Court: Borders Web Ops Must Remit CA Sales Taxes

ScentCone writes "A rather quiet appellate court ruling finds that Borders must start coughing up sales taxes to California. Even though Borders spun off their online business to a separate company (now run by Amazon), has no employees, physical facilities, banking, or other activity in the state, the court found for California. While this is at first alarming (unless you write e-commerce software, in which case this may be the Programmer Permanent Employment Act), the court's reasoning was that despite the separate structures, the Borders brick-and-morter presence in CA, some overlapping board membership, common logos, cross-promotion, etc., meant that the two divisions were too entangled to fend off CA's army of hungry revenuers. Ramifications could include good old print catalog operators, store-less biggies like Amazon that have partnerships with CA companies, and more."

Comments

Re:Why the hell not?

[dokhebi]

Which state would charge and receive the sales taxes? Which state does the sale take place in?

These are the reasons there were no sales taxes on out of state mail orders. I guess you want both states to charge sales taxes. If that happens, then people living in states with no sales taxes would order from companies that reside in states with no sales taxes, and the number of internet sales would drop to somthing close to zero.

Just my $0.02 worth.

Flat online tax

[MasterLock]

Simple and clean solution: Implement a flat tax for all online purchases for all states (yes, even NH and the other tax-free states). Send the tax to each state based on the ship-to zipcode.

Results: Each state gets a piece of the action and the online stores can't complain about the costs to implement all of the different tax codes all over the nation.

Re:Why the hell not?

[dgatwood]

On the other hand, it is illegal for a vendor to pay or hide sales tax in Iowa. In other words, if my prices included an "extra" 2% and I only charged 5% on all Iowa sales, but used that padding to pay for the various local sales taxes, the state department of revenue would start enforcement proceedings.

So those stupid "we pay the sales tax" sales are illegal in Iowa? I have to wonder how hard this screws over concessions vendors, which almost universally charge a fixed price including tax rather than line-iteming the tax.

Re:Why the hell not?

[TykeClone]

So those stupid "we pay the sales tax" sales are illegal in Iowa?

As far as I can tell. Of course, if you do any looking into Iowa sales tax rules, there's an awful lot of grey areas - presumably there so that the department of revenue has something to do.

I can't speak for concessions vendors, but food is generally excluded from sales tax. I think restaurants charge sales tax on food that they prepare, but I'm not sure if a concession stand falls within that?