Slashdot Mirror

← Back to Stories (view on slashdot.org)

Amazon Charges Sales Tax On "Shipping and Handling"

Posted by timothy on from the not-just-shipping-mind-you dept.

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."

31 of 330 comments (clear)

  1. Buy Amazon Prime. by Anonymous Coward · · Score: 5, Informative

    Problem solved.

    1. Re:Buy Amazon Prime. by neo8750 · · Score: 4, Insightful

      Way i see it is netflix is 8 bucks a month 8*12 = 96. Where with amazon prime its 80 and i get free shipping on my amazon purchases.

    2. Re:Buy Amazon Prime. by Lumpy · · Score: 4, Insightful

      But if you dont do it the y PUNISH you by delaying when your package ships. I have had orders sit unshipped for 5 days with them, when I ask about it I was told that "to avoid this get a prime membership"

      --
      Do not look at laser with remaining good eye.
    3. Re:Buy Amazon Prime. by Prosthetic_Lips · · Score: 5, Informative

      False. The sales tax laws are very specifically worded, anything collected (even if in excess of what you were supposed to collect) is required to go to the states. Unless the rules are different since Amazon is out-of-state? I have looked into Florida laws, and even if I were to collect double what I was supposed to, I couldn't keep a penny (legally).

    4. Re:Buy Amazon Prime. by Anonymous Coward · · Score: 4, Insightful

      It's not punishing, it's exactly what they told you they would do. If you choose free shipping, they say your stuff will be delivered in 5 to 8 business days. Given the abundance of their warehouses and ridiculously low shipping times, you should have received your order within 8 business days, so, they were within their right to delay your order to get more profitable (paid shipping and prime) orders out of door first. If you didn't get it on time, that's a different story.

    5. Re:Buy Amazon Prime. by Relayman · · Score: 3, Interesting

      The merchant is required by law to account for all money collected as sales tax separately from the amount of the sale and to remit all sales tax collected to the state. If the merchant collects less than is required based on the sales, then the merchant has to make up the difference. To not remit all money collected as sales tax to the state is illegal.

      It's possible that North Carolina is different than the Midwestern states which I'm familiar with, but I doubt it.

      --
      If I used a sig over again, would anyone notice?
    6. Re:Buy Amazon Prime. by Anonymous Coward · · Score: 4, Informative

      Further, ALL collected sales taxes, whether lawfully, legally collected or not, or even ifthey are collected in error, MUST be remitted to the state.
      Shipping and handling is exempt from sales tax in California but if it is collected, it MUST be sent to California. If they don't, it is tax fraud and they could face stiff penalties, and lose their reseller's permit, preventing them from selling to California addresses.

      A lot of businesses collect sales tax for all sales, including tax-exempt sales. Do they remit those taxes? Probably not.

    7. Re:Buy Amazon Prime. by Sentrion · · Score: 4, Informative

      In many states, companies that collect sales tax are allowed to keep a portion of the tax collected. In fact, they HAVE to keep a portion of the tax collected to remain compliant with most state laws. It's just a fraction, but it is meant to "reimburse" the company for going through the trouble to collect the tax in the first place. If tax is collected when it wasn't due, then the retailer is supposed to refund that money back to the customer. If you buy from a retailer that doesn't charge you sales tax then it is presumed to be your duty to files a state sales tax return to "voluntarily" pay the sales tax yourself directly. Technically you could save a fraction of a fraction by setting up yourself or your company as "self pay" for sales tax. You'll typically need a certificate and a statement, then you can buy tax free and file your own state sales tax return. I've known a few companies that do this, as it can make sense both to save a small portion (the amount the retailer would get to keep) and to keep your company compliant when so many retailers do not collect sales tax or charge the right amount. Staying on top of what percent tax is for each and every zip code and for each and every type of product for each and every state and territory can get even big online retailers bogged down.

    8. Re:Buy Amazon Prime. by ottothecow · · Score: 3, Interesting
      and what would they do with that money? Spend it on entertainment?

      There is some very good television out there and the fact that they are watching it on Prime instead of live makes me think they aren't watching Honey Boo Boo. Nothing wrong with opting for leisure (and maybe opening up discussion topics) over spending every waking hour trying to make money.

      Would it be a problem if they spent that same time playing WoW or reading a book?

      --
      Bottles.
    9. Re:Buy Amazon Prime. by Joe+Tie. · · Score: 5, Insightful

      I work in order to have time for leisure. In all seriousness, if you took the time I spent relaxing after work and made me work a second job? I'd prefer to be dead. That's not life, that's slavery.

      --
      Everything will be taken away from you.
    10. Re:Buy Amazon Prime. by mysidia · · Score: 3, Insightful

      Two day shipping is a convenience, but not worth it to a lot of people. It is for me, even if I opt for standard shipping,

      You're forgetting the important part: not only is it 2 day shipping, but it's also "free"; as in, no cost other than the cost of the prime membership for prime eligible items.

      As long as you would normally make 12 orders a year from Amazon, with approximately $7.00 regular shipping per order (approximately 1 order a month); then Prime is a good economic choice.

      More so, if you regularly paid extra per order for expedited shipping. More so if you have sales taxes in there.

    11. Re:Buy Amazon Prime. by Miamicanes · · Score: 5, Interesting

      The existence of Prime shipping is a game-changer to someone who lives in a place that gets hurricanes, because it enables you to buy things with overnight or 2-day shipping that would be cost-prohibitive to buy from them if you had to actually pay full price for that shipping. I don't even bother fighting the zoo at Home Depot, Target, or Sam's Club anymore before hurricanes... I just buy everything from Amazon, and come home from work to a pile of hurricane supplies waiting on my front doorstep the next day, a few hours before the hurricane makes landfall. Prime shipping is the whole reason why I now buy things like cat food, batteries, and lawnmower parts from Amazon, as opposed to books. Even places that offer free shipping can't compete, because THEY only offer free GROUND shipping, and if you want it upgraded to 2-day or next-day, you get hit with the full cost. With Amazon, 2-day is free, and overnight is only a few dollars more.

      I just wish Amazon had a search option for "Only show me items that can be shipped in time to receive tomorrow". If there's any consistent logic to their cutoff times for same-day shipping, I have yet to figure out what it is. Sometimes it seems to be as late as 8:30pm, sometimes it seems to be 4pm, and it doesn't just seem to vary by warehouse... it literally seems to be a matter of blind, random good or bad luck that changes daily with no apparent rhyme or reason. Saturday and Sunday delivery are even more randomly variable. Few things are more frustrating than trying to do last-minute birthday present shopping on Friday as the deadlines are ticking away, and you can't even figure out what the deadlines ARE without clicking on the item and scrolling down. I swear to god, I'm going to write a program to do brute-force scraped-searches on Amazon called "OnlyTomorrow" that spoofs a browser, executes your search, then fetches the items and brute-force eliminates any that can't ship in time or that don't literally include the requested keywords in the title/description (my other pet peeve about Amazon... sometimes, its signal-to-noise ratio for searches is just horrendous, and the SNR seems to be the absolute WORST when you're panic-buying and desperately trying to beat the same-day shipping deadline).

    12. Re:Buy Amazon Prime. by Miamicanes · · Score: 3, Informative

      > Don't forget unlimited $4 overnight. Do that once with a computer case and it pays for itself.

      Or a generator. I have friends who literally bought a generator with prime shipping as a hurricane was making landfall, and had the generator on their front porch the following afternoon (obviously, they lived in an area where the power lines went down, but there was no major flooding or destruction).

    13. Re:Buy Amazon Prime. by mwvdlee · · Score: 3, Interesting

      At the end of your live, when you're on you deathbed and ready to breath your final breath, do you regret not working more or do you regret not taking more time off?

      --
      Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
    14. Re:Buy Amazon Prime. by Seumas · · Score: 3, Insightful

      Exactly. Instead of shopping online at Amazon (where the supplier of the Amazon-fulfilled shipment is often a small business or mom and pop), make sure to shop locally, at mom and pop shops that still exist, like Walmart, Best Buy, or Target.

  2. sales tax is always on the FULL PRICE by alen · · Score: 3, Informative

    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?

    1. Re:sales tax is always on the FULL PRICE by PPH · · Score: 5, Insightful

      And now you see why small businesses don't like to have to collect taxes for hundreds of different taxing jurisdictions. When they aren't located there, are much smaller than Amazon and can't afford a tax compliance department staffed with accountants and lawyers. Yeah sure, you could do business as a 'associate' of Amazon and have them handle tax compliance for you. But now you're their bitch and they can dictate other aspects of your online existence.

      Wave good by to innovation.

      --
      Have gnu, will travel.
    2. Re:sales tax is always on the FULL PRICE by Mr.+Slippery · · Score: 4, Interesting

      And now you see why small businesses don't like to have to collect taxes for hundreds of different taxing jurisdictions.

      Most small businesses don't. They collect sales taxes in the jurisdiction where they are located. If I (in Maryland) sell you something by mail, I collect tax if you're in Maryland, or no tax if you're not. You might owe use tax, but that's Not My Problem.

      In New York, where it's a destination tax, a merchant located there has to collect for a few dozen jurisdictions -- a pain, but far from "thousands".

      It's a problem for too-big businesses such as Amazon that have "nexuses" of business all over the place; screw them, companies shouldn't be that big.

      But it can be a problem for small companies that provide a venue for merchants in many different locations.

      --
      Tom Swiss | the infamous tms | my blog
      You cannot wash away blood with blood
    3. Re:sales tax is always on the FULL PRICE by Tokolosh · · Score: 3, Insightful

      Amazon loves this complicated and convoluted system - it raises the barriers to entry of competition.

      --
      Prove anything by multiplying Huge Number times Tiny Number
    4. Re:sales tax is always on the FULL PRICE by Fjandr · · Score: 3, Interesting

      How about they do their job and regulate interstate commerce?

      The apply the Commerce Clause to everything under the sun, but when it comes to normalizing trade between the States they have basically remained quiet. Of course, what that means is that there should be no taxes charged by any State on goods arriving from outside their borders. Aggressive jurisdictions, like California and New York, have taken it upon themselves to exceed their authority, and all it would take is a simple clarifying act for Congress to settle the issue.

      Of course, that can only happen in a country that isn't broken. Since the US is not such a country, don't expect a simple, straightforward Act to pass settling the issue. When they finally decide to do something, it will be so incomprehensibly Byzantine that tax lawyers everywhere will simultaneously jizz themselves.

  3. Outrage! by White+Flame · · Score: 5, Insightful

    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.

    1. Re:Outrage! by Anonymous Coward · · Score: 3, Informative

      Well, in California, you must collect taxes on Shipping if you're charging more than the actualy cost of shipping, or you don't keep detailed shipping cost-records. So, the flat-rate $4.99 shipping option in California, according to the BoE is fully taxable.

    2. Re:Outrage! by Anonymous Coward · · Score: 3, Interesting

      Yes I am complaining about paying taxes in California. We used to be able to build roads and school our children on a 6% sales tax. California employees were allowed to unionize under Jerry Brown and since then there has been a steady drumbeat of tax increases to keep California government growing and public employees living large. In a few years we will have 20,000+ California retirees living like lottery winners with 100k+ pensions (with automatic inflation increases) and lifetime gold plated health benefits. California has net 200,000+ citizens moving out of our state a year because of the poor business environment and economy relative to other states. They are never satisfied with several ballot measures this election asking for more and higher taxes in the name of "education" when in reality it is about shoring up the pension funds.

    3. Re:Outrage! by swillden · · Score: 3, Insightful

      Because the sales tax on S&H for a $9.99 dvd is morally and ethically the same as pre-tax profits of $36.8 billion

      Sure it is. What's the difference? One number is much bigger than the other, but the difference in tax amounts is similarly different... and the *aggregate* of all the S&H fees on all the DVDs is probably not so much different in scale than the Apple number. So, what's the difference?

      --
      Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
  4. Was the handling charge really for handling ... by perpenso · · Score: 3, Insightful

    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.

    1. Re:Was the handling charge really for handling ... by Sir_Sri · · Score: 3, Informative

      This is why the EU has a value added tax. It doesn't matter how the value was added to the product, it's taxable. This conceptually makes sense if you consider the basic unit of value is labour - labour is used to extract the resources that make things, and to convert the resources into other things. So any use of labour can be taxed.

      In north america we have various 'goods' taxes, (usually provincial or state taxes), but some are goods and services taxes. Varies a lot by place.

  5. Re:Is shipping by Lumpy · · Score: 5, Funny

    Mostly because Slashot's green color is lead paint, and all these screen lickers are getting lead poisoning.

    --
    Do not look at laser with remaining good eye.
  6. Bad Summary by doug141 · · Score: 4, Informative

    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."

  7. Re:Is shipping by nedlohs · · Score: 4, Informative

    You are a special kind of stupid.

  8. It's the law in CA by kenh · · Score: 3, Informative

    Have a look at this FAQ entry on the California Board of Equalization website:

    Are delivery and handling charges taxable?
    Delivery charges.
    You have the property delivered directly to your customer using a common carrier, the U.S. Mail, or an independent contractor

    Tax does not apply to the delivery charges under these conditions if the charges are clearly stated as a separate entry on the invoice or other bill of sale. If the delivery charges are not stated separately, they are taxable.

    Example.

    You sell a refrigerator and have it delivered by an independent contract carrier. On the invoice, you show a $750 charge for the refrigerator plus a separately stated $50 charge for delivery (the amount charged you by the carrier). Since the delivery charge is stated separately, tax applies only to the charge of the refrigerator ($750). If the invoice had shown a single charge of $800, tax would apply to the entire amount.

    Note: If you charge more for delivery than your actual costs, the added amount is subject to tax. In the example above, if you had charged your customer $60 for delivery, but your actual delivery cost was $50 (the amount charged by the independent contract carrier), tax would apply to the additional $10 charge.
    You use your vehicle to make the delivery

    Tax applies to the delivery charges if you use your own vehicle, whether or not those charges are separately stated on the invoice.

    Example. You sell a refrigerator and deliver it to your customer using your own vehicle. On the invoice, you show a $750 charge for the refrigerator plus a separately stated $50 charge for delivery. Tax applies both to the delivery charge and the charge for the refrigerator.

    Note: Tax does not apply to delivery charges using your own vehicle if there is a written contract of sale, signed before delivery, that transfers ownership of the property to the purchaser prior to delivery.

    Handling charges. Handling charges are generally taxable.

    Combined charges. If you charge a single amount for delivery and handling (for example, the invoice shows a single amount for "postage and handling" or "shipping and handling"), the portion of the charge that represents handling is generally taxable, while the portion that represents delivery may or may not be taxable.

    Note: It is important to use terms such as "delivery," "shipping," or "postage" on the invoice to represent delivery charges. A separately stated charge that says only "handling", for example, is not considered a delivery charge and the entire handling charge is taxable--even if postage or shipment charges are indicated on the package.

    For more information on delivery charges, or information on how tax may apply to a specific transaction, please see Regulation 1628, Transportation Charges or publication 100, Shipping and Delivery Charges. You can also contact the Board's Information Center 800-400-7115 or your nearest Board office.

    http://www.boe.ca.gov/sutax/faqpurch.htm#10

    --
    Ken
  9. Then pay for faster shipping by Sycraft-fu · · Score: 4, Informative

    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.