Illinois The First State To Throw Out Laws Making Amazon Collect Sales Tax Based On Affiliates
from the a-good-win,-but-the-battle-is-almost-over dept
Over the years, we've covered a bunch of stories about Amazon cutting off affiliates in various states. The issue was mainly that states are desperate for sales tax revenue -- and there's something of an ongoing dispute about who's responsible for paying and collecting sales tax. Technically, if you buy via "mail order" and don't pay a sales tax, you're still supposed to pay up the sales tax to your state yourself. It would appear that almost no one does this. If companies have a business "nexus" in the state, then they are supposed to be collecting the sales tax at the time of the order, and sending it on to the state. The issue here was that states passed laws (almost all of which targeted Amazon) arguing that if Amazon has affiliates in the state, that counts as having a nexus, and thus Amazon would need to start collecting the sales tax. But, an affiliate is hardly the same thing as having a physical presence in a state. As anyone who's done an affiliate program knows, all it really means is that you're agreeing to advertise for the retailer, and if any sales come through, then you get a cut. They're not employees. They're not even contractors. They're just advertisers.In NY, Amazon sued over their law, but the lawsuit got tossed and continues to wind through the appeals process. However, in Illinois, it appears that a similar law has been struck down by the Illinois Supreme Court, who said it violated federal laws prohibiting discriminatory taxes on online sales. And make no mistake about it: this is targeted directly at online sales.
It appears that the Illinois Supreme Court recognized the real relationship between Amazon and affiliates:
But Justice Anne Burke, writing for the court's majority, questioned whether there was any substantial difference between out-of-state businesses reaching Illinois consumers through a click-through-nexus approach or through other approaches that aren't taxed.There is one dissent, which argues that since this isn't imposing any new taxes, just who collects them, that there is no discrimination issue here at all. Either way, all of this may be moot as there's increasing support in Congress to basically force the issue on internet companies, making them collect the sales tax for states.
"The click-through link makes it easier for the customer to reach the out-of-state retailer," Burke wrote. "But the link is not different in kind from advertising using promotional codes that appear, for example, in Illinois newspapers or Illinois radio broadcasts."
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Filed Under: affiliates, illinois, sales tax
Companies: amazon
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I don't like to pay sales taxes but...
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Amazon
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Advertised get paid to display adds, if you 'get a cut' ON A SALE, you are not an advertiser you are in sales, and therefore and 'employee'.
That should not be too difficult to understand.
There is (rightfully) a legal distinction between "getting a cut on SALES" and being paid to advertise for a company.
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Is not that what Amazon does exactly?
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Re: I don't like to pay sales taxes but...
Why charge only the last step of the whole process when you can charge every single step of it?
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Saying you're not an advertiser because you're in sales is like saying you're not in transportation because you're in shipping.
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Re: Amazon
I do get worried about the UPS man trying to rape me.
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Re: I don't like to pay sales taxes but...
This is not only ridiculous, it's completely unconstitutional. (Not that it seems to matter these days.)
There doesn't need to be a 'level playing field' for businesses in different states. This idea is silly. There are a number of things the states do differently to benefit/harm the businesses within them, sales tax rates being simply one of them. To single it out as something to be controlled by the feds in nonsensical.
If you think tax rates would some how end up lower in general because of what you are suggesting, you aren't living in reality. A short Googling shows me 5 states that currently don't have ANY sales tax. So right off the bat you are making taxes higher for all those people.
I bet they will love that.
(Not to mention, ya know, the whole reason this is an issue is because the states are crying for MORE taxes and they think everyone in the country is a tax-evader for using the internet)
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sales tax US style
Advantage, Internet stores get sales tax, can't dodge by relocating warehouse/office, cant be struck down as unconstitutional. states get the tax income. one sales tax across the land, shoppers can focus on getting a better deal with only one tax in the equation.
Disadvantage, reduction in power for state politicians, big business can't play of one state against any other state, strengthening of the role of federal government, reduction of state tax officers( no state run sales tax).
What needs to be in the new tax rules, All collected sales tax returned to the states. the rate is set by agreement of 3/4 of the states. the distribution formula is set by agreement of 3/4 of the states. start rate is 10%.
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re: sales tax US style
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Make all businesses do this
That or add a requirement that if a state wants retailers to collect sales tax for it, it must provide a method for retailers to submit an address in that state and be told the correct sales tax rate. It must be provided at no direct cost to the retailer (the retailer may have to pay for a phone line or network connection, but any special hardware or such has to be provided by the state). The justification here would be that since it's the state demanding the retailers do this then the state's obligated to give them what's required to comply with the state's demands. And the service must be authoritative. If a retailer gets a rate from the service then the state can't claim the rate's incorrect. If some subdivision of the state claims sales tax they were owed wasn't collected, the retailer's immune to the claim and they'll have to take it up with the state. The justification here would be that if the state that's demanding the tax be collected doesn't know their own sales tax rate, nobody else can be expected to.
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Re: sales tax US style
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Re: re: sales tax US style
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Re: Make all businesses do this
All in All, I can see a huge bureaucratic nightmare coming from this.
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Re: Re: Re: sales tax US style
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Re: Re: sales tax US style
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Second, state laws already cover this...its strange they aren't using as another excuse to send swat teams barging into peoples homes.
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Re: I don't like to pay sales taxes but...
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Re: Re: Re: I don't like to pay sales taxes but...
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Re: sales tax US style
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Re: Make all businesses do this
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sales tax US style
tax colection would be stremlined with one colection agency.
local and state tax beuroacray could afford to cut unnecessary staff
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Re: Re: Make all businesses do this
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Re: Re: Re: Re: I don't like to pay sales taxes but...
As far as sales taxes go, the sales tax exemption for mail order purchases (a crony hand out to Sears, Roebuck and Company?) should be eliminated. Sales tax should be collected based on the location of the company. With a company like Amazon this could be difficult to asses since the company headquarters is in one sate, distribution centers are located in multiple states, and servers where the actual sale is conducted could be located almost anywhere. I think taxes should be collected based on where the company headquarters is located. And by headquarters I mean a place where people actually go to work. Not a P.O. box in Montana (or any other state without a sales tax).
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Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
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A personal story
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Either you advertise because you are paid specifically to advertise, or you are in 'sales' where you are paid in relation to the number or volume of product you sell.
That is the difference, it's a simple one too.
One is being paid to advertise a product
the other is paid to SELL a product
They are not the same thing.
Again a TV station does not get more money because more of the product is sold, they do not receive a commission on sales. They are paid to show adds and depending on the time of day and other factors charge a specific amount, an amount that is not tied to sales.
Once you start to receive commission on sales you are no longer an advertiser (although you may also advertise) you make your money from the sales (even from that advertising) you are therefore "a nexus" for that company.
It's not my opinion, its just the law.
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Do you think the used car sales shop pays a different rate for advertising in the local newspaper based on the number of sales he makes in the weeks after the add is run ?
Or do you think (correctly) that he pays a specific amount for that space and add, regardless of the number of sales he makes.
Its a simple concept, easily understood, even with TD's misdirection.
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Stating what you think you are not is not a confirmation of what you are.
They are not saying "they are not in advertising" of course the advertise (promote) THEIR PRODUCT, as the sale of their product is the basis of their income. Not the advertising.
Whereas a newspaper running an add for a car yard is specifically an advertiser what they charge to run that add is not tied to number of sales but tied to page and area of the add in the paper.
That is the simple difference between an advertiser, and someone who sells a product they also promote.
Show me one trader who sells product without promotion ? And I will show you 1000 promoters (advertisers) who sells advertising, and not the product.
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if a sales come through and you make it, you are then acting as a sales person, if you 'get a cut' you are 'employed' (paid) to conduct that sale.
Just because "you've done it" clearly does not mean you understand it, or its legal status.
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Its amazing how simple concepts to an engineer become leviathans when Government is involved.
I suspect the state the company is in would want some of the cash the company is collecting (yes, they already do in the form of franchise or business taxes, but they forget about that too,) since they usually get some sales tax in normal brick-and-mortar sales. Some states are hitting the crack pipe so hard at the moment that they want a piece of every sale, whether or not it starts in or finishes in their state.
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And the state is already supposed to get a cut of it, in the form of earned income tax. They want the income tax *AND* the sales tax, because, of course, crack isn't free.
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It's possible such a system could be automated, but then that becomes another expense for the businesses - either to automate it themselves or to hire a service to do it for them.
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Re: Re: Re: Re: I don't like to pay sales taxes but...
they commonly TORTURE and extend the meaning of 'interstate commerce' such that they can fuck with ANYTHING they feel like...
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Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
'intra state' would be within the state
'inter state' would be between states
pedant alert off/
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Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
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It does not, however, make them part of Amazon's internal corporate structure. They are separate legal entities and their presence or activities in the state where they reside does not equate to Amazon having a presence there any more than it would if we were talking about an advertising agency rather than an individual.
The company I work for has affiliate deals with a number of different software companies. If your reasoning is sound that makes our entire company their employee, which of course would be ridiculous.
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Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
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Re: Re: Re: Re: I don't like to pay sales taxes but...
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Re: I don't like to pay sales taxes but...
All you'll do is make me pay more for the stuff I want. My solution will be simple, I'll buy less stuff.
If, however, you are suggesting replacing any and all federal taxes with a federal sales tax (both online and brick and mortar) then I might be on board. Adding another tax just for the sake of adding another tax is just ignorant.
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Re: Re: Re: Make all businesses do this
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Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
If the company is located in Michigan, all sales should have a 6% sales tax regardless of where the customer is located. I don't believe an effective system can be built for business to collect taxes based on the approximately 9000 sales tax jurisdiction within the country. Small business would be punished heavily in order to accommodate sales from any location, and comply with all of the sales tax collection requirements. The big internet retailers would become even more entrenched against upstart online companies than they are now.
My comments about Amazon weren't so much the affiliates as the parent company. Many items are sold directly by Amazon. The problem I was trying to highlight is determining where the sales tax would be assessed. Would it use the location from where the items shipped or where the company is incorporated? As far as affiliates who sell products through Amazon, sales taxes should be assessed based on their location - not Amazon's.
One criticism of using the sales tax of the company's location is the high probability of large companies moving to lower or no sales-tax jurisdictions. I'm in favor of forcing states to be more competitive in their tax structures, but there is a potential to be highly disruptive to several states' budgetary plans.
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Re: I don't like to pay sales taxes but...
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Re: sales tax US style
Good lord. No, no, a thousand times no. Sales tax is the worst. Why force states that don't want one to have one?
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If someone has a website which links to products and then gets a kickback for any sales pushed Amazon's way (e.g., thewirecutter.com), I don't see why the sales tax is an issue for the "affiliate". The income derived by the referring website would be taxed under existing income tax laws. Any sales tax should be the responsibility of either Amazon or the company selling through Amazon.
If a company is selling directly through Amazon to a customer, I believe the sales tax should be collected by the seller based on their jurisdiction. Amazon is only involved as a facilitator, and should bear no responsibility for sales tax. Although, Amazon would be a prime position to sell a service to facilitate collection and remission of sales taxes.
Could someone give me a better idea of what exactly constitutes an Amazon affiliate?
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no state taxes
So no state taxes,
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Re: Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
There doesn't need to be any new laws about sales over the Internet. The existing ones work fine as they are. If the company is registered to do business in the same state as the purchaser, then the transaction is intrastate and thus subject to that state's sales tax which is supposed to be collected by the company for the state. It makes no difference if the transaction was made over the phone, via USPS, or over the Internet. If the company isn't registered to do business in the same state as the purchaser, then it is an interstate transaction and the customer is not subject to being taxed by that state as those transactions are in the jurisdiction of the federal government and not state governments. The fact that Internet technology makes the transactions easy doesn't mean we need new laws for it. Mail order businesses have been around a long time and it has worked the same way for a long time. No new laws are needed.
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Re: Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
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Re:
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Re: no state taxes
And there are many things on the state level that you wouldn't want the federal government wasting its time on. Not to mention that one way to pressure the federal government into enacting laws is for states to start passing those laws first.
State governments are one thing that makes us different from other countries, and give a lot more people an opportunity to participate in the political process.
I think having state governments is a pretty cool idea.
County governments, on the other hand...
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Amazon also has webstores, in which people buy wholesale or used and sell product on amazon. Thats what you are refering to, and they are not 'Affiliates". They are a different thing entirely.
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Re: Re: Re: Re: sales tax US style
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Re: Re: no state taxes
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Re: A personal story
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you say "none" I say ALL, if you get a cut from sales, the sales are "driven" by that cut.
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" local paper doesn't mean you don't estimate the number of sales an ad in the local paper will generate and agree to a flat rate based on that estimate."
have you ever put an add on a newspaper ?? do you understand the process ? Do you honestly think you are charged differently based on the projected sales ?
Where do you live ?? where does this occur ?
what happens if you advertise something that is not a saleable product ?
NO, you are simply wrong,, no offense or anything, but IN THE REAL WORLD is just not work like that. Honestly !!!!
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Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
'inter state' would be between states
and "intestate" means dying without leaving a will. !!!
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Re: Re: Re: no state taxes
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Re: Re: Re: no state taxes
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Re: Re: I don't like to pay sales taxes but...
Actually, what he appears to be saying is that in addition to the property taxes and income taxes, Oregon should be required to impose a sales tax with a fixed rate, exactly the same rate as all other states should be required to use.
The distinction is that this would not be a Federal sales tax; it would be a state sales tax (meaning the money would go to the state, not to the federal government), but with the tax rate determined by federal law.
This may or may not also be a ridiculous argument, and you may or may not have the same response to it (I suspect that you would), but it is at least a different one from the one you were responding to.
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