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Amazon Fights Back Against NY Online Sales Tax
The New York Times is reporting on Amazon's lawsuit contesting the recently enacted New York state law which requires online retail outlets to collect sales tax on items sold to the state's residents. Amazon disagrees that it should be required to collect such tax without a physical presence in the state. We discussed the 'Amazon Tax' last month. Quoting:
"The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer. Amazon has hundreds of thousands of affiliates--from big publishers to tiny blogs--that feature links to its products. It says thousands of those have given an address in New York State, although it does not verify the addresses. The state law says that if even one of those affiliates is in New York, Amazon must collect sales tax on everything sold in the state, even if it is not sold through the affiliate."
I wonder if Amazon could just refuse to sell items to people in NY state, and additionally drop all affiliates there (or at least stop accepting new affiliates). I'm sure all those affiliates (bit and small) would make some racket to their state legislators if they were cut off.
:P
Of course they'd never go that route, I think. It sure would be fun to watch, though.
Doesn't the antidote to this seem clearer than day on this one? All Amazon has to do is ban publishers with payment addresses in NY... those big enough to care can simply reincorperate in a more tax-friendly state, those small enough not to matter will simply just go away.
Congress needs to act, since this is an interstate issue.
I don't think New York has the authority to do this. But I sure would like to see the supreme Court act.
One problem with sales tax is the complexity of the code. What states need to do is to create an out-of-state seller tax rate, which retailers could voluntarily choose to pay (instead of trying to figure out the specific taxing locale). It might be equal to the highest taxing rate in the state, and would be paid to the state with no locale attached to the revenue sent there. Then the state would divide the revenue up amongst their localities based on some sort of formula (perhaps based on in-state sales, for example, for percentages).
It was already a law that residents had to pay sales tax on out of state items. But with no real way for the state to enforce it, most taxpayers are not going to bother.
Also, per resident this is a very small amount, which makes it almost silly to bother reporting on your state tax return. According to the first article, "The provision is meant to contribute about $50 million to the $122 billion budget" In 2006, the population of NY state was 19,306,183. By those numbers, each resident would be paying an average of $2.59. In NY, sales tax is different IN EACH COUNTY! (Statewide it varies between 7% and 9%). This means that a $24.95 book would have $1.74-$2.24 tax owed to NY state. Who would bother? Granted, some people order hundreds of dollars worth or merchandise off of Amazon, so it would be higher for some people, that's not the point. Obviously, not many people pay their share, which is why the greedy politicians passed this law.
One HIGHLY invasive option is for the state of New York to sue Amazon and force them to hand over the addresses of NY residents. Heck, they could probably even sue for the entire purchase history per year, per account. I am not sure that New York could enforce it even then, though. What are they going to do, knock on each Amazon shoppers door and threaten to take them to take them to jail if they don't pay two bucks?
(I am not saying that this is a GOOD option, but since it was already a law, I am surprised that the state of NY did not try to get their grubby mitts on taxpayers money this way. Bring on the flames...)
Hopefully Amazon will win this.
The greed of the State.
If you want to talk about greed, let's talk about the state legislatures and localities that have an insatiable appetite for raising taxes. That's their solution to every fiscal shortfall. They seem to be unable to grasp the concept of "living within your means". Not satisfied with what they can extract from their own citizens, they want to force out-of-state businesses to do their dirty work for them. As far as I am concerned, they can all go to hell.
Mea navis aericumbens anguillis abundat
Firstly
The question is whether the vendors must collect those taxes on behalf of the state. Generally, only those companies that have a physical presence, such as an office or store, in the state of the purchase are required to collect the taxes.
By have a physical presence in NY, I'm deriving benefits from the state; Amazon without a physical presence in NY receives no state benefits and should not have to work as the states agent withput consideration.
Secondly
Amazon's legal obligations are dependent on the actions of a third party over which it has no contract or control. It would be like the county tax assessor telling your your property taxes will increase 25% on sunny days!
Thirdly
NY is the poster child for it's mishmash of sales tax laws, my understanding is that you can be liable for state, county, and municipal sales taxes in some places of NY, the chief obstruction to a coherrent, unified national state sales tax system is NY
Apocalypse Cancelled, Sorry, No Ticket Refunds
This is simply a jurisdiction (State, County or City) trying to make tax collection easier for themselves. I don't know of any jurisdiction with a Sales Tax that doesn't already have a corresponding Use tax, which is intended to tax anything that was purchased from out of Jurisdiction. Unfortunately, collecting that Use tax is difficult with the number of possible filers and the jurisdiction's desire to verify that the filers aren't under-reporting. Generally, they have dealt with this by going after businesses and big-ticket items like cars, boats, and airplanes. But, governments are getting greedier. If they can't get the online retailers to collect the taxes for them, the next option for them is to go after the banking industry to collect enforcement data. They will simply require banks to collect information on the items purchased so they can collect the Use tax based on that information. In pre-computer days, that would have been impossible given the volume of data, but today, it is clearly possible. Especially if you realize that any internet purchasing goes through some kind of bank or payment service (Paypal). I don't want that much 'Big Brother' looking over my shoulder; I'd rather pay sales tax via the retailer who simply can report it by category, not item.
If I am not for myself, then who will be for me? If I am only for myself, what am I? If not now, when?
It's called the Constitution of the United States.
In section 10...
And when we look back to section 9...
Now I'm no constitutional scholar - but I interpret the above to mean the states can't tax each other's exports. This will be challenged and it will end up in the Supreme Court.
The new law is based on a novel definition of what constitutes a presence in the state: It includes any Web site based in the state that earns a referral fee for sending customers to an online retailer.
It's not novel. In Zippo v. Zippo 952 F. Supp. 1119, the Court found Pennsylvania had jurisdiction over Zippo.com, a California-based company, over the fact it engaged in electronic commerce with 3,000 individuals and 7 ISPs located in Pennsylvania. In this case, Amazon is engaged in electronic commerce with numerous companies, via the referral fee, based out of New York--thus New York should have the same jurisdiction rights as Pennsylvania did.
However much I dislike the taxes, I hate discrimination and government loading the dice and making the playing field slanted. The brick-and-mortar companies in New York are obligated to collect sales tax for NY. That includes you corner diner and the mom-and-pop store selling used books. There was a time when compiling 50 state sales tax codes or even 25000 local county tax codes and making businesses outside complying with these code was technologically impossible. But now that excuse is not valid anymore.
If Amazon does not have to collect the tax, none of the local businesses should have to collect the tax. If the local businesses must, then Amazon must too. It is a question of Government not playing favorites and creating walled gardens. It is not really a question of whether or not the the sales tax is fair or unfair. But I am not sure most people will see the distinction.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Though I grew up in the U.S., I now live in Finland, where the state actually provides services in exchange for high taxation: excellent public transportation, generous unemployment and retirement, a monthly living allowance to students, free university education, a flourishing arts scene, and so forth. Paying taxes here is actually attractive. In the U.S., where people feel increasingly out of touch with their government, suspicious of the ability of police to actually do their job, and can't count on Social Security, I can understand the grumbles.
Yes, I live in NC and yes, I benefit from the things that are built with state tax money. This "should" language you keep using is anathema to me, though. What should happen is that they don't take money from me except for what I elect to do. Yes, they have the authority to do it otherwise, but not robbing me for things I don't use is the should.
Greed is wanting more when you have enough; I grant that this is subjective, but "enough" is not determined by well-intentioned tax assessors. Keeping what is already mine is not greed, my friend. That you (and others) have accepted that way of thinking is why the only solid economic progress happens in spite of you
Um, some of us live in states that don't have sales tax.
And we've got guns.
And we believe we should live free or die.
Just sayin'.
(Actually I have no guns, but I think all my neighbors do...)
How far do you want to take this? Should I have to pay sales tax to my home state if I buy a cookie and bring it across the boarder?
The REAL problem with collecting sales tax for online sales has nothing to do with the customer paying the state. It has EVERYTHING to do with the burden on the retailer. Do you have any idea how big a mess the sales tax system in most places is?
It can very from county to county and even from town to town in the county.
So under your system let me show you how this would work.
Any website that sells anything is going to have to register with not just EVERY STATE but every county and town. Each of them will require that you pay a fee to get your tax number... Oh joy.
Then every quarter you will have to file a few THOUSAND tax reports. One per city, county, and state.
Then you will have to have some way to decide which local gets the tax and what the rate is. Do you tax the shipping address or the billing address?
So what your plan would do is drive every small web store right out of business.
It is unconstitutional for the states to tax interstate commerce.
So your little rant is just that a rant. Do we give to many tax cuts to the very rich and big companies? Yea I think so but this has NOTHING to do with that. In this case the tax break is going right to the consumer aka the little guy.
Under your plan the burden would be on the small companies and the consumer.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Yes, cities often put an extra tax on to cover their expenses. Food and medicine is often exempted*. NY is known for 'tax holidays' where they'll make clothing under a certain dollar amount tax free. It can get ugly.
I don't read AC A human right
It wounds like there's alot of greed flowing around here... you alls wants no taxes, and the "evil" state is going to end the party.
Frankly, New York State is in the hole. Most of its industry went overseas within the last two decades (no more glass from Corning, film from Rochester, shoes from Binghamton, etc.) and at times it seems like the entire economy of the state has shifted to New York City. Much of that work (and a nice chunk of the state's revenues) comes from the financial sector. Which is now in the toilet. So you not only have an ongoing economic collapse in NYC, but the rest of the state's economy got "shanghaied" long ago.
The truth is, the State of New York is facing record deficits this year and needs to make up for the difference (it does not expect to be able to). And while the governor is recommending that municipalities consolidate to reduce costs, taxing internet retailers on sales in NYS is another way to get there.
An enlightenment painter would paint a grand house on a lawn; A romantic painter would paint it on fire.
Wow.. you sound like a such a bleeding heart liberal.. oh wait.. this is slashdot. Legally avoiding taxes is stealing.. that takes some balls of come up with. I call bullshit! It's my right to minimize taxes I pay in every legal way. Greed (as you call it) or free market capitalism (my preferred term) is has been not only driving this country, but also most of the civilized world. When did US, with the largest GDP in the world (right on par with the entire EU) become the 2nd rate nation? It's not about gimme, it's about keeping the money you worked hard for. If you feel like helping your state/federal government you can always send them a check...
Just buy everything with PayPal and have it shipped to yourself as a gift from a fictitious address outside of New York. If they solve this, then any non-New York resident could tax-bomb any New York resident by gift shipping all of their stuff to their own houses using a New York address as the giver.