Bezos: Attempts To Collect State Sales Tax On Amazon Sales Is Unconstitutional
from the won't-stop-'em dept
For quite some time now, we've covered how various states have tried to avoid laws that say mail order companies don't need to collect sales tax in states where they have no staff (while individuals are supposed to self-declare and pay that tax, almost none do). The main target has been Amazon, with various states pushing to get Amazon to pay taxes anyway. Amazon has taken a hardline with many of these states, even announcing plans to move subsidiaries out of Texas if it kept on trying to collect sales tax because of those subsidiaries. The latest, found via Slashdot, is that Jeff Bezos is claiming that such attempts to collect sales tax are unconstitutional without Congressional approval:And in the U.S., the Constitution prohibits states from interfering in interstate commerce. And there was a Supreme Court case decades ago that clarified that businesses — it was mail-order at that time because the Internet did not exist — that mail-order companies could not be required to collect sales tax in states where they didn’t have what’s called “nexus.”This is, of course, entirely accurate. Of course, Bezos also points out that Amazon would be perfectly happy with Congress stepping in and creating a sales tax system that works across states. There's been an ongoing effort for years, called the Streamlined Sales Tax Initiative, which tries to align all of the states and their sales tax practices, to avoid every company from having to follow 50 different sales tax laws. Bezos notes that Amazon would support such an initiative:
And that’s a very clear decision.
Our point of view on this is that we should simplify the sales tax system, and we’ve been consistent on this for about 10 years. It’s called the Streamlined Sales Tax Initiative. I think 22 or 23 states have signed onto it. Because the right way to fix this is with federal legislation. That’s where it can be fixed properly.This is actually a pretty big issue. It makes sense that companies shouldn't have to collect sales tax in states where they have no employees. Not only does it create a massive bureaucratic nightmare (especially for smaller e-commerce players), but it actually acts as disincentive to sell into those states. On top of that, the point of the sales tax is supposed to be about supporting the local infrastructure for those retailers (roads, and such). But if you have no local presence, there's a much weaker argument that such taxation is needed. Still, I have no doubt that eventually sales tax will be standardized at the federal level in some format or another, just because the government can't resist a chance to tax -- especially a tax that can be seen as regressive, like a sales tax.
Sales tax collection is very complicated. And, you know, we’re no different from big chains of retailers — they don’t collect sales taxes in states where they don’t have nexus, either. So everybody is following the same rules. And I don’t think our customers would say, “Why don’t you just optionally collect the tax? I know you’re not required to do it, but aw, go ahead.”
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Filed Under: interstate commerce, jeff bezos, sales tax, states
Companies: amazon
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Why? Because each one's edicts can come into conflict with the other.
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If you don't like the prices offered, after taxes and shipping, don't buy it online. However if you think the convience of buying from home, a vast supply of products, and delivery to your door is worth the difference in price, buy online.
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Yes, but by letting some companies not pay taxes in your state, you give them competitive advantage over local businesses.
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As far as "roads and such" go, I'm pretty sure that UPS and FedEx pay local taxes for their trucks.
And one FedEx truck on the road delivering 50 packages is a hell of a lot less wear and tear and traffic than 50 vehicles on the road traveling hither and yon.
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Go NH! No state income tax, either!
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However, this has the distinct advantage of making things like unemployment really hit the state bottom line, so they have real numbers driving them to create jobs.
All in all, I think that sales taxes are basicly not going to work in the long run.
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ok Jeff, so you're saying your business doesn't exist in ANY state?
This shit is so funny to me- the way you people try to crank on record labels for their business practices and then give a free pass to exponentially worse companies like Google and Amazon.
just remember, we notice the hypocrisy. It's right out there in the open.
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You'll have to go find me that quote where Bezos says he has no employees in any state, because I just can't seem to find it.
And since "worse" is pretty subjective and covers a lot of ground, it's pretty tough to discern exactly what your record labels (good, apparently) vs. Google/Amazon (bad, somehow) is supposed to mean.
The record labels don't really have "business practices" at this point. They're just kind of limping along, bitching and moaning the whole time, while pushing for warrantless searches and expecting the taxpayers to fund legislation to keep them alive, despite their relative uselessness.
On the other hand, Amazon has millions of happy customers. The same with Google. And the only tenuous thread I can see holding these apples and oranges together is their cloud services, which the record labels hate but can't figure out how to shut down (yet).
Ignorance is pretty easy to spot out "in the open," as well.
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Well done sir.
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Record companies good. Internet bad. Google help internet. Google bad.
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"Items sold by Amazon.com LLC, or its subsidiaries, and shipped to destinations in the states of Kansas, Kentucky, New York, North Dakota, or Washington are subject to tax."
Those are the states that they have an actual physical building, or employee's. The argument is that the other 45 states want sales tax too, sense online ordering is taking over a huge part of the economy.
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Re: Amazon and Sales Tax
See http://www.amazon.com/gp/help/customer/display.html?nodeId=468512#which
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To be fair maybe they should charge and pay sales tax to the state where the company is headquartered rather than to all 50 states.
Oregon would gladly welcome all the companies that want to take advantage of our 0% sales tax by bringing in the jobs.
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Are you suggesting those orders are filled by C3PO?
Pretty sure those orders are being filled by human employees of Amazon.
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internet. it crosses borders. only people who need to have staff in the state being sold into at any time are the shipping companies (who do pay all relivant taxes, one assumes)
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Amazon pays taxes in the states where people staff warehouses. They don't pay taxes in states where they have no warehouses or staff. How is that difficult to understand?
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If it was we wouldn't be talking about this, Einstein.
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Historically, having a subsidiary in a state was not enough to create nexus in that state. Actually, I don't know if there are any laws or case law which define nexus as anything other than "having a public facing storefront".
Also, your cute attempt to insult my intelligence was just precious. Too bad you said something so stupid right before the insult; it really dulls the impact.
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The internet and its business have been around long enough that the time to start collecting taxes like other retailers should begin now. And don’t tell me that figuring out 50 or 100 tax rates is a pain, use your programming smarts and write that code once and it’s done.
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Actually there are only 7 states that make charging a sales tax nearly impossible, and it doesn't have anything to do with programming smarts.
See, I'm a software developer, and my company actually resides in one of those 7 states. The problem isn't that we "don't have enough programming smarts"; the problem is that the law does not make it clear how to charge sales tax on an internet sale. For traditional "brick and mortar" you simply charge the sales tax for where your store is located. With an internet sale you have one big question:
Where does the sale "take place"?
At the internet retailers? At the address used for delivery? At the billing address?
The 7 states that make charging sales tax truly impossible each have county or "locality" taxes. For instance, in Alabama, there are special tax rates if your sale "takes place" within a certain distance of some sports stadiums. Also, the rate for each locality is updated quarterly.
I think there is one thing that really helps to bring home how difficult this problem is: There are no businesses or services provided that will guarantee to give a correct tax rate for every address in the United States. There are many paid services that will return a rate, but none of them promise accuracy and ultimately you as the retailer are responsible for any fines or penalties.
One last thing, there are estimated to be around 11,000 sales tax rates in the United States, not 50 - 100. No one really knows the exact number.
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It's just like Sears.
...so all of the old rules still apply to them.
The rules that applied to any mail order retailer in 1960 applies to Amazon in 2011. Nothing magically changes just because a new communications medium involved.
How some people approach this discussion is much like how anything old is suddenly made new at the Patent office if it mentions the internet or computers.
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Re: It's just like Sears.
i agree with you, actually.
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right and wrong
The problem in Texas seems to have come from the fact that Amazon has a subsidiary in Texas, instead of actual offices.
I haven't dug into it, but it sounds like the subsidiary only does distribution for Amazon. Which makes it really not so much a separate company, and I can see where Texas is getting annoyed with them.
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Re: right and wrong
At the end of the day, Amazon may not have a foot in my state, but if they are selling products to my state, then need to be collecting sales tax in my state
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Re: Re: right and wrong
Uh, not according to the law they don't. If you want them to pay tax in your state, get the law changed.
As for reporting sales tax on my income taxes, not going to happen. I am not going to track my mail order purchases throughout the year so that I can pay tax on them. Personally, I don't see how that is even legal because that amounts to taxing interstate commerce which is against federal law. So until federal law changes, retailers aren't going to collect the tax and consumers aren't going to pay it.
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Tariffs are illegal
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p.s. I agree with #17
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Why is he not collecting CA taxes?
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Re: Why is he not collecting CA taxes?
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Sales tax is a mess
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Re: Sales tax is a mess
In addition to calculating, collecting, and remitting sales tax, it automatically updates any changes to state and local sales tax rates -- so retailers who use TaxCloud don't need to worry about that. And should there be any audits, our company -- FedTax.net -- handles those, too.
How difficult it is to collect sales tax really shouldn't be part of this conversation -- technology has advanced to the point that it's a non-issue.
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I call BS. There are dozens of services that provide tax rate information but not one of them can guarantee accurate tax rates for every sale in every state.
What rate do you use when a house is split evenly in two tax jurisdictions?
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Re: Sales tax is a mess
(though after it was recently increased, there's some talk about dropping it again for only specific things like some foods and such, and there are extra taxes over and above that on petrol, tobacco products, and alcohol... and probably a few other things i know nothing about)
we have our fair share of problems, but an intentionally unamangably broken taxation system is not one of them.
(heck, i qualify for an invalids benifit from the government here... they actually eliminate a whole chunk of beaurocracy by just giving me less in the first place, checking my taxes as 'payed' so far as anything that cares is concerned, and carrying on (rather than going through the whole process of officially giving me more and then taxing it, which would not be unexpected...)
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regressive?
I always thought sales taxes were progressive, at least more progressive than income tax. Income tax taxes all my money, including money I would have used to pay down debt or invest.
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Re: regressive?
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Mail Order and Internet sales tax
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Re: Mail Order and Internet sales tax
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The point of sales tax
Actually, the retailer is kind of beside the point here. It's the consumer who pays the sales tax, and that tax goes to support the consumer's home state and community. The local infrastructure that sales tax supports is the consumer's, not the retailer's -- which is as it should be, since the consumer is the one paying the sales tax. (This is what they mean when they say that online sales tax is "destination-based.")
"The point of the sales tax is supposed to be about supporting the local infrastructure" -- that's still true. And as it always has, sales tax supports the local infrastructure of the consumer -- whether that tax is collected by an online retailer or a local retailer.
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I used to write resumes
Sales taxes are horribly regressive, and compound the enormous wealth inequity in this country. Bezos is right. (This time.)
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Same treatment as retail sales
Jim, you wrote "the time to start collecting taxes like other retailers should begin now."
That's precisely what is happening now, as JEDIDIAH details above, Amazon is being treated exactly like other retailers. Making them collect taxes where they have no such nexus, would be treating them differently than Sears Catalog sales were treated.
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As long as they use Delaware as the model for setting up rates.
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Re: Mail Order and Internet sales tax
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Accounts
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Granny flats Sydney
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Mortgage
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