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."

Comments

Buy Amazon Prime.

[Anonymous Coward]

Problem solved.

Re:Buy Amazon Prime.

[neo8750]

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.

Re:Buy Amazon Prime.

[Lumpy]

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"

Re:Buy Amazon Prime.

[Prosthetic_Lips]

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).

Re:Buy Amazon Prime.

[Anonymous Coward]

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.

Re:Buy Amazon Prime.

[Anonymous Coward]

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.

Re:Buy Amazon Prime.

[Sentrion]

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.

Re:Buy Amazon Prime.

[Joe Tie.]

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.

Re:Buy Amazon Prime.

[Miamicanes]

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).

Outrage!

[White Flame]

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.

Re:sales tax is always on the FULL PRICE

[PPH]

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.

Re:sales tax is always on the FULL PRICE

[Mr. Slippery]

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.

Re:Is shipping

[Lumpy]

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

Bad Summary

[doug141]

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."

Re:Is shipping

[nedlohs]

You are a special kind of stupid.

Then pay for faster shipping

[Sycraft-fu]

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.