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Amazon Pulling Out of Texas Over $269 Million Tax Bill
ralphart writes with this excerpt from the Dallas Morning News:
"As a result of an ongoing tax dispute with Texas, Amazon.com has decided to take its ball and go home. The online retailer said Thursday that it would shutter its Irving distribution facility April 12 and cancel plans to hire as many as 1,000 additional workers rather than pay Texas what the state says is owed in uncollected sales tax. Texas wants $269 million from Seattle-based Amazon in past-due sales tax. It sent the bill to the company last October."
We've discussed the online retailer's tax battles with other states in the past.
Amazon thinks Texas is bad? Illinois is trying to get about 6 years back-taxes from online shoppers They want everyone who purchased goods in the past 6 years online to pay back-sales-taxes on those goods. How that is considered legal is amazing.
http://archive.chicagobreakingnews.com/2010/12/state-to-offer-sales-tax-amnesty-for-online-shoppers.html
The tax rate is 8.25% for many of the residents.
Plus property taxes are about $1,000 per $50,000 home value.
Our problem is the Perry sucks as governor in the same way Bush did.
Instead of being a true conservative, he was a spendthrift.
Dan Patrick (who is too socially conservative for my tastes) *may* be a true fiscal conservative which would be nice.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Texas is after sales taxes from before Amazon came to the state.
Companies don't PAY sales tax, they COLLECT it. The people in Texas that order from Internet retailers like Amazon are the ones who pay, or don't pay, sales tax. Amazon just collects the tax from the customer, and then pays it to Texas.
One difficulty is that if a Texas consumer wants to buy an item online, and they pay sales tax when ordering it from Amazon.com but not tax if ordering from (e.g.) buy.com, then Amazon will lose business. So it's in Amazon's best interests to NOT collect sales tax from Texas customers if they can avoid it.
There is no clear answer here. On the one hand, you have the Streamlined Sales Tax movement (http://www.streamlinedsalestax.org/) that is trying to enact legislation in as many states as possible requiring retailers to collect tax from customers, regardless of whether the retailer has a presence in that state. The intent is to "level the playing field" and close the no-tax loophole of ordering from out of state - allowing in-state merchants to compete fairly with out-of-state merchants. If this were enacted, Amazon would collect the tax and so would everyone else - so no one would be at an advantage or disadvantage in that regard.
That sounds well and fine, but the difficulty is the mechanics involved. Sure, Amazon and Wal-Mart and other big companies can code their web sites & shopping carts to figure out where the customer lives, and collect sales tax appropriately. The problem is that setting up a web site to do this is expensive - there are data subscriptions and a lot of coding involved. Over hundreds of thousands or millions of transactions, the cost is minimal. But the effort required by Amazon is really not much different from the effort required from doggiechewtoys.com or any other mom-n-pop operation - except that the little guys don't have the transaction volume to dilute the up-front costs. So it is VERY hard on small businesses to make this kind of change.
What to do? Beats me.
Obviously Amazon is within their legal rights to seek out favorable tax havens to operate within the United States, but hardball tactics like this make them appear to be quite evil.
It is Texas that is using hardball tactics. They had previously exempted mail order/etc companies from sales taxes.. until one day they noticed that they got a lot of suckers to move their businesses into Texas.. then they changed the rules overnight and sent out bills to many such companies.
You know that Texas is up to know good because they didnt perform an audit of Amazon's activities in the state, but instead simply made up a figure and demanded it.
"His name was James Damore."
"retardican", that's good. I've had this argument with similarly unenlightened people before. The argument goes:
Them: No public money for research unless it is medical research.
Me: Hmmm....quantum mechanics and relativity, modern techno-stuff is built on it, couldn't get funded these days.
Them: Uh...uh...yeah, but I'm talking about pie in the sky research.
Me: That was pie in sky, so was group theory, which underpins transaction security you can buy stuff on-line.
Them: Yeah, well, they could point to something useful.
Me: No they couldn't, Galois died in 1932.
Them: Oh, okay, but not social research.
Me: So, you don't want to know what social problems have solutions, like failure of schools?
Them: Okay, you made your point.
Two months later:
Them: No public money for research unless it is medical research.
Me: Recall we had this argument 2 months ago and you admit you lost.
Them: What was your reasoning again?
You see, there's no talking sense to these people, they cannot keep anything abstract in their heads for longer than a gnat's attention span.
The whole idea of making more money is that you get to keep more of it, so your expenses are lower relative to what you earn. it sounds to me that you want to arbitrarily raise expenses based on what you earn, which of course defeats the entire purpose of attempting to better one's place in life. Maybe that's the idea comrade?
Do you seriously believe raising taxes on the wealthy is going to make them say "Well, that didn't work out. I guess I'll try being poor now?" Of course not.
You know why a graduated tax system is used just as much as I do. Because the people who need services can't afford them. They aren't being paid enough by the people you seem to admire.
Pure socialism may not work, but pure capitalism is nothing more than a pyramid scheme.
This sounds easy on the outside, but in reality it is not if you are doing it right. (FYI: I have experience adding a third party sales tax vendor (similar to the API you write about) into ecommerce websites.) It definitely does not take 5 minutes and I wouldn't suggest that any script kiddie do it. (You are dealing with real money here.) In the real world, you have to deal with all sorts of things like:
*) Taxes that vary depending on the type of item being bought. (Meaning you have to make sure your items have the various classifications for all the various laws.)
*) Need to then deal with crediting taxes on order cancels/returns/changes, which can be even more fun when you are doing it for a split quantity returned.
*) Error handling when remote API goes down
*) Validating user inputted address matches up with a valid tax address.
*) Shipping is taxable for some areas and others not. So again, you get to deal with this headache every time there is an order return or other order changes.
It's definitely doable, just not near 5 minutes doable and is definitely a cost to be considered by smaller sites.
> State, zip code and tax rate?
Bzzzt. Sorry, nice try, but wrong answer. Zipcodes don't correlate to municipal taxing boundaries. They're usually *close*, but legally that's not good enough. Just to give one example, the city of South Miami, Florida is a "patchwork city". After the first real estate crash in Florida (during the 1920s, when the combination of the Great Depression and 1926 Hurricane more or less destroyed South Florida physically AND economically), the city of South Miami went bankrupt and couldn't provide municipal services any longer. Some influential residents got the Florida legislature to allow individual landowners to secede from such municipalities. Many did. As a result, to this day, not even the city's police and fire departments can tell for sure whether or not any given square foot of land is or is not within the city limits. The net result is that nothing short of a geocoded database that resolves down to every street address in America can definitively assign every order to its proper taxing authorities. And even then, the database could become invalidated if a city changes a law and fails to notify whomever maintains the database.
It gets worse when you consider how the IRS (if it were tasked with the job) would almost certainly go about doing it -- they'd "privatize" it to a third-party that would turn around and charge anyone smaller than Wal Mart or Amazon $3 to do a "taxing-district analysis" (kind of like how when you renew your license plates in Miami, you're going to get hit for a minimum of $3 above and beyond the alleged cost of the plates/sticker themselves, because you MUST renew through a private "tag agency", and there's literally no way to pay the renewal fee that doesn't involve payment of ADDITIONAL fees for the "service" of collecting your payment and handing you the sticker to put on your plate (or the plate itself)).
Amazon DOES do it. Customers living in Washington have to pay sales tax when they buy things on Amazon.
A general site is going to be very complicated, and knowing the sales tax is only part of the problem.
Sales taxes are not necessarily X% on every sale. Different localities have different rules on what gets taxed and what doesn't, or can vary the taxes depending on the type of merchandise. These taxes can also vary from day to day, as some localities have holidays for particular things. It would be necessary to create a taxonomy of merchandise based on the laws of every state, county, city, metro area, school district, or mosquito control district that collects sales taxes. The job of matching address to taxing entities is also large, but that can be handled at the federal website level, with the caveat that shipments to post office boxes are best effort guess for municipality.
Once joesobscuremerchandise.com has calculated the taxes, and billed appropriately, Joe owes various entities the taxes he has collected. The paperwork on that alone could be prohibitive for a small site.
The only thing that would make collecting sales tax feasible for the small business is a massive reform effort to make sales taxes uniform, and that will face a lot of opposition.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes