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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

Mon, Oct 21st 2013 7:41pm — Mike Masnick

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.

"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."

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.

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Filed Under: affiliates, illinois, sales tax
Companies: amazon

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Anonymous Coward, 21 Oct 2013 @ 8:59pm

I don't like to pay sales taxes but...
if the Federal Government would mandate a fixed and common sales tax rate on all Internet purchases across all states and territories I wouldn't be too upset. First, it would level the playing field a bit for businesses. Second, it would simply tax collection by eliminating the myriad different state, local, etc., tax rates that businesses are expected to account for. Third, it would help drive states to move toward that tax rate across the board for logistical and competitive reasons.
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- Anonymous Coward, 21 Oct 2013 @ 9:26pm
  
  Re: I don't like to pay sales taxes but...
  Not happening, unified taxes are good for the public but bad for public coffers since they depend on fuzzy relationships to hide multiple charges for the same exact things, thus reducing collected income, but promoting shameless extravagant expending patterns.
  
  Why charge only the last step of the whole process when you can charge every single step of it?
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- Anonymous Coward, 21 Oct 2013 @ 10:00pm
  
  Re: I don't like to pay sales taxes but...
  So you want the Feds to tell the States what sales tax rate they should be collecting? But JUST on the Internet?
  
  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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  - beech, 22 Oct 2013 @ 4:11am
    
    Re: Re: I don't like to pay sales taxes but...
    As I recall, the constitution gives congress control of interstate commerce. So it would probably be more constitutional.
    
    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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    - Anonymous Coward, 22 Oct 2013 @ 4:54am
      
      Re: Re: Re: I don't like to pay sales taxes but...
      The commerce clause has already been warped enough. It's not a carte blanche for the federal government to intercede on every issue they wish.
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      - art guerrilla (profile), 22 Oct 2013 @ 8:16am
        
        Re: Re: Re: Re: I don't like to pay sales taxes but...
        um, actually, it is...
        
        they commonly TORTURE and extend the meaning of 'interstate commerce' such that they can fuck with ANYTHING they feel like...
        [ link to this | view in chronology ]
        
        Anonymous Coward, 22 Oct 2013 @ 5:49pm
        
        Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        I know they commonly do that doesn't mean that's what the clause was intended for or that they should. I'm asking here that we don't add 'collecting sales tax on behalf of the states' to the list of things they warp the commerce clause into allowing.
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      - Anonymous Coward, 22 Oct 2013 @ 8:58am
        
        Re: Re: Re: Re: I don't like to pay sales taxes but...
        Well, if the matter is entirely INTRASTATE commerce, the federal government can't interfere. Every other form of commerce is within the federal domain. That's where distinction lies.
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    - Anonymous Coward, 22 Oct 2013 @ 4:57am
      
      Re: Re: Re: I don't like to pay sales taxes but...
      Exactly, the separation is clear. The federal government gets to regulate (which includes taxes on) INTERSTATE commerce and the states get to regulate INTRASTATE commerce. The Feds can't force taxes to be collected on sales within a state and states can't force taxes to be collected on sales between states. Also, one state cannot tax an individual buying something from another state that is not subject to that state's own laws. When you purchase something from another state and are not physically in that state, you are not subject to their laws. You do not owe state sales tax on it. If there was a Federal sales tax on interstate sales, you would owe that, but that would go to the Federal government not the state anyway.
      [ link to this | view in chronology ]
      - Anonymous Coward, 22 Oct 2013 @ 6:25am
        
        Re: Re: Re: Re: I don't like to pay sales taxes but...
        Wasn't the original intent of the commerce clause to give the federal government the ability to regulate among the states (i.e., intrastate commerce)? It's my understanding the original intent of the law was to prevent a situation where a factory in state "A" would be forced to buy raw materials from state "B" since there was a specific, and heavy, tax on the raw material if it originated from state "C". Basically the commerce clause was supposed create a level playing field for all parties within the United States.
        
        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).
        [ link to this | view in chronology ]
        
        Anonymous Coward, 22 Oct 2013 @ 6:26am
        
        Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        Misused "intrastate" above. Sorry.
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        art guerrilla (profile), 22 Oct 2013 @ 8:19am
        
        Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        pedant alert on/
        
        'intra state' would be within the state
        'inter state' would be between states
        
        pedant alert off/
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        art guerrilla (profile), 22 Oct 2013 @ 8:19am
        
        Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        oops, turned on pedant alert too soon...
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        Anonymous Coward, 23 Oct 2013 @ 6:30am
        
        Re: 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
        
        and "intestate" means dying without leaving a will. !!!
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        Anonymous Coward, 22 Oct 2013 @ 8:24am
        
        Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        It is simple. The reason states can't charge sales tax for purchase that are made by someone out of state is that it would mean subjecting someone who is not in that state to THE laws of that state. States cannot do that. They only can govern things that are entirely within their jurisdiction. The commerce clause is designed to protect two things. 1. States rights to handle the business that is solely within their state without interference from the federal government or other states and 2. allow the federal government to regulate everything else so that commerce between states is fair. If what you are proposing (eliminating the exemption for state sales tax for purchases made between states when the seller is located in a given state, that would open the door to allow states to pass laws that would set a separate tax rate for purchases made from other states, effectively imposing a tariff on interstate commerce which would be REALLY BAD. There is a really good reason why it is set up the way it is. States get to control their own business as long as it is only theirs. Everything else is in the jurisdiction of the federal government.
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        Anonymous Coward, 22 Oct 2013 @ 8:52am
        
        Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        As for the question of affiliates... if you live in Illinois and purchase something over the Internet from an affiliate (located in Illinois) of a site that is not located in Illinois. Yes, you should be charged Illinois state sales tax, however it is the affiliates job to collect it, not the sites. So forcing Amazon to collect sales tax for sales that they are not making but rather just facilitating should be wrong.
        [ link to this | view in chronology ]
        
        Anonymous Coward, 22 Oct 2013 @ 9:59am
        
        Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        I'm not suggesting states be allowed to impose different taxes on the residents of other states. As I mentioned above that falls squarely within the intent of the commerce clause to prevent such activity. What I am suggesting is that sales tax be assessed based on the location of the company completing the sale to the customer.
        
        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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        Anonymous Coward, 22 Oct 2013 @ 12:25pm
        
        Re: Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        But the tax is not imposed on the company. It's imposed on the consumer. The business merely collects the tax from the consumer for the state. And if the consumer is located in another state then they are being taxed by a state law of which they are not a subject. The only reason the location of the business comes into play is in determining if the transaction is an interstate or intrastate one.
        
        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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        Anonymous Coward, 22 Oct 2013 @ 1:12pm
        
        Re: Re: Re: Re: Re: Re: Re: I don't like to pay sales taxes but...
        Another factor is that when companies register to do business in a particular state, they are able to get a tax ID that allows them to purchase goods and for resale and goods used to produce their product tax free. The reason for this is that goods are not supposed to be taxed multiple times. Only the final sale to the end consumer is supposed to be taxed. If the state taxes the sale between the retailer and their supplier then taxes the sale again between the retailer and the customer, the product has been taxed twice. Throw in another tax for the transaction between a manufacturer and the distributor that is supplying the retailer, then it's been taxed 3 times. That is not supposed to happen. Sales tax is supposed to be applied only once on the last sale to the consumer.
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- Anonymous Coward, 22 Oct 2013 @ 4:52am
  
  Re: I don't like to pay sales taxes but...
  How would an additional federal sales tax change the existing state sales tax landscape at all?
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- Anonymous Coward, 22 Oct 2013 @ 9:10am
  
  Re: I don't like to pay sales taxes but...
  I'm an Oregonian. We don't have a sales tax. It's come up for a vote many, many times and been defeated every time. What you're saying is that in addition to my property taxes and income taxes, I should be forced to pay a Federal sales tax on internet purchases. This is ridiculous. It won't suddenly drive me to a brick and mortar store. I buy online because I live in the middle of no where, and can't get the stuff I want locally.
  
  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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  - The Wanderer (profile), 26 Oct 2013 @ 9:59am
    
    Re: Re: I don't like to pay sales taxes but...
    
    I'm an Oregonian. We don't have a sales tax. It's come up for a vote many, many times and been defeated every time. What you're saying is that in addition to my property taxes and income taxes, I should be forced to pay a Federal sales tax on internet purchases.
    
    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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- John Fenderson (profile), 22 Oct 2013 @ 10:06am
  
  Re: I don't like to pay sales taxes but...
  But what about those of us who live in states without a sales tax at all? Lack of a sales tax is one of the several awesome things that keep me living where I'm at.
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Skye Media Group, 21 Oct 2013 @ 9:14pm

Amazon
I LOVE Amazon. They have everything
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- Anonymous Coward, 21 Oct 2013 @ 9:53pm
  
  Re: Amazon
  Hell yeah!! Same here, Amazon is great! I buy everything on Amazon except food.
  
  I do get worried about the UPS man trying to rape me.
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Anonymous Coward, 21 Oct 2013 @ 9:16pm

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.

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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- Anonymous Coward, 21 Oct 2013 @ 9:21pm
  
  Re:
  What if you get paid for advertising in by a percentage of sales that result from your advertisement?
  
  Is not that what Amazon does exactly?
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- Rich Fiscus (profile), 21 Oct 2013 @ 9:31pm
  
  Re:
  If you're going to be snarky and pedantic, at least be accurate. You do not have to be an employee to get a sales commission.
  
  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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  - Anonymous Coward, 22 Oct 2013 @ 7:20am
    
    Re: Re:
    of course they can advertise, but their income is tied to 'sales', they are therefore primarily in sales and not advertising.
    
    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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    - Rich Fiscus (profile), 22 Oct 2013 @ 8:46am
      
      Re: Re: Re:
      None of which makes Amazon affiliates employees. They are, in essence, independent contractors. They get paid for (successful) advertising and whatever income that brings in is certainly taxable.
      
      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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- Anonymous Coward, 21 Oct 2013 @ 9:53pm
  
  Re:
  You are wrong.
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- Anonymous Coward, 22 Oct 2013 @ 4:55am
  
  Re:
  So, in your mind, there's no such thing as being an advertiser since, by definition, all advertisers "'get a cut' ON A SALE."
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  - Anonymous Coward, 22 Oct 2013 @ 7:09am
    
    Re: Re:
    IF you a commercial TV or radio station you are paid for the time to give to a specific company, because you advertise for MacDonnalds does not mean the rate you are paid for that time is dependent of the number of burgers that are sold.
    
    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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    - James Burkhardt (profile), 22 Oct 2013 @ 3:17pm
      
      Re: Re: Re:
      Except none of the sales are driven by the actions of the affiliate aside from providing a link to amazon.com. A person in sales tries to sell product. I guarantee you if people could track what advertisement brought you in pre-internet then a "ill give you a cut of the sale of everyone who you send to my store" that would have been one of, if not the only, standard advertising contracts.
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      - Anonymous Coward, 23 Oct 2013 @ 6:20am
        
        Re: Re: Re: Re:
        "Except none of the sales are driven by the actions of the affiliate aside "
        
        you say "none" I say ALL, if you get a cut from sales, the sales are "driven" by that cut.
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    - Anonymous Coward, 22 Oct 2013 @ 5:52pm
      
      Re: Re: Re:
      All money that is spent on advertising is dependent on 'the number of burgers sold.' The nominal rates might not be directly tied to consequential sales but the relationship is still always there. Advertising is paid for only because it increases sales ergo all advertising is dependent on 'the number of burgers sold.'
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  - Anonymous Coward, 22 Oct 2013 @ 7:15am
    
    Re: Re:
    that is not true, and how can it be if not all advertising is 'selling something', and no advertiser 'gets a cut on sales', they get a flat rate, or the rate they charge for the advertising time/rate.
    
    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.
    [ link to this | view in chronology ]
    - Anonymous Coward, 22 Oct 2013 @ 5:55pm
      
      Re: Re: Re:
      You're myopically focusing on the way the rates are calculated and ignoring where the money to cover them comes from regardless of how the rate is calculated. Put another way the fact that you can't easily and accurately track the number of sales made as a result of an add in the 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.
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      - Anonymous Coward, 23 Oct 2013 @ 6:25am
        
        Re: Re: Re: Re:
        if "myopically" means CORRECTLY, then yes I am !!!!
        
        " 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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Anonymous Coward, 21 Oct 2013 @ 9:19pm

The dissenter must be a comedian since the issue of whom is responsible for collecting implies absorbing all the costs of doing so alone while others don't have to.
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- Anonymous Coward, 22 Oct 2013 @ 4:56am
  
  Re:
  Seriously flashed a bit red on that one. Assuming the cost of compliance is zero and doesn't constitute a taking is fucking disgusting.
  [ link to this | view in chronology ]
nic42 (profile), 21 Oct 2013 @ 9:33pm

If I had a company in Sylmar, California selling "The Garden Pickle" and I advertise on WREX 13 in Rockford, Illinois, I do not have to collect sales tax from sales generated in that state. If, however, I were to advertise on www.wrex.com where they would be an affiliate to my sales website of www.theamazinggadenpickele.com, prior to this ruling, I would have to pay the state sales tax. Thus, there was, in fact, discrimination based on the media type so the majority of the court was correct and the dissent was incorrect.
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Anonymous Coward, 21 Oct 2013 @ 11:20pm

sales tax US style
what gets round the sales tax headache is as post_1 says is a uniform rate across the country, collected by the federal gov. and distributed back to the states by the federal government.

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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- Anon-Y-Mouse, 22 Oct 2013 @ 12:12am
  
  Re: sales tax US style
  Don't use a flat sales tax. There is no problem with the government having a sales tax registry where businesses can go to find out the amount of sales tax they have to collect for each zip code. That same registry can handle receiving the taxes and distributing them to the proper recipients. All this can be done electronically. The real problem is major shopping areas, and internet sales have seriously cut into sales tax collection in rural areas.
  [ link to this | view in chronology ]
  - James Burkhardt (profile), 22 Oct 2013 @ 1:24am
    
    Re: Re: sales tax US style
    Yes, but sending a check toeach of the over 5000 tax jurisdictions with over 10000 different tax rates would eat into the small margin mentality of online merchandising.
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    - Anonymous Coward, 22 Oct 2013 @ 1:58am
      
      Re: Re: Re: sales tax US style
      It would also eat into the time of the sole trader or small business, who would have to deal with all of those tax authorities.
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      - James Burkhardt (profile), 22 Oct 2013 @ 3:26pm
        
        Re: Re: Re: Re: sales tax US style
        Same thing im talking about. No also about it. That is exactly my point.
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  - Anonymous Coward, 22 Oct 2013 @ 2:00am
    
    Re: Re: sales tax US style
    Even zip code doesent help. Different cities have different sales tax even if located in the same zipcode.
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- Anonymous Coward, 22 Oct 2013 @ 4:58am
  
  Re: sales tax US style
  Additional disadvantage: it's grossly unconstitutional.
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- John Fenderson (profile), 22 Oct 2013 @ 10:11am
  
  Re: sales tax US style
  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%.
  
  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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Anonymous Coward, 21 Oct 2013 @ 11:34pm

re: sales tax US style
Just to be clear, there is the one sales tax applied to all retail channels.
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- Anon-Y-Mouse, 22 Oct 2013 @ 12:15am
  
  Re: re: sales tax US style
  Actually, no. There are plenty of exceptions. Ready to eat food is taxed in some areas, while not in others. The tax rate on food sometimes differs from merchandise. Some types of merchandise like clothing aren't taxed in some places. High priced merchandise, luxury goods, may be taxed at higher rates.
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Todd Knarr (profile), 22 Oct 2013 @ 12:04am

Make all businesses do this
Internet sales tax collection is being pushed by the brick-and-mortar merchants. If you want to kill it, turn it around and demand that all merchants collect sales tax under these rules. That is, if Target has stores in Illinois then when someone walks into a Target in California the store has to determine where that person lives and if they live in Illinois must collect the Illinois sales tax at the rate for that person's home address and remit it to Illinois. Force that and hoo boy will you hear the screaming from the people most in favor of this over how much it'll cost them to be able to figure out the correct tax rates.

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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- James Burkhardt (profile), 22 Oct 2013 @ 1:34am
  
  Re: Make all businesses do this
  The biggest problem isn't in knowing the sales tax rate, I, an ametuer programmer, could probably build the module for a small database query. no, the problem is in the number of different tax jurisdictions and tax rates which legally need to be collected properly and mailed to each of the individual authorities. You know someone is going to decide that the online retailer with 1.001 million is sales (the guy who didn't even think he would need to collect sales tax, because his Gross sales never exceed 975K), should have remanded 102 dollars to region x and 104 dollars to region y rather then vice versa, which is what he did. Then he is getting audited by 50 different state tax agencies, putting the financial burden on a widget retailer with low profit margins (because what state agency is going to come to you for the audit? No they are going to make you come to them....)
  
  All in All, I can see a huge bureaucratic nightmare coming from this.
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- Anonymous Coward, 22 Oct 2013 @ 5:08am
  
  Re: Make all businesses do this
  When you are physically in a state, you are subject to THAT STATE'S laws. If you buy something in a store in California even though you are visiting from Illinois, that is still INTRASTATE commerce, not INTERSTATE commerce. Mail order is different because you are not physically in the state you are purchasing it from. If the store operates in both states then the laws say that you are purchasing it from the entity in your state not the other one when ordering through the mail.
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  - Anonymous Coward, 22 Oct 2013 @ 6:25am
    
    Re: Re: Make all businesses do this
    Which is why if you live in one state and work in another the state you work in is the one that gets to collect income tax...
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    - Todd Knarr (profile), 22 Oct 2013 @ 9:48am
      
      Re: Re: Re: Make all businesses do this
      Not really. If I live in one state but work in another I have to declare all my income in my home state, whether I earned it there or not. My home state'll usually give me a tax credit for any taxes paid to other states, but if my home state's tax rates are higher than where I worked I'll still owe the difference. The tax rates in the other state may not be advantageous either. For instance if I earned $25K in each of 4 states then each of them will tax me at a low rate based on a $25K/year income, but my home state will be taxing me at the rate for a $100K/year income which'll be a lot higher.
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      - Anonymous Coward, 22 Oct 2013 @ 12:28pm
        
        Re: Re: Re: Re: Make all businesses do this
        I'm just glad I live in a state without a state income tax.
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      - Anonymous Coward, 22 Oct 2013 @ 5:57pm
        
        Re: Re: Re: Re: Make all businesses do this
        The ... denoted sarcasm. I'm sorry that wasn't clear.
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Anonymous Coward, 22 Oct 2013 @ 5:56am

sales tax US style
sales tax as currently implemented is a pain for the consumer, the nation has divided itself into a billion tiny tax fifedoms. big business doesn't care because it can structure itself to avoid the high tax zones, small business has no choice. it just has to lump it, each political unit has its own tax department.

tax colection would be stremlined with one colection agency.

local and state tax beuroacray could afford to cut unnecessary staff
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Jim Anderson, 22 Oct 2013 @ 6:26am

A personal story
I live in Minnesota and recently I tried to buy a blanket from a web site located in Michigan. I was told that I would have to pay sales tax on the blanket because there was an agreement between Michigan and Minnesota. When I checked this on the internet I found there was such an agreement between Minnesota and 20 to 30 other states. I sent a number of emails to the revenue department of the Minnesota asking the details of this situation. No one cared to reply except to send a form email that implies I would have to pay Michigan sales tax and also Minnesota use tax. I tried calling the Revenue department only to be placed on hold and then dumped off the line. The effective sales tax would be over 17 percent. Use tax is a tax you pay on out of state purchases. It is generally equal to the in state sales tax. So no blanket and a firm resolve never to purchase anything from any of the states. I am sorry but I can't remember the name of this group of states agreement.
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- Anonymous Coward, 23 Oct 2013 @ 4:31am
  
  Re: A personal story
  Such agreements, if challenged should be able to be struck down because interstate commerce is clearly a federal matter.
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Ninja (profile), 22 Oct 2013 @ 6:42am

Should be simple: at the time of the sale the tax should be calculated based on the billing address as if it was a physical store. Simple as that. I wonder what's hard about it...
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- ltlw0lf (profile), 22 Oct 2013 @ 7:58am
  
  Re:
  Should be simple: at the time of the sale the tax should be calculated based on the billing address as if it was a physical store. Simple as that. I wonder what's hard about it...
  
  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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  - Ninja (profile), 22 Oct 2013 @ 10:41am
    
    Re: Re:
    They do get with property taxes, labor and other stuff. And there are sales for the state/county/whatever they are. Indeed things get awful when Govt gets involved. Or rather when politics get in the way of the technical stuff.
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- jupiterkansas (profile), 22 Oct 2013 @ 8:04am
  
  Re:
  Might work for state taxes, but if you include local taxes you're talking about hundreds if not thousands of different tax rates depending on zip code. And the rates change depending on which laws are passed, so you'd have to keep updating the database. Then there's the issue of paying each state their taxes due - this would be huge a burden on the retailer. And then there's government audits to make sure those taxes are all properly paid.
  
  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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  - Anonymous Coward, 23 Oct 2013 @ 5:00am
    
    Re: Re:
    Most e-commerce good engines already have this capability built in. The operator of the store just has to include the tax regions and rates that apply for where they are physically located. For instance, oscommerce has this capability. I live in Houston, Texas. Here the state sales tax rate is 6.25%. The city adds another 2% (1% for the city, 1% for the MTA). If I were running a ecommerce site I would simply include a module that applies for the state to add the tax for the state and another one to add the tax for the city when they are applicable. The engine will do the rest. It isn't hard.
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Anonymous Coward, 22 Oct 2013 @ 7:23am

"and if any sales come through, then you get a cut."

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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- ltlw0lf (profile), 22 Oct 2013 @ 8:00am
  
  Re:
  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.
  
  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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Anonymous Coward, 22 Oct 2013 @ 10:12am

Okay, I'm completely baffled about what constitutes an Amazon affiliate.

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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- Anonymous Coward, 22 Oct 2013 @ 1:34pm
  
  Re:
  That is EXACTLY how it works. If Amazon is just a facilitator of transactions it isn't responsible for collecting the taxes, the seller is. I think where this comes into play is the fact that the Internet makes it easy for individuals (not companies) to effectively run "businesses" selling stuff without registering as a business at all. Unless a person selling stuff (think eBay more than Amazon) registers at least with a DBA, then they don't really have a means for the state tax collector to track them and what taxes they may owe. If your just selling your used stuff you don't want anymore that is one thing and shouldn't be subject to sales tax as sales tax was already presumably paid when you bought it originally. However if you are buying new goods wholesale from a distributor and then just using your affiliate account to sell them to people as a business even if you didn't register as a company in your state, you are supposed to collect sales tax on sales to other people in your state but no one really does that and the states don't really have much of a way (or the resources for that matter) to track thousands of small time individuals selling stuff without collecting the due sales tax using anonymous account names. That is where I think this whole idea stems from about sales taxes on the Internet. It's not really the big retailers that are the issue.
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  - James Burkhardt (profile), 22 Oct 2013 @ 3:23pm
    
    Re: Re:
    An affiliate is a website with a link to amazon. That link, when used by a customer who buys something on that visit, tells amazon to pay a small percentage of the sale to the affiliate. THe affiliate is selling nothing.
    
    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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    - Anonymous Coward, 23 Oct 2013 @ 4:28am
      
      Re: Re: Re:
      I know the difference. I was merely referring to where I think this issue originated.
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    - Anonymous Coward, 23 Oct 2013 @ 4:44am
      
      Re: Re: Re:
      Yes that is how a traditional affiliate program works, however it wasn't clear from the article that this was what they were referring to. There may be some confusion of the two things in the calls since you could say that a business who also has a presence on Amazon to generate sales thru their ecosystem (as many companies do) also are using Amazon as an affiliate even if Amazon provides the entire mechanism for the payment processing.
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Anonymous Coward, 22 Oct 2013 @ 10:20am

no state taxes
there are three tiers of govenment. local/city government, state, and national. local and national provide distint and useful services to the citizens, state seens to be a mini version of the national government. i say lets get rid of an entire tier of government, voting-wise, each clump of X-num citizens provides 1 congressman, a region defined by the old boundries of the extinct states provide two senators

So no state taxes,
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- jupiterkansas (profile), 22 Oct 2013 @ 2:06pm
  
  Re: no state taxes
  State highways, state parks, state judicial systems... there's a lot of things the state does that you probably aren't aware of, esp. if you live in a big city that has its own robust government.
  
  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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  - Anonymous Coward, 22 Oct 2013 @ 9:47pm
    
    Re: Re: no state taxes
    so to cut government a tier gets loped, the buracratic blot is removed but necessary services remain.
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    - jupiterkansas (profile), 23 Oct 2013 @ 7:40am
      
      Re: Re: Re: no state taxes
      I can't make sense of that sentence.
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    - Anonymous Coward, 23 Oct 2013 @ 8:31am
      
      Re: Re: Re: no state taxes
      How exactly to you intend to fund those services when you remove the tier of government? Are cities and towns now going to be expected to fund from their budgets those services that were previously handled at the state level and in addition to that increase, are they also supposed to fund the parts that are rural and outside of their jurisdiction? Is the federal government supposed to now step in and fund those as well when they are already operating in a huge deficit to the point that they just reopened the government after shutting down for half a month and only opening up again by raising the level of debt they allowed themselves to incur?
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