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Calling B.S. On Amazon's Taxation Arguments
theodp writes "Over at the Center on Budget and Policy Priorities, Michael Mazerov carefully picks apart Amazon's arguments against collecting sales taxes, arguing that they simply do not withstand scrutiny. While Amazon officials say collecting sales tax in every state would be excessively burdensome, Mazerov notes the e-tailer already collects sales tax in virtually every state for numerous other companies that sell on its website. Mazerov also finds it disingenuous for Amazon to argue that it should not have to help support public services in states in which it has no physical presence when the company fails to support public services in most of the states in which it does have a physical presence. Finally, Mazerov isn't buying Amazon's argument that its opposition to collecting sales tax is not driven by a desire to gain a price advantage over competitors, which he finds at odds with the company's own actions and SEC filings. By claiming sales-tax immunity, says Mazerov, Amazon has enjoyed an unfair 5%-10% price advantage over local retailers, while also depriving states and localities of hundreds of millions of dollars of legally due revenue each year."
It is unrealistic for every company to figure out what sales tax applies in every state, that is why there is a company that does it for you: Vertex. I recently worked on a project to implement this software for a large retailer. Amazon has far more technical knowledge than the average bricks and mortar retailer, this is no reasonable excuse as to why they cannot pay local sales tax. It is long past time for the online retailers to start paying sales tax just like every other business.
Not having to pay sales tax is one of my primary reasons that I often buy products online. Online retailers already have a lot of advantages for many types of products, there is no reason that they should be subsidized over local retailers.
Yup. I used to live in NY and we had taxes out the ass! The prudent yard sellers collected sales tax, though most people don't bother.
Belief? Hope? Preference?The Existential Vortex
From what I recall, filing my state (Maine) taxes online defaults to paying a small estimated use tax due to purchases on the internet. In your mind, if you uncheck the box, you open yourself up to a much-more-likely audit. Because of that, I think a lot of people just pay the estimated use tax. So I think your analysis of "the only one in the country" is wrong.
Counties and cities have their own sales taxes, so a state lookup or even a zip code lookup wouldn't cut it. You'd need to know what municipality the buyer is in, then get state, county, and municipality tax rates.
Don't blame me, I voted for Kodos
No, when opening a bar, you only need to know the laws relating to your bar in that locale. If you open up a bar in Seattle, you don't need to worry about the laws regarding bars in Ocala, FL.
Yes, there are only 50 states. However, each city might have it's own tax rate. There are a lot more than 50 cities. You would have to have some schmoe look it up for every location, and keep on top of any changes that might happen. Whereas, with your bar example, you only need to keep on top of what the tax rate is for your one location.
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Just say no to irreversible processes!
50 states, plus county and city taxes. There are probably well over 2,000 different sales tax rates.
Half of writing history is hiding the truth.
Only 50? There are hundreds, if not thousands of different sales tax regions in the US.
I call BS anyway. There are only 50, is it too much to have some schmoe simply look the damned tax up on a sheet of paper? WTF?
If only it were so simple. The US sales tax system is a byzantine mess. You have state taxes, city taxes, transit authority taxes, public improvement fees, etc which apply based on where the sale occurred. That is the easy piece though. The difficult part is that the tax rates themselves can be different based off the products. Some products are taxable in one state but not in others. A simple example is plain bottled water which is pretty much untaxed everywhere, and flavored bottled water which is taxable in most states. Then you have tax free holidays where a certain class of products are tax free for 3 days (typically back to school), but it is a different set of days for different areas of the country of course.
To top all that off, cities, states, etc are constantly changing the rules as to which products are taxable and which are not. It is a real pain in the a** to deal with, but all of the national retail chains have to deal with it, so why can't Amazon and the other online retail companies? The best case would be to just have a national sales tax that is the same everywhere instead of the current stupid system. Instead of forcing companies to devote millions of person hours to figuring out what taxes to pay, people could actually be doing something productive.
"simply look the damned tax up on a sheet of paper?"
See, now, it's way more complicated than that. Here in Florida, for example, each COUNTY has it's own rate. And we have to charge according to where the BUYER is because that's where they take ownership of the product. And it changes every year. And IIRC, some of the tax is capped to a limit. You really do need a slew of people to deal with the complexity. If they really want to collect taxes like this, what's needed is a single rate for mail order/Internet purchases to make it all palatable.
This might help you: http://dor.myflorida.com/dor/consumer/
Belief? Hope? Preference?The Existential Vortex
Actually, if you leave that field blank on my state's taxes, your odds of an audit go up by nearly an order of magnitude. More so if you are over 55 and have multiple credit cards. (as they know you likely use mail order, and likely there's money to collect).
Proving these violations is REALLY EASY for a state. They simply need your bank statements and credit card statements, and they look for checks and credit purchaseds from out-of-state companies they already know don;t colelct tax, and then bill you the tax, times three, plus interest and penalties (usually ending up somewhere around 7 times the taxes you should have paid). This process takes about 30-60 minutes for the agent, and you get screwed. I know SEVERAL families who have gone through this recently, having made numerous large purchases online.
The state is not only concerned about purchases made without paying tax, they're also looking for in-state companies you may have paid that to, so they can go after them as well... This is easy money for the state, and an easy argument to get past thhe public (the 90% who bought locally and paid taxes don;t like you assholes who not only fail to, but send your money out of state instead of buying locally and supporting the economy). It's a win-win for the politicians, and a huge negative credit mark and a big bill for you.
Most people understand this... you need to learn it. You can choose the easy way or the hard way. (if you;ve been cheating a while, I'll vote for the hard way for you).
There is no contest in life for which the unprepared have the advantage.
Ahem.
The IRS has *nothing* to do with Use Taxes. That's your local Member State that collects use tax, not the central government.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
How about cutting spending
Okay, where would you begin?
Let's just get rid of Public Health altogether. Never mind it's *far* cheaper to have public health services than not.
How about law enforcement? Second Amendment is all I need.
How about Welfare? Those lazy SOB's need to get to work.
How about Child Services? Kids are young. The sooner they learn to be on their own the better.
How about jails? Stack em' higher!
Finally, the culture of 'starving the beast' *never* works. Why? Because the 'starve the beast' advocates have their own pet publicly-funded projects.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
Strangely enough, I agree with this. I'm definitely not against taxes in general and sales tax specifically, but it doesn't make sense to me that a retailer should be required to lift a finger to help a state government from which it gets nothing in return. Those taxes are not going back to Amazon; those taxes are going to pay for things like police and schools in the community in which the *buyer* resides. And yes, the buyer is the one actually paying the tax, but it is ridiculous to expect a company outside of the state to pay any of their own money (in time and effort) to do the work of collecting that tax when they have no say over whether and how that tax is collected.
The states' beef is with the buyers, the actual payers of the tax, who then see the benefits from those taxes. They should be the ones required to collect their own taxes, not the retailers who will never see a dime of the money they spend collecting the tax come back.
This is really no different than what the RIAA is doing. It's the same mentality; if you can't get recourse with the people who you actually should be going after, then just go screw somebody else somewhere up the chain instead.
Try 100K. We get a monthly update of 100K records.
Infuriate left and right
Then determine what you are selling and if it is taxable at that time under that tax jurisdiction's individual rules, which is frequently dependent upon the sales price of the item, the overall total of the order, and what sort of business you are.
"This post contains words, known to the State of California to cause thought. Wash brain thoroughly after reading."
You mean the free shipping that most of their items include if they're over $25?
I've been buying from Amazon for years. We even pay the $80/yr for free 2 day shipping. We come out WAY ahead.
Or course, even if we were paying the 8% sales tax, we'd prob still be ahead. Finding anything in our area from a brick and mortar for less than MSRP is a rarity. Hell, for motorcycle and car parts I order from CA, pay the shipping, and STILL save money.
There are certain categories of product in the UK that Amazon must charge VAT and then pay that to the Gov; if they can do it here - and elsewhere in Europe - why not in the US?
There is some explicit stuff in the US constitution that forbids the US Fed from interfering with the state revenue process and cannot tax state revenue.
Also it isn't allowed to raise taxes on behalf of states on interstate commerce... It can however tax corps and citizens directly and give the states money out of its pocket.
As some states do not have sales tax, it may be a problematic thing for the Fed to do.
"I am the king of the Romans, and am superior to rules of grammar!"
-Sigismund, Holy Roman Emperor (1368-1437)
Sorry, but Sales Tax is not something Wal-Mary, McDonalds, Shell, etc pay. It's something they collect and forward.
There's a very important distinction here. Please bear with me for a minute.
You, as the buyer of an item, incur Sales Tax on every taxable item you buy. That tax is something you pay, and since you are a user of your state's infrastructure that's all well and good.
Amazon/WallyWorld/MickeyDs/Etc, as the seller of an item, do not incur Sales Tax. If they have a physical presence in your state, they are subject to the laws of your state, and a common law to many states is that they must collect Sales Tax on your behalf and forward it to the State for you. They are, of course, liable for Sales Tax on anything they as a corporation purchase for their own use (office supplies, etc), but they don't "pay" Sales Tax on the stuff you buy from them. You do.
The reason this distinction is important is simple - a company that does not have a presence in your State is not subject to your State's laws, they are subject to Federal law and the laws of their own State. My home state of Maine cannot tell Amazon (a Washington company) how to do business, and that includes making them collect tax for my state. If Amazon put a store in Maine, then they are now subject to Maine law, and would start collecting and forwarding Sales Tax like a good Maine company should.
So, if you as a buyer are purchasing something from a company that is not collecting Sales Tax for you, that doesn't mean the tax isn't still due. It just means the company you are buying from isn't helping you pay it. YOU still owe that tax to YOUR state. Most states refer to this as "Use Tax" and collect it when they collect your income taxes.
"This post contains words, known to the State of California to cause thought. Wash brain thoroughly after reading."
You can't have it both ways. You're exactly right that they can't collect tarrifs because they're members of the Union, not foreign countreis; and thus your arguments comparing them to foreign powers trying to tax you are inapplicable.
The rules for taxation within the Union are set by the Federal government, not by your sense of fairness. The government says that they can impose taxes on their customers for all goods purchased and used in the state, so long as the tax isn't higher for goods from other states.
Which brings us back to the key point - they aren't taxing you. The debate isn't about whether they can tax you, it's about whether they can compell you to collect a tax for them and send it along in exchange for letting you do business with people who would owe said taxes.
I'm right there with you. Ever since the sales tax has gone above 9%(for us) in this idiotic state, I've switched over to making as many purchases as I can online. That amazon prime fee, has more than paid for itself in the amount I've saved in not having to pay the state tax man.
Uniform Commercial Code pretty much says that only the Federal Government has the power to tax interstate commerce. Most states get around this by calling it a use tax which I thoroughly disagree with the concept.
Washington's sales tax is only 6.5%, plus whatever each county/city adds to it. If you're paying 10%, or even close to it, you probably live in Seattle and/or King County. (Even Seattle is only 9.2%, I believe. Restaurants are 10%, but you can't really buy a restaurant meal from Amazon.) I live in Snohomish County and my rate is much less.
Unless you're just over-estimating it to keep the Californians from moving up here, in which case: oh wait, it's really 20%, better stay in LA!
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It's a pragmatic reason: the federal government already requires income tax. You can piggy back on the federal income filings easily, and get their mandatory employer filings and whatnot to combat tax cheats.
In contrast, the sales tax is somewhat hard to prove. In a famous legal case, the Crazy Eddie's electronics franchise got in trouble for slowly stopping their practice of underreporting sales and pocketing the tax they collected from consumers. When you mix that in with categorized sales tax (ie food is free, and booze is extra), and outright sales tax exemptions for charitable organizations and education, every argument you've brought forth applies just as much to sales tax as income tax.
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Actually he IS being taxed..
He's being taxed by the amount it is costing him to record keep, collect, and forward the tax to the state in question.
Brick and mortar stores are taxed in the same amount, but it's very easy to record-keep, as you program up the cash registers and load the (small) exception table for the items you have to deal with. In some cases, as in prepared food at supermarkets, this adds a requirement that the person making the purchase be asked whether or not they intend to eat at tables set aside at the store, or whether they intend to take their purchase home. The answer to this question changes the tax rate in some places.
For an Internet retailer, where it's still not legally clear whether the transaction is taking place in the state of the purchaser or the seller, this is onerous in the extreme. Unlike a brick and mortar company, the transaction is either at the sellers location or the drop-ship warehouse (where consideration is finally exchanged resulting in a sales contract; this is supposedly one of the "outs" Amazon is "exploiting"), or it's at every sellers location at the time of the purchase. For example, on an airplane at 36,000 feet somewhere over the midwest.
The part which is truly onerous to the retailer is that there are, at least on the last database update I'm aware of, 160,000+ sales tax rates at various locations in the U.S., and it is nearly impossible to correlate the location with the GIS information such that you can pick the right sales tax(es) to collect for a given location.
Mail order purchases (before the Internet was such an avenue of commerce) are the reason there are state "use tax" laws, and it's the responsibility of the purchaser to pay the tax in the locality that the purchase is intended to be used.
Amazon is being given a bum rap here. Because they are a single "one stop shopping" target for the government to use as enforcement proxy via unfunded mandate ("get Amazon and you get all the tax on all the traffic through Amazon, and get them to pay for the collection process"), they have a huge bullseye painted on their back. Although the idea of normalizing sales tax across all venues, as was suggested in the article, is very attractive on the face of it, it's unlikely to ever happen.
-- Terry
States are not allowed to impose duties on goods crossing their border. Nor are the allowed to block goods from crossing. See the U.S.C.
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