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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
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.
"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.
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.