of anything local. And I live in Toronto; it's not like stuff is hard to find around here.
- colinbartlett 13y ago
chc 13y ago
I wonder if the difference is really about the competitive advantage per se. The 10% difference is about the same as the difference in price with tax. It sounds like people are actually spending about the same amount, but now part of that budget is going to tax rather than actually being spent on goods.
minouye 13y ago
The biggest sales uptick -- 61 percent for big-ticket items -- went to merchants that use Amazon Marketplace...That means Amazon still indirectly benefits, since it collects a fee from merchants on its marketplace. Not sure why they buried this at the end of the article. Amazon can still attract price-conscious shoppers by funneling them to marketplace sellers that don't collect sales tax, and can now invest in more fulfillment centers and other initiatives that require nexus (Amazon Fresh, etc.)
- justinsb 13y ago
  This does seem the most important conclusion. What's likely happening is Amazon is no longer showing themselves as the top seller in some cases. Consumers are still buying on Amazon, but from a different seller, who does not charge sales tax. What would be impressive is if Amazon made an (algorithmic) judgment call, and showed price-sensitive shoppers that would otherwise go elsewhere the cheaper seller, and shoppers that would tolerate the tax the (presumably higher profit) Amazon offering.
  - robryan 13y ago
    They already do that with fulfillment by amazon. There is a certain price difference for which Amazon will show you that fulfilled product vs a cheaper marketplace offer with slower fulfillment/ shipping.
- jnbiche 13y ago
  Now, they need to offer marketplace sellers some type of 2nd-day delivery service at a reasonable price. Having Amazon Prime and knowing I'll always get the item on the second shipping day means that I'll chose the Prime item even if the marketplace seller is cheaper.
gtaylor 13y ago
I'll gladly pay an additional 6-10% to keep avoiding Wal-mart or Target or even Home Depot. There are people like me who just really hate having to suit up and go shopping. I don't like the traffic, I don't like getting ripped off, and I don't find in-store shopping a fun or magical experience like some do. I can pull up Amazon and read ratings/reviews, see what kind of problems people ran into with products, and make a reasonably informed decision with my money. In a big box store, I feel like I'm taking more of a chance unless I stop, scan the barcode, read through reviews. Meanwhile, I look like a silly guy who can't make up his mind. Yes, I enjoy obsessively comparing reviews/ratings for potential purchases. Even the really cheap/insignificant ones...
- WalterBright 13y ago
  That's right. Going to the mall to buy something is a 2-3 hour time sink, plus gas. Buying online is about 5 minutes, no gas.
  - ja27 13y ago
    The "no gas" part is big. I don't think many people realize how much they spend on gas to run errands. A quick run to Target for something is about a 10 mile round trip from my house or about $2 in gas for a typical minivan. A Home Depot or Lowes is more like $4 from here, $5 with tolls.
    - sliverstorm 13y ago
      Varies hugely from person to person. Target, Lowes, and Home Depot are all right on my way home from work. If it's a weekend, they are ~5 miles round trip.
    - zorpner 13y ago
      Absolutely. My favorite is running the numbers to figure out how far out of the way it's worth going to buy cheaper gas -- for my MPG/the size of my car's tank, typically less than half a mile for a 10¢ difference.
- 13y ago
bbq 13y ago
> Amazon supports federal legislation that would explicitly let states require tax collections by all online retailers above a certain size. This would give Amazon a huge competitive advantage (given their existing infrastructure). Of course they support this.
- adventured 13y ago
  They get hit with flack coming or going. If they're against online taxes, then they're accused of not doing their fair share to support government coffers, or they're accused of getting an unfair competitive advantage (per offline retailers). It's similar to Walmart's minimum wage support. If Walmart were against minimum wage increases, their opponents would lambast them for it. If they're in favor of it, they get accused of only being in favor of it because they know they can more easily afford it compared to smaller retailers.
  - RodericDay 13y ago
    poor walmart, poor amazon
  - justinsb 13y ago
    Amazon fought tooth and nail against paying sales tax, even in states where they clearly had a presence (California in particular). Now that they agreed to start paying sales tax going forward (in return for no back-penalties), they are lobbying for their competitors to have to pay sales tax as well. They are also building warehouses in-state now and trying to compete on speed of delivery, which is a more respectable way to compete against out-of-state rivals.
  - bbq 13y ago
    You're right, I said this accusingly and that's unproductive. I think legislation like this should exist. I don't think it's right to ignore the advantage (assuming we accept they have one here) and the legislation should take it into account.
minouye 13y ago
From the report: Our data consist of daily transactions for 2,807,476 households from January 1, 2012 to December 31, 2013, and include both banking (i.e., checking, savings, and debit card) and credit card transactions. We observe the date, amount, and description of each transaction. I'm a little disturbed that they had access to complete transaction information for roughly 2% of American households. Is it common practice for banks to share this data? Surely date + amount + description is personally identifiable in many situations.
- gph 13y ago
  Not to defend the banks, but in what situation could date/amount/description become personally identifiable? I guess it sort of depends on how descriptive the description field is, but if it just lists the product(s) then I don't really know how you'd ever be able to verifiably match it with a name.
  - cbhl 13y ago
    An '08 paper from Arvind Narayanan and Vitaly Shmatikov at the University of Texas at Austin showed that, in a large dataset, the combination of a large number of transactions could be used to de-anonymize individuals. http://www.cs.utexas.edu/~shmat/shmat_oak08netflix.pdf http://www.cs.utexas.edu/~shmat/shmat_oak08netflix.pdf
wycx 13y ago
A straightforward solution would be for the US to have a uniform online sales tax, distributed to the state of the shipping address. Is this intractable?
- AnthonyMouse 13y ago
  All it would take is an Act of Congress, but it's political. Birmingham, Alabama has a sales tax of 10%. New Hampshire has no sales tax. How do you set the rate nationally without making enemies?
  - justinsb 13y ago
    I suspect if you tried to do it federally it would be a violation of States' rights and thus unconstitutional.
    - chc 13y ago
      There's always a way around that. Most likely you'd just do it like many other federal carrots — "This tax is levied on all online purchases and will be distributed to the state of the recipient provided that state does not impose any additional taxes on the purchase." You're not depriving the states of their right to tax the purchases, but it will be onerous to their residents if they don't go along with the federal plan.
      - justinsb 13y ago
        That sounds like it could work - nice hack!
      - mzs 13y ago
        Clever but why should this sales tax go to the state I live in instead of say the community where the item was shipped from? It's really more of a duty or use tax in such a case, like in the old days where I would order something from a catalog not in the state I live in, I was supposed to pay a use tax to this state of the difference between the sales tax here and what I might have paid in taxes when ordering when I did my state income taxes. They really should not call it a sales tax, it potentially gets collected by a state that has nothing to do with the sale at all and the cities and states that had to do with it did not collect any of it.
mutert2 13y ago
Amazon is awesome.
Urgo 13y ago
They started collecting tax in NC in Feb and I'll be honest, I've bought less since then. Last year when I needed something I went to amazon first and if it was there ordered it. Now I shop around.
mzs 13y ago
I'm curious, in states that have this, how does it work? Is it all online sellers that did not previously collect sales tax or just a few big ones like amazon? Does it show-up on your shopping cart directly or do you have to do forms quarterly say?
- MisterBastahrd 13y ago
  Amazon currently collects taxes if they (or the seller) has a physical presence in your state. Apple does the same thing. In my state, I'm required to pay taxes on every online purchase for which taxes have not already been charged to me. I keep all my receipts for the year and split them between tax paid and not. I pay taxes on all of the online purchases I make during the year. Most people I know, even in states that require collection of taxes for online purchases, don't claim any at the end of the year. Given that out of state companies are under no compulsion to report purchases to state governments, there simply isn't a whole lot of way for states to know whether the information is accurate except through state tax agency audits.
  - mzs 13y ago
    Thanks for the nice explanation. The state I live in requires to pay a use tax either quarterly or as part of income taxes but for a couple of years at least has allowed you to use a table graduated based on income instead of keeping records.
shittyanalogy 13y ago
This is a good thing. It creates an enormous enforcement efficiency as now states can go after amazon (which they won't have to) and not individual tax dodgers. Not having to charge sales tax also creates an unfair business advantage against local stores.
sytelus 13y ago
I read the book "The Everything Store". There are large chunk of chapter devoted to how Bezos fought against paying tax. Originally, the argument was that online retailers don't use facilities provided by states so they are not obliged to pay any taxes to states. If I remember correctly, this follows almost directly from constitution. But then states like New York found a loophole which basically says if you have any affiliates in the state then you are physically in that state and so you are obliged to pay taxes. This thing is very messy because some regions not only have state tax but even district and city taxes. So calculating them is very complex task. When I thought about the whole situation, it became apparent constitution has a bug here. The sales tax is not supposed to be levied because the state is providing some service to the business. It is levied because that's how states want to distribute the burden of taxes on two components: What you earn and what you spend. This way you can target most of the money flow that happens in the state even for edge cases where a person don't have regular income but spends a lot out of his or her inheritance. So summary here is that online retailers got lucky from this bug in constitution. It was extremely unfair to brick-and-mortar guys who not only have to spend lot of capital but also pay full taxes losing their competitive edge even faster. Note: Above are just observations and logical arguments. Personally I don't have lot of respect for current tax system.
- mratzloff 13y ago
  It's bullshit anyway. If the state had no infrastructure essential to Amazon, that person couldn't get online, the package couldn't be delivered to them by truck, etc.

82 points by IBM 13y ago

The push to tax Amazon is so online and brick-and-mortars are treated equally in a tax sense. Yet the states that have enacted taxes on Amazon, do not collect taxes unanimously from all businesses selling online within their borders. It seems to me that states need to find a new method to treat all online sales equally as well, and not separate Amazon into its own tax bracket. Is each company that faces a legislature going to have to fight for its tax rate separately and work their won deals? This is ambiguous to buyers and hurts smaller businesses that don't have the legal funds or ability to negotiate.

bbq 13y ago
The problem is taxes are incredibly complicated. There are companies that do "tax as a service"[1]. Governments should pass tax laws in some sort of industry standard tax rules specification[2]. This way, companies and the open source world can write rules engines to process taxes and online stores can pick among the competitors, not having to worry about the complexities themselves. Costs are reduced, competition increased, and consumers win. [1] http://www.avalara.com/ http://www.avalara.com/ [2] this might also make taxes simpler. If legislators can't encode (compile) it, they can't legislate it!
- dangrossman 13y ago
  That's basically the Marketplace Fairness Act, which is the most likely "internet sales tax" bill to pass in the near future. http://www.marketplacefairness.org/ http://www.marketplacefairness.org/ It requires each state that wants to collect from foreign sellers to provide a uniform state-wide sales tax policy, a single organization in each state to handle registrations/filings/audits, and free tax compliance software. It also builds a mechanism to certify companies (like Avalara) to take care of internet sales tax for you, and relieves businesses of liability for mistakes if they use one of these companies to compute/file their taxes.
  - thatthatis 13y ago
    For true fairness there needs to be a single organization nationally that can collect and process the tax. 50 different filings is an unduly onerous and inefficient hurdle for setting up shop.
    - dangrossman 13y ago
      That's what the certified companies are for. This one set up that site: https://taxcloud.net/ https://taxcloud.net/ They calculate and file your returns for you. They get paid a commission directly by the states for facilitating it, so they're free to businesses.
    - walshemj 13y ago
      Unfortunetly the distrubuted nature of the political system acts aainst this its the same with emplyment having 53 diferent sets of employment laws is very ineficient. From an outsiders perspective what the USA needs is a proper reform of the constitution and remove a lot of thinkgs from the perview of the individual states. A maximum age for senators, congessmen and judges would also be a good thing.
      - bruceb 13y ago
        So you are pro age discrimination is what you are saying.
        jdminhbg 13y ago
        There is already age discrimination: http://en.wikipedia.org/wiki/Age_of_candidacy_laws_in_the_United_States http://en.wikipedia.org/wiki/Age_of_candidacy_laws_in_the_Un...
        awda 13y ago
        And you can be tried as an adult at 15 or 16 years old, but you can't vote until you're 18. What kind of bullshit is that?
deleted 13y ago
[deleted]
brc 13y ago
If it were up to me I'd just can the sales tax on the brick and mortar stores as well. There is always some spending you can cut somewhere.
- jasomill 13y ago
  "Some spending" is a bit of an understatement — sales taxes represent the single largest revenue source for state governments other than "transfers from the federal government"[1]. [1] http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk http://factfinder2.census.gov/faces/tableservices/jsf/pages/...
venomsnake 13y ago
>It seems to me that states need to find a new method to treat all online sales equally as well, and not separate Amazon into its own tax bracket VAT works fine once you have the infrastructure in place.

mrcharles 13y ago

Honestly, Amazon has a lot to offer even beyond "No Tax". And I say this as a Canadian who has had to pay taxes and duties on amazon orders since day 1. People may gripe about it for a bit... but amazon is still the best way to shop, and also has the best selection and prices.

justinsb 13y ago
I agree that Amazon is often the most convenient option. But their prices simply aren't the best any more (at least for things other than books). Try a price comparison next time and see if you agree! (Another change is that Google Shopping has improved a lot over the last few years, so price comparison is less painful as well.) One thing Amazon still does best: their deliveries arrive on time, and seem a lot less likely to get stuck in UPS limbo.
- ekianjo 13y ago
  Yeah, even in Japan, they are not the cheapest option anymore, there are usually smaller retailers for specific items that get you better deals, but think about the following cost: - cost to register on a different website - cost to "trust" a minor player you have never used before - cost of time lost because of delay in delivery - cost of how they handle returns Most of the time, I think a few seconds about the difference in price between amazon and that minor retailer, and unless the difference is huge (which is usually not the case), I'll go for Amazon. Even when I had issues with what I got from Amazon they sent me the replacement item BEFORE I even send back the defectuous item. Who else does that?
- mrcharles 13y ago
  Possibly true in the US; but in Canada where we get stuck paying bullshit exchange rate premiums all the time, I can still usually save a bit of money. Just recently I bought some audio equipment from amazon.com, which, with duties and taxes prepaid, still came to less than the pre-tax price of anything local. And I live in Toronto; it's not like stuff is hard to find around here.
colinbartlett 13y ago

chc 13y ago

I wonder if the difference is really about the competitive advantage per se. The 10% difference is about the same as the difference in price with tax. It sounds like people are actually spending about the same amount, but now part of that budget is going to tax rather than actually being spent on goods.

minouye 13y ago

The biggest sales uptick -- 61 percent for big-ticket items -- went to merchants that use Amazon Marketplace...That means Amazon still indirectly benefits, since it collects a fee from merchants on its marketplace. Not sure why they buried this at the end of the article. Amazon can still attract price-conscious shoppers by funneling them to marketplace sellers that don't collect sales tax, and can now invest in more fulfillment centers and other initiatives that require nexus (Amazon Fresh, etc.)

justinsb 13y ago
This does seem the most important conclusion. What's likely happening is Amazon is no longer showing themselves as the top seller in some cases. Consumers are still buying on Amazon, but from a different seller, who does not charge sales tax. What would be impressive is if Amazon made an (algorithmic) judgment call, and showed price-sensitive shoppers that would otherwise go elsewhere the cheaper seller, and shoppers that would tolerate the tax the (presumably higher profit) Amazon offering.
- robryan 13y ago
  They already do that with fulfillment by amazon. There is a certain price difference for which Amazon will show you that fulfilled product vs a cheaper marketplace offer with slower fulfillment/ shipping.
jnbiche 13y ago
Now, they need to offer marketplace sellers some type of 2nd-day delivery service at a reasonable price. Having Amazon Prime and knowing I'll always get the item on the second shipping day means that I'll chose the Prime item even if the marketplace seller is cheaper.

gtaylor 13y ago

I'll gladly pay an additional 6-10% to keep avoiding Wal-mart or Target or even Home Depot. There are people like me who just really hate having to suit up and go shopping. I don't like the traffic, I don't like getting ripped off, and I don't find in-store shopping a fun or magical experience like some do. I can pull up Amazon and read ratings/reviews, see what kind of problems people ran into with products, and make a reasonably informed decision with my money. In a big box store, I feel like I'm taking more of a chance unless I stop, scan the barcode, read through reviews. Meanwhile, I look like a silly guy who can't make up his mind. Yes, I enjoy obsessively comparing reviews/ratings for potential purchases. Even the really cheap/insignificant ones...

WalterBright 13y ago
That's right. Going to the mall to buy something is a 2-3 hour time sink, plus gas. Buying online is about 5 minutes, no gas.
- ja27 13y ago
  The "no gas" part is big. I don't think many people realize how much they spend on gas to run errands. A quick run to Target for something is about a 10 mile round trip from my house or about $2 in gas for a typical minivan. A Home Depot or Lowes is more like $4 from here, $5 with tolls.
  - sliverstorm 13y ago
    Varies hugely from person to person. Target, Lowes, and Home Depot are all right on my way home from work. If it's a weekend, they are ~5 miles round trip.
  - zorpner 13y ago
    Absolutely. My favorite is running the numbers to figure out how far out of the way it's worth going to buy cheaper gas -- for my MPG/the size of my car's tank, typically less than half a mile for a 10¢ difference.
13y ago

bbq 13y ago

> Amazon supports federal legislation that would explicitly let states require tax collections by all online retailers above a certain size. This would give Amazon a huge competitive advantage (given their existing infrastructure). Of course they support this.

adventured 13y ago
They get hit with flack coming or going. If they're against online taxes, then they're accused of not doing their fair share to support government coffers, or they're accused of getting an unfair competitive advantage (per offline retailers). It's similar to Walmart's minimum wage support. If Walmart were against minimum wage increases, their opponents would lambast them for it. If they're in favor of it, they get accused of only being in favor of it because they know they can more easily afford it compared to smaller retailers.
- RodericDay 13y ago
  poor walmart, poor amazon
- justinsb 13y ago
  Amazon fought tooth and nail against paying sales tax, even in states where they clearly had a presence (California in particular). Now that they agreed to start paying sales tax going forward (in return for no back-penalties), they are lobbying for their competitors to have to pay sales tax as well. They are also building warehouses in-state now and trying to compete on speed of delivery, which is a more respectable way to compete against out-of-state rivals.
- bbq 13y ago
  You're right, I said this accusingly and that's unproductive. I think legislation like this should exist. I don't think it's right to ignore the advantage (assuming we accept they have one here) and the legislation should take it into account.

minouye 13y ago

From the report: Our data consist of daily transactions for 2,807,476 households from January 1, 2012 to December 31, 2013, and include both banking (i.e., checking, savings, and debit card) and credit card transactions. We observe the date, amount, and description of each transaction. I'm a little disturbed that they had access to complete transaction information for roughly 2% of American households. Is it common practice for banks to share this data? Surely date + amount + description is personally identifiable in many situations.

gph 13y ago
Not to defend the banks, but in what situation could date/amount/description become personally identifiable? I guess it sort of depends on how descriptive the description field is, but if it just lists the product(s) then I don't really know how you'd ever be able to verifiably match it with a name.
- cbhl 13y ago
  An '08 paper from Arvind Narayanan and Vitaly Shmatikov at the University of Texas at Austin showed that, in a large dataset, the combination of a large number of transactions could be used to de-anonymize individuals. http://www.cs.utexas.edu/~shmat/shmat_oak08netflix.pdf http://www.cs.utexas.edu/~shmat/shmat_oak08netflix.pdf

wycx 13y ago

A straightforward solution would be for the US to have a uniform online sales tax, distributed to the state of the shipping address. Is this intractable?

AnthonyMouse 13y ago
All it would take is an Act of Congress, but it's political. Birmingham, Alabama has a sales tax of 10%. New Hampshire has no sales tax. How do you set the rate nationally without making enemies?
- justinsb 13y ago
  I suspect if you tried to do it federally it would be a violation of States' rights and thus unconstitutional.
  - chc 13y ago
    There's always a way around that. Most likely you'd just do it like many other federal carrots — "This tax is levied on all online purchases and will be distributed to the state of the recipient provided that state does not impose any additional taxes on the purchase." You're not depriving the states of their right to tax the purchases, but it will be onerous to their residents if they don't go along with the federal plan.
    - justinsb 13y ago
      That sounds like it could work - nice hack!
    - mzs 13y ago
      Clever but why should this sales tax go to the state I live in instead of say the community where the item was shipped from? It's really more of a duty or use tax in such a case, like in the old days where I would order something from a catalog not in the state I live in, I was supposed to pay a use tax to this state of the difference between the sales tax here and what I might have paid in taxes when ordering when I did my state income taxes. They really should not call it a sales tax, it potentially gets collected by a state that has nothing to do with the sale at all and the cities and states that had to do with it did not collect any of it.

mutert2 13y ago

Amazon is awesome.

Urgo 13y ago

They started collecting tax in NC in Feb and I'll be honest, I've bought less since then. Last year when I needed something I went to amazon first and if it was there ordered it. Now I shop around.

mzs 13y ago

I'm curious, in states that have this, how does it work? Is it all online sellers that did not previously collect sales tax or just a few big ones like amazon? Does it show-up on your shopping cart directly or do you have to do forms quarterly say?

MisterBastahrd 13y ago
Amazon currently collects taxes if they (or the seller) has a physical presence in your state. Apple does the same thing. In my state, I'm required to pay taxes on every online purchase for which taxes have not already been charged to me. I keep all my receipts for the year and split them between tax paid and not. I pay taxes on all of the online purchases I make during the year. Most people I know, even in states that require collection of taxes for online purchases, don't claim any at the end of the year. Given that out of state companies are under no compulsion to report purchases to state governments, there simply isn't a whole lot of way for states to know whether the information is accurate except through state tax agency audits.
- mzs 13y ago
  Thanks for the nice explanation. The state I live in requires to pay a use tax either quarterly or as part of income taxes but for a couple of years at least has allowed you to use a table graduated based on income instead of keeping records.

shittyanalogy 13y ago

This is a good thing. It creates an enormous enforcement efficiency as now states can go after amazon (which they won't have to) and not individual tax dodgers. Not having to charge sales tax also creates an unfair business advantage against local stores.

sytelus 13y ago

I read the book "The Everything Store". There are large chunk of chapter devoted to how Bezos fought against paying tax. Originally, the argument was that online retailers don't use facilities provided by states so they are not obliged to pay any taxes to states. If I remember correctly, this follows almost directly from constitution. But then states like New York found a loophole which basically says if you have any affiliates in the state then you are physically in that state and so you are obliged to pay taxes. This thing is very messy because some regions not only have state tax but even district and city taxes. So calculating them is very complex task. When I thought about the whole situation, it became apparent constitution has a bug here. The sales tax is not supposed to be levied because the state is providing some service to the business. It is levied because that's how states want to distribute the burden of taxes on two components: What you earn and what you spend. This way you can target most of the money flow that happens in the state even for edge cases where a person don't have regular income but spends a lot out of his or her inheritance. So summary here is that online retailers got lucky from this bug in constitution. It was extremely unfair to brick-and-mortar guys who not only have to spend lot of capital but also pay full taxes losing their competitive edge even faster. Note: Above are just observations and logical arguments. Personally I don't have lot of respect for current tax system.

mratzloff 13y ago
It's bullshit anyway. If the state had no infrastructure essential to Amazon, that person couldn't get online, the package couldn't be delivered to them by truck, etc.