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Amazon Charges Sales Tax On "Shipping and Handling"
You may have noticed that retailers like Amazon are charging tax, in compliance with state laws, on not just the price of goods, but on the "shipping and handling" fees they charge. An anonymous reader writes "By coincidence I noticed this myself the other night, and ended up ordering something from a supplier in Arizona, rather than Amazon, to avoid the sales tax. Now here is an article about it in the Los Angeles Times."
Problem solved.
not a sale for a service?
I pay sales tax when I get my oil changed for both the oil and the labor.
in some states you even have to pay sales tax on the full $649 price of a smart phone
sales tax is on GOODS AND SERVICES
are slashdotters really that dumb not to realize this?
This is the correct behavior (in most states). Hate it? Me too. Bitch at your local government person.
How are sites slashdotted when nobody reads TFAs?
You still have to pay the sales tax, even if it's not part of the sales price. Stop ripping honest people off.
After all the outrage in the Apple tax thread, everyone should stand for paying their fair share of sales taxes, not dodging them by ordering out of state from somebody they normally wouldn't.
Certain items aren't taxable in certain states. For example, clothes aren't taxable in New Jersey, where Amazon will start collecting tax in 2013.
If Amazon is collecting tax inappropriately, then it should have passed the money on to the state. It would be up to the customer to request a refund on his/her state return. The inappropriate tax could offset tax that wasn't collected, but should have been.
I haven't had a need to do this, but suppose I buy a TV from some online place using my CC.
It's shipped, and I've paid sales tax on the shipping. Okay, I return it for some reason,
for a CC refund.
Do I receive a refund for the sales tax paid for its original shipping, or is that lost forever?
The answer is generally yes, you pay sales tax on shipping & handling. Check your local state's department of revenue, though in general if a state can charge a tax it will.
Many other states charge sales tax on shipping. Nothing to see here.
-m
I wonder if you also have to pay tax on Prime? It's main function is to cover shipping & handling for all orders, I cannot see why it would not count. But since it's not part of any one order, perhaps it does not..
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Is this news? Didn't the Beatles write a song about this?
This is not a profit center for Amazon. If they collect this money they must either pass it on or admit the mistake and refund the customer. Anything else will get you in deep legal trouble
I can tell you that's exactly how it's supposed to happen, in every state I've done the paperwork in.
If you doubt, pick up the phone, order pizza delivery, and check out the receipt.
Was the handling charge really for handling or is it a euphemism for our markup after costs? In other words is part of the price being hidden/embedded in the handling charge? *If* so there may be some justification for including handling in the taxable portion of the bill.
Some states charge sales tax on freight, some don't. Some states charge sales tax on services, some don't. I know AZ doesn't charge tax on freight, not sure about services. If Amazon is charging you sales tax on freight in AZ, three possibilities come to mind.
1) Amazon is so new to the sales tax game that either they don't know about how freight is taxed in each state (yeah right.)
2) Amazon hasn't programmed their system to handle freight in states that don't tax it (if anyone from Amazon is reading this, stay away from Vertex, it taxes properly only about 90-95 percent of the time.)
3) Amazon is pocketing a bit of extra change.
If they are collecting the taxes they go to the government or it would be fraud? The article makes it sound like they don't. They wouldn't affect the companies profit margin. Unless it is different in the States than in Canada.
Paying higher taxes is the patriotic thing to do, according to Obama and Biden. If you disagree, let me reming you there is an election next week.
Oh REALLY ?
Then why did your buddy Romney do everything he could to avoid paying
taxes ?
Guess you have a selective memory, don't you, you white trash moron ?
Amazon is collecting taxes on shipping and handling. However, California law is causing this. Stop trying to incite anger against a company just following the laws of the state they are doing business in. If you don't like the laws; do something about it. I promise you that every retailer hates the annoyance of sales tax.
North Carolina does. So why not. Vote Higher Taxes 2012.
where do they bill you for labor on a oil change? The dealer??
The lube places have a flat fee or do they brake it down in to labor and oil cost??
Here in Georgia, shipping on an item sold to another is taxable. I found that out when I ordered some toner for a copier from my local supplier but didn't have time to go pick it up. I called them and they pointed me toward the Georgia law laying it out.
I'll be sure to accept all automotive advice from someone who knows the difference between brake and break.
I bet you use the geek squad or easy tech for pc repair and get ripped off.
... you tolerate bloated corrupt state governments. California has promised such lavish benefits to its state employees that it has no legitimate path to obtaining the money; they now put so much of the budget into employee pay and benefits that they can no longer properly provide the basic services and maintain the existing infrastructure (for each active employee, they have two or more retirees being payed as much as when they were providing some service to the taxpayer). As a result, they long-ago started pushing the bounds of the US Constitution (in both spirit AND the letter)
The first such corruption is when state and local governments tax visitors. Hotels already pay their taxes on income and property... the addition of so-called "occupancy taxes" are a way to tax people from outside the area (these people are being taxed without representation)
The second such corruption is when states try to tax interstate commerce (specifically forbidden by the US Constitution). In California, they tried to intimidate citizens into paying taxed on out-of-state purchases (effectively asserting a CA sales tax on a purchase from, for instance, Colorado) by pretending it was something new called a "use tax" and hoping nobody would take the legal risks and costs to sue all the way to the Supreme Court over a 7% tax on a small purchase. The "use tax" is a clear fraud... if you buy a book from Amazon you must pay a "use tax" (with no regard to whether you use the book, or gift wrap it and ship it to a friend in Florida) but if you buy the very same book in Los Angeles there's no "use tax".... the "use tax" is obviously a renamed "sales tax". The really stupid bit is that they get some in-state businesses to support such taxes, on the grounds that untaxed out-of-state purchases are unfair competition and those out-of-state vendors are not paying "their fair share" but the very rationale for sales taxes used to be to make local businesses who use the roads and the police and the fire services pay for those things "off the top" on their activity (since otherwise any business could use creative bookkeeping to avoid making taxable profits and thereby avoid local taxes). The out-of-state vendor uses no local services, and he DOES contribute to some local services indirectly by using shippers who pay local taxes for their operations. As long as interstate activities are NOT taxed, there is at least SOME pressure to keep sales taxes lower (people buy out of state) but if the society as a whole embraces this abuse the pressures to keep these taxes low will reduce.
California's legislature has been dominated for so many decades by the Democrats who are controlled by the state employee unions that they have introduced a mind-blowing level of bizarre tax policies in a never-ending attempt to bring in enough tax money... taxing "shipping and handling" charges is one of the more rational parts of the CA tax tomfoolery. Governors all across the country are trying this same ploy and they are all pushing garbage like this because they are ALL facing the same financial problems that come from decades of vote buying with the promise of future payouts to these state workers. It will not end here, and the ONLY way to keep this stuff from growing and spreading is to begin cutting back on the size of state governments which are bloated to levels the nation's founders would never have been able to comprehend. Margaret Thatcher was right when she said that the problem with socialism is that sooner or later you run out of other people's money; State and federal government in the US keeps promising more and more while saying somebody else (usually "the rich") will pay, but the truth is that the real money is in the middle class (they each have less but there are so many more of them) so the middle class are the ones who get taxed... usually in subtle ways (examine your phone bill... read the fine print on the gas pump... ask your employer how much he/she actually pays to employ you (money they must allocate to you but intercept and send to the state before you ever see it))
You can have freedom or you can have big government; you cannot have both
You ship directly to the purchaser by common carrier, contract carrier, or US Mail
Your invoice clearly lists delivery, shipping, freight, or postage as a separate charge
The charge is not greater than your actual cost for delivery to customer
The first item is basically a distinction between bringing the product to the customer yourself and using a service (like USPS, UPS, FedEx, etc.). Amazon isn't delivering the item itself, so this doesn't apply to them.
The second item is making a distinction between including the cost of shipping in the cost of the item and breaking it out as a line item. Since Amazon does list shipping separately, this doesn't apply to them.
The third item makes a distinction between simply charging the customer for the cost of the shipping and making a profit on the shipping cost. Amazon is charging you more than UPS/USPS/etc charges them to ship the item, therefore they are making a profit off the shipping costs. And that is why the BOE is requiring them to collect sales tax on the charge. They're selling you something extra, they're making a profit off of it, and as a result you as the consumer have to pay tax on their profit. The fact that the extra cost is controlled by them and of no use to you is immaterial. The state treats it like Amazon raised the price of the item but tried to make it look cheaper by including a portion of the cost in with the shipping.
By doing this, the state is ensuring it gets everything it's entitled to, and making consumers aware that when they buy from Amazon, they are paying an Amazon tax, and a sales tax on the Amazon tax.
Here in Texas, there is a form you have to send in by the 20th of each month with 8.25% tax payment on internet purchases you made out of state. I think that I am the only person in Texas who complies with this law. There is really no way that the state can keep up with such purchases.
Summary should have summarized it's the law. "According to California's sales tax collection agency, the Board of Equalization, sales tax should be collected when a seller "makes a combined charge for 'shipping and handling' or 'postage and handling,' " if the invoice does not show the actual cost of the individual delivery."
At bit misleading title, because Amazon is not doing it of their own accord, they are doing it in compliance with the law, which means that every other internet vendor selling into california will have to do the same.
Some states require this. Call your legislature if you don't like it...not amazon.
You just decided to blame amazon instead of your local government. Stupidity Issue #1 and the followed up to break the law..Free Loader Issue #2
Is any of this wrong ?
J&R is based in NYC, website www.jr.com. No tax, several items have free shipping. I've been buying from them for decades with no problem. Amazon sometimes has a lower price, but now that they charge sales tax (almost 10% here in CA) it's worth it to switch.
I don't work for J&R, nor am I paid to shill for them. Just doing my best to keep Uncle Jerry from getting more money.
A few years ago I was trying to find a gameboy advance cartridge that was fairly uncommon.
Sam Goody's carried it for 16 dollars, so I ordered it immediately. They charged me 17 dollars and change for "shipping and handling".
When the package arrived it was the size of a deck of cards and had $1.60 in postage on it, sent via regular post - not even first class.
Talk about thieves.
Hi,
Wondering whether such "surprise" happened to US people only?
Since I've been spending hundred of dollars buying books from Amazon and these charges are no surprise.
From Malaysia.
You may have forgotten the days when Amazon made no profit on the books that it sold and made all its profit on shipping and handling charges. The profit for one quarter from shipping and handling was around $35 million as recall. Don't ask me for a citation; other than Wikipedia, I wouldn't know where to look.
If I used a sig over again, would anyone notice?
This is not too surprising when you see a lot of items in Amazon Storefronts charging $0.99 for an item and $19.99 for shipping + handling. I assume this was a tactic of skirting sales tax
(1) He said that paying high taxes was something Obama and Biden would support, otherwise if you do not support it you should support the other guy. So if Romney is guilty of not paying taxes, that only means he is living up to those values. Try to pay attention.
(2) Not sure how you determined the race of the person posting the comment. This is no better than automatically assuming all black people are criminals.
Have a look at this FAQ entry on the California Board of Equalization website:
http://www.boe.ca.gov/sutax/faqpurch.htm#10
Ken
It's nice that you found a way to not pay "your fair share" to the state you live in.
Ken
Remember when everyone was upset that Amazon threatened to pull their warehouses out of CA to avoid collecting sales taxes? Now everyone is upset because Amazon is collecting sales taxes in CA according to CA state law...
Ken
Amazon and any and all e-tailors will suck (homosexually) this to the tune of 1 Trillion Dollars US per year.
Why?
A Gold Mine!
E-Tailors can and have right to 'click-track'!
If the click-track leads to a 'add to my shopping cart' then the e-tailor can add at that moment ... for each click.
Shopping Tax
A small amount per person .... unless the person is undecided ... AH HA! ... keep the potential ... for more 'clicks' ... more 'click' equals more tax at the end!
e-buyer undecided and confused
Beautiful bilking strategy ... thank you US Gov. and all for institutionalization of this Nazi tax.
Ou OH ... Did I say a bad word ? Aaa jhjhuuuu pspspspsp uuu,,,,, mmmm. Now it is better.
XD
Their shipping rates are competitive with other online companies. You seem to be complaining that they won't both comp you shipping and do it quickly. Well given that I don't know anyone else that does that, it seems reasonable they don't. Amazon just offers lots of options:
1) Free shipping that is slow. They note it can take a number of days. However, you don't have to pay anything extra for it.
2) Per shipment faster paid shipping. They have all the regular options, up to next day. You pay based on size and weight, like with most retailers, and get your shipment in the specified time.
3) Prime. Yo pay a yearly fee to get two day shipping on all items (even pretty large and heavy ones) and have the option to upgrade any item to one day for $4/item. Often even the 2 day items arrive in one day, though they don't guarantee it.
Sounds damn reasonable to me.
This article is garbage. I quote: '"The sales tax on freight is a profit center for them," he said. "It adds up when you figure how many packages they do. It's a huge number."' This is completely untrue. Any tax that Amazon collects gets remitted to the state (ignoring a very small percentage that some states allow the merchants to keep as basically a payment for the trouble of collecting the taxes), they don't keep it. Failure to collect sales tax is one thing - it's a civil matter and is punished through monetary penalties, but collection and failure to remit is a criminal matter.
If the LA Times has a problem with Amazon's sales tax collection policies, they should take it up with the California BOE. I'm sure Amazon is not doing it any differently than any other company that has a physical presence in California.
Cross border shopping is worse... if i bring my purchases home into Canada, and the border guy is bored enough, I pay 13% taxes on the cost of the item, the state taxes, and shipping and handling costs.
Usually they don't bother now until it's around $200. If I stay in the US, after 24 hours i have a $200 exemption (but $201 makes the whole thing fair game). After 48 hours I have an exemption on the first $800.
U.S.P.S. postage is not taxable by any state. Nor is freight for goods shipped across state lines. Interstate commerce is federal jurisdiction, not state. States are simply not allowed under federal law to impose their own taxes in a federal jurisdiction.
Amazon have had UK sales totalling over £7bn during the past three years, but have paid £0 in tax.
http://www.independent.co.uk/news/uk/home-news/amazon-investigated-by-uk-authorities-over-tax-avoidance-7622019.html
To do something right, you often have to roll up your sleeves and get busy.
Some states do require tax on shipping fees. I know PA does.
Wuddooeyeno? IITYWYBMAD? Like nuts? eclecticallyincorrect.com
I think the LA Times article misconstrued the collecting of sales taxes on combined shipping and handling as to helping Amazon's bottom line. If they collect the tax, they have to pay it all to the state. They can not breakout shipping from handling and only pay the sales tax on the handling.
Now any handling fees above the actual shipping costs do help the bottom line.
BTW, I am glad that Internet sales are finally being charged sales tax. It helps to level the playing field between the Internet and brick and mortar stores. It also guarantees that the sales tax that we should be declaring on our state income forms actually gets collected. Sales taxes are badly needed by our local governments and schools to pay for the valuable local services they provide.
... says a discarded seasonal worker.
Learn the rules so you know how to break them properly.
www.teslabox.com
brEAk please. brAke is what you do to slow down a vehicle.
Trying to become famous by taking photos. Visit my homepage please.
Newegg with their code sales and such lately are getting all my new game business just because I almost always get free shipping from them and they dont charge me sales. Their free shipping also gets to me in 2 to 3 days vs amazon sitting on it 5 days before shipping as a way of encouraging me to pay for prime.
Plus newegg carries a lot of electronics and is carrying more all the time. Granted they have the head crushing depth of stuff amazon carries but I will order from them over amazon everytime I can on electronics, pc parts and games which is a big chunk of what I buy online every year.
For most of the rest I go to ebay.
I love amazon and all but having to pay for tax, the free shipping being slow, paying tax on shipping fees just makes me only go to them when my other sources fail me. I used to use amazon A LOT, but now I dont so much.
Some states require tax on shipping and handling. I've lived in NC and TN, and IIRC at least one of them did (I'd remember better if I ever bought anything from tax-withholding companies or filed the "required" form and paid the tax.)
My guess would be NC (generally more obnoxious about treating people as serfs and taxing everything they can think of) but TN relies mostly on sales taxes (no income tax, and only 1-2% higher sales tax than NC, which has the highest income tax in the region), so maybe they need more money.
Congratulations, you're a douche. You are intentionally avoiding paying your fair share and I'll bet my bottom dollar that you still think you're entitled to of your states services.
To follow that up, just because the vendor doesn't collect taxes from you doesn't mean you don't owe them. You are still liable for the proper tax amount and by not paying it you are committing tax evasion.
Stop being such a freeloading fuck and pay your fair share or stop taking advantage of government funded services like roads, schools, health inspectors to keep you from dying from the food you ate at Waffle House last week.
I really can't stand free loading assholes like you.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
In the US you get a lot of items from prime next day because they ship from a warehouse near you. However, sometimes the item isn't at one of those, and has to cross the country. That either takes a bit of time, or costs quite a lot of money if you want it done next day.
Amazon is unwilling to pay the next day air prices, so they will only guarantee second day. Nobody is unhappy if it gets there a day sooner, and they don't get reamed on shipping charges.
At the rate of how things are going, my last breath will probably be a pathetic gurgling death-rattle and the words "I got the memo". Shortly after my body slumps across my keyboard and ergonomically correct mouse pad, the rest of the office staff will be celebrating a birthday/anniversary/baby shower two cubicles over with cake and punch.
So Amazon isn't evil; they're doing exactly what California told them they must do. It's at the end of the article. This seems like grandstanding to me. The issue is not Amazon, it's California law.
Even TFS notes that this is in compliance with the law and NOT outside the norm by any means, so I am not quite sure what the purpose of this article was at all. It is up to the individual states to determine whether they want S&H to be included within the sales tax calculation, and about half of the states actually require it to be included. What's more, this is only considering S&H as a common carrier cost for shipping. If you are padding the S&H charges such that it becomes a profit center line item, then regardless of state that S&H charge must be included in the tax calculation. There are numerous other stipulations as well, but suffice it to say it can be very reasonable for Amazon to charge tax on S&H.
If it is found, however, that Amazon is truly miscalculating their tax, then you can bet that the state auditors will find it. State auditors go through remittances with a fine tooth comb looking for just a single error, as that is often all they need to make you pay out your ass in fines. If it actually came to that, then I could see this being a news worthy article, but as is it just looks like /. ad whoring.
The average Slashdotter is all for taxation-- "with taxes, I buy civilization"-- until they have to pay for it.
Gamingmuseum.com: Give your 3D accelerator a rest.
Since Amazon started charging sales tax, we buy much less from them. I suspect I am not alone.
In California, "handling" is taxed but not "shipping". If the two are bundled into a single charge, it is taxed. That is the law in California. At least, we do not have a value added tax, which would include "shipping" even if it were separately charged.
Hi,
from the foreigner point of view it is nothing new.
When I order something from another country I have to pay:
[( + ) * (1+ ) ] * (1 + )
when ordering from Amazon (US) to Europe it is overseas shipping :-(
I've had to deal with that for years due to the California Use Tax (yes, I've been diligently paying it for many years). In California, Handling is taxable, but Shpping is not, though the combined Shipping & Handling is taxable. So, I've been paying tax on S&H for all that time. If they were to split out those charges, it would save some tax (9.25% where I live).
I see class action suits arising across the country and world!!
My karma is bad. Don't get too close!!!