Amazon Botches Sales Tax, Overcharges NJ

Hodejo1 writes "On July 1 Amazon started to charge sales tax to NJ residents, which is 7% in the state. But something was not right when I attempted to buy a book for my daughter. Just as I was about to finalize the order I noticed the charges were way off. The book cost $8.09. The tax I was to be levied was $0.85. That's a 10.5% tax rate! Why am I being charged 10.5%? It turns out that Amazon is also charging me tax on the $3.99 cost of shipping and handling. That's a problem, because New Jersey does not tax shipping and handling as I confirmed on the state's web site. I then checked a purchase I made from Amazon on October 7th of this year. Guess what? I was taxed on the $13.50 shipping and handling charge for that order. Now it is very possible — probable most likely — that this is nothing more than a coding error on Amazon's site. But it's a whopper! Just consider the hundreds-of-millions of dollars in sales Amazon makes in New Jersey each year. These extra dimes add up very quickly. Has Amazon been overcharging NJ residents' sales tax since July? If so, why haven't they picked it up by now?"

Comments

State should just tax it.

[Anonymous Coward]

What do you think the "only pay for shippig&handling, nevermind its more than the product" scams are about? just another tax dodge in the land of tax dodgers.

Re:State should just tax it.

[Impy the Impiuos Imp]

Thank you.

I have an elderly relative who fell for one of those scams, but she's feisty and, being retired, had nothing better to do than sit on the phone over multiple calls to cancel the order and get her money back.

But it is a scam, just like banks charging you overdraft fees is core to their business model rather than a true penalty because it costs them money, and credit card companies hoping, yes hoping, you get into financial trouble so they can jack up the rates and get you permanently stuck barely making monthly minimum payments of high rates.

When the business model is centered around profits from these things, they are not what these scammers claim them to be.

Re:State should just tax it.

[ShanghaiBill]

NJ does tax S&H. Amazon is doing it correctly. The submitter is a moron. The reference provided in the summary to "prove" that NJ does not charge tax, actually says exactly the opposite: since 2006 they tax S&H.

Re:State should just tax it.

[camperdave]

The "shipping costs more than the item scam" was really only a thing on ebay...

You don't watch too many late night infomercials, do you?

Re:State should just tax it.

[Runaway1956]

"As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable."

I didn't actually read much of that page, until I saw your post. Then, I did a search for "shipping" on the page, and read everything that got highlighted. You're right - reading helps people to avoid making idiot posts!!

Re:State should just tax it.

[Sponge Bath]

I think the problem is the way they get their money. Instead of charging service fees that reflect their cost of business, some fees are set exorbitantly over the cost of providing the service (like a $20 service fee anytime "overdraft protection" is used). And these fees are paid by those that can least afford them. The guy that keeps $10,000 in his account gets free checking, and never gets dinged by overdraft fees. But he's being used by the bank too, by getting 0% interest on his checking account so it becomes a free loan to the bank.

This is not a problem in a competitive environment. Unfortunately, in the US, the banking system is as competitive as the DSL/Cable ISP duopoly, mobile phone service or TV programming services.

Re:State should just tax it.

[Grishnakh]

Stupid Slashdot. Why does this shitty site not have a way to mod down moronic submissions like this? This isn't the first time I've seen something this poorly-researched pop up on here.

Re:State should just tax it.

[Tyler Eaves]

Say it with me class: CRED-IT UN-ION

Re:State should just tax it.

[sjames]

I would suggest that many if not MOST markets in the U.S. are unhealthy (do not work as a market is supposed to work). That's why we see consumer electronics where the top of the line and the budget model differ only in firmware and soldered jumpers on the board and why a pair of shoes that costs $10 to make in Indonesia runs $200 in the store. It's why the only difference between so many brands is the name on the box.

Re:State should just tax it.

[cdwiegand]

They're no better - snobish, poor customer service, and the local CUs in this area have savings accounts whose rates are no better than a bank's. I ended up switching to an employee-owned bank. I get pretty good service, and my only complaint is they don't run their own data system, so when I make a deposit it's not instantly credited to my account, I have to wait anywhere from 1-8 hours before any of it shows up on the account, as they batch everything from each branch only twice a day.

Re:State should just tax it.

[viperidaenz]

The guy who keeps $10k in his account is the guy the bank makes money from. They make their money by lending out the money of others and charging interest.

The guy who doesn't keep a lot of money in his account is nothing buy a cost to the bank, so they charge more fees.

I hate to break it to you, but banks are not charities.

Re:State should just tax it.

[larry bagina]

Slashdot runs another site without all the stupid shit. It's here

Re:State should just tax it.

[AlphaWolf_HK]

I don't know about NJ, but in my state they do exactly that. Whatever you charge as sales tax above the actual sales tax, whether it is deliberate or by accident, you pay to the state anyways.

I think if it was an error on the part of a coder, then my guess is that this money is also pooled into taxes that they have to pay to NJ, so it is going to be paid to them whether they ask for it or not.

Re:State should just tax it.

[AK Marc]

But they don't make much off him. Why? Because they have to balance available funds with the unavailable funds and meet governmental minimums. If the guy wit $10,000 can take it out at any moment, they can't lend against it. If they do, and he takes it out, they are short.

Re:State should just tax it.

[Wycliffe]

I think the problem is the way they get their money. Instead of charging service fees that reflect their cost of business, some fees are set exorbitantly over the cost of providing the service (like a $20 service fee anytime "overdraft protection" is used). And these fees are paid by those that can least afford them. The guy that keeps $10,000 in his account gets free checking, and never gets dinged by overdraft fees. But he's being used by the bank too, by getting 0% interest on his checking account so it becomes a free loan to the bank.

No, you need to go one step deeper all the way back to you the consumer. Banks provide a service. They could charge a person $20/month
for this service and probably be ok financially if they could get customers but you the consumer will go to the bank across the street that
gives free checking instead. You pay for free checking with overdraft fees and lost interest just like you pay for free broadcast tv with commercials.
They aren't being "used" by the bank. They are paying the bank to use their services and most people would rather lose a little interest or have the
occasional fee than have a reoccuring monthly fee. I understand exactly how a bank charges me and I have no problems with it.
If you don't like their business model, find a bank, credit union, etc... that has a business model and fee structure you like.

Re:State should just tax it.

[mcgrew]

Stupid Slashdot. Why does this shitty site not have a way to mod down moronic submissions like this?

It does. It's called the firehose, and you can set it up so that newly submitted stories are on the front page, with a handy + and - next to each story and a moderation for it (spam, stale, stupid, dupe, notthebest).

Re:State should just tax it.

[viperidaenz]

Banks can easily lend out up to 80% of the deposits they hold.
Things get a bit hairy when they lend out 90%+ though, like what happened in Europe.
Most people put most of their money in a bank. The idea is large groups of people don't random pull all their money out of a bank.
This is backed up by the fact there is less than $1T USD in circulation, but over $10T held by banks. (and like, 14T held by other nations...)

When someone buys a house with a mortgage, where does the money they paid for the house go? In another (or the same) bank.

Re:State should just tax it.

[AK Marc]

Yes, and they are required by law to hold some of it back. You don't lend out 120% of it. You must have cash reserves at the end of every day. If you don't, they shut you down. You are going on a rant about fractional banking that doesn't address what I said at all. The only way it could have been more off topic is to add in a stab at "fiat currency" for causing it all.

Re:State should just tax it.

[Grishnakh]

Yes, but once it's on the main page, it's stuck.

On Reddit, there is no separate page you have to visit to moderate story submissions; all the submissions can be modded up or down at any time, so if something is stupid, it'll just get modded down to oblivion after enough people look at it and decide it's crap. Here, you're relying on people to take their time to check out the Firehose.

Re:State should just tax it.

[viperidaenz]

I'm simply stating the guy who keeps $10,000 in the account gets free services because the bank can profit off $8,000 of his money.
The guy who keeps going in to overdraft gets charged large fees because the bank doesn't like people borrowing their money without prior agreement.

Re:State should just tax it.

[AK Marc]

I'm simply stating that they will not lend against his $10,000 because if they lend against it, and he withdraws it, the bank can lose its charter.

Are you sure ?

[Anonymous Coward]

What about this nj law
As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable.

Re:Are you sure ?

[Blakey Rat]

Let's apply Occam's Razor. What's more likely: a company that's been the largest online store for years charging wrong taxes, going completely unnoticed since 2006? A company that's been intensely focused on interstate tax issues in the last few years, and have incredible incentive to ensure they tax accurately to avoid giving ammo to their many opponents?

Or some idiot (submitter or Timothy, you can take your choice) misread his own State's laws and decided to puke his unfounded outrage all over this site?

I'm taking option B.

Tax rate too low?

[Anonymous Coward]

I am somewhat confused. I thought only filthy free market capitalists wanted to pay lower taxes. The liberals^W progressives are all forwardlooking and think we don't pay enough tax and see the value of paying more taxes, which is more government, which equals a better world. Why don't we ask Amazon to start charging 100% on everything to everybody? Then governments all across the US, and even the world, will have hundreds of millions or billions of dollars more with which do good.

Re:Tax rate too low?

[ShanghaiBill]

I am somewhat confused. I thought only filthy free market capitalists wanted to pay lower taxes.

As a fithy free market capitalist (FFMC), let me chime in. We FFMCs do indeed believe in lower taxes, but we also believe in sensible taxes. Taxes should be simple, fair, difficult to avoid, and should not inhibit economic growth and prosperity. So taxes on income and labor and the worst, taxes on revenue are better, taxes on property or consumption are better still, and taxes on things you want to discourage are the best of all. If you look at the things we tax in America, it would be difficult to design a dumber tax system. Most taxes are on production or profits (income tax and payroll tax), and we have some of the lowest consumption taxes in the developed world. So we end up with millions unemployed at the same time we run up trillions in deficits because we don't produce enough to satisfy our consumption levels. That is a symptom of a broken system. Unfortunately, sensible tax reform isn't even on the political horizon.

Re:Tax rate too low?

[NicBenjamin]

The problem with Checks and Balances, a diverse economy, and a population that really engages in politics is that all big changes are nigh-impossible to enact. If Obama proposed a tax reform that conservative intellectuals loved, for example replacing the income tax with a national VAT, conservative Congressman would be unable to vote for it unless it also cut revenue. The engaged people who vote in GOP primaries are universally convinced ALL taxes are evil, and all taxes are equally evil, therefore any "tax reform" that makes the tax burden less painful without significantly cutting tax revenue is inherently evil. OTOH the Democrats couldn't vote for it unless it raised revenue. Their engaged people believe annoying the GOP's engaged people is the Highest Calling Available to Man. But Obama's a Democrat so he could probably bully some of them into at least considering it.

Then somebody who looks good on TV would claim the change will ruin them because they have a very carefully constructed life that allows them to dodge many income taxes, but the whole point of consumption taxes is you can't dodge them. You're actually seeing this with ObamaCare. Most of the people harmed by it, on TV, and from states with their own exchanges would find out that they'd get a better deal on insurance after ObamaCare. But they don't bother looking because they put like three whole hours into picking their current plan and nothing from the government could be cheaper.

And in the end it would die like Social Security reform did, or ObamaCare almost did, failing some important procedural vote nobody outside DC knew existed before it became the only story on CNN.

If we had the British system, PM Obama could replace the income tax with something new within six months. If the rank-and-file in either party managed to block him there'd be a new election, and either the blocking rank-and-file would become PM or they'd be voted out.

Re:Tax rate too low?

[Grishnakh]

What's really bad is that the so-called "liberals" in this country are big fans of taxes that hurt poorer and working-class people the hardest. Sales taxes are the most regressive form of taxation, yet if you look at most of the "Blue" states, they have extremely high regressive tax schemes. The only Blue states that really walk the walk are Delaware, Oregon, and New Hampshire. There's also Alaska and Montana, which are strong Red states.

Re:Tax rate too low?

[countach74]

I just thought I'd point out the fallacy that is normally associated with tax revenues: increased tax rates != increased tax revenues. It is highly probably that a simplified system that is more straight forward and less difficult to dodge, would actually yield higher tax revenues even if the overall rates were lower, on paper. The amount of economic productivity to be gained from a simplified system alone is likely significant, not to mention that lower taxes in general tend to stimulate the economy, and where there is more wealth, there is more to tax. Obviously, there is likely a point of diminishing (or negative) returns, but my point is that we must not fall into the fallacy that tax rates == tax revenues.

Re:Tax rate too low?

[swillden]

So taxes on income and labor and the worst, taxes on revenue are better

Eh? Taxes on revenue are terrible. Yeah, they're simple, but they penalize low-margin businesses, driving capital away from highly-efficient industries.

Re:Tax rate too low?

[mcgrew]

Sorry, I have to disagree with most of what you said vehemently. Sales/consumption taxes are regressive; the poor slob behind the grill at McDonald's lives paycheck to paycheck while the CEO spends only a small portion of what he "earns". Worse still is property tax; you're getting taxed over and over. I knew an elderly couple who lost their home, because it had been paid off twenty years earlier but housing prices had risen so much that the taxes were higher than what they'd been paying for the mortgage. There should be no such thing as property tax, period.

I do agree that we should tax things we want to discourage, but if you say "tax what you want to discourage and tax consumption" you're saying that the marketplace is something that should be discouraged.

Tax income and only income, and tax ALL the income, no deductions. And since the rich get far more benefit from government than the poor, they should be paying a higher percentage of their income.

Is "diverse economy" a euphemism for "in-equal wealth distribution"?

Re:Tax rate too low?

[StenD]

Sales/consumption taxes are regressive; the poor slob behind the grill at McDonald's lives paycheck to paycheck while the CEO spends only a small portion of what he "earns".

That's why the FairTax has a prebate, in the amout of tax which would be paid up to the poverty level. This means that the "poor slob" might receive more in the prebate than actually paid in FairTax (expecially if s/he purchases used goods, which would be exempt from the FairTax), and the CEO would pay nearly the full net amout of FairTax on his spending.

Worse still is property tax; you're getting taxed over and over.

It's rent you're paying to the government. :(

And since the rich get far more benefit from government than the poor, they should be paying a higher percentage of their income.

Agreed, but by taxing income, you allow taxation to be avoided by deferring income, having income received outside the country, etc. Tax consumption, and you reduce opportunity to avoid the tax.

Re:Tax rate too low?

[redlemming]

That's why the FairTax has a prebate, in the amount of tax which would be paid up to the poverty level.

One problem here is coming up with a single number to use for this prebate, as the cost of living differs significantly from area to area, and is often HIGHER in poor areas. In poor urban areas, this is because businesses operating in those areas must deal with lower availability of capital and higher losses of goods, both resulting from the higher crime rates, and thus must charge more to compensate for the higher interest rates on loans and higher loss of goods.

In poor rural areas, the higher cost is associated with the cost of transport to get the goods out into the boonies.

Then we have the difficulty of defining poverty ... Just where is the poverty line or level, and how do we define this in a sensible way most people are willing to accept?

Another problem with this system is that many types of purchases that have long term educational value to those looking to improve their lot in society will be taxed, such as non-fiction books, non-fiction DVDs, computers, software, internet access, tools needed to learn trades, and so forth, as the acquisition of these won't fall within the prebate amount.

Yet another set of problems with this system arise from the fact that supply and demand still operate. The higher the cost of the item, including taxes, the less the demand. Each item not sold reduces the profits of the merchant, the manufacturer, and everybody else involved in the system.

Thus a sales tax directly reduces the ability of people in poor neighbourhoods to get jobs, since the merchant will have less money to spend on hiring people (or on bonuses for good work).

You also get poorer selection: the higher the sales tax, the fewer items merchants can take a chance on selling. Stores in poor areas already have much more limited selections than those in other areas, which has an impact on things like health.

Similarly, due to the reduced profits, the availability of capital will be lower, for things like repairing or maintaining or expanding the buildings the merchants operate in.

You also negatively impact the willingness of people to produce educational materials to help the poor develop job skills, or to provide services that help with this.

All this is basic economics, unfortunately it's not going away without massive government regulation that does more harm than good.

Most people do NOT stay in poverty their entire lives (most basic books on economics will discuss this at length), but the more you create obstacles to developing marketable skills (or getting low paid jobs that allow individuals to get skills) through legislation, the more you limit this mobility. Over the long run, you create a class system.

If you're going to tax goods or services, tax things like ESPN, which nobody needs.

Agreed, but by taxing income, you allow taxation to be avoided by deferring income, having income received outside the country, etc. Tax consumption, and you reduce opportunity to avoid the tax.

No, you simply shift the avoidance of taxes to different mechanisms. Black markets become more profitable, and you see an increase in smuggling and barter, as well as services provided "off the books" or "Quid pro quo". No tax system can prevent this: there will always be inefficiency in any system. Think of it as entropy if you like.

Having both income and sales taxes buys you the worst of both worlds, and there's all kinds of second and third order negative consequences that flow from having multiple types of taxes operating at once. Far better just to tax job and inheritance income.

There's a lot that could be done to clean up inheritance tax. For example, don't allow people to hide money in trusts or similar mechanisms (or at least clean up the rules for doing this). Also, you might set some reasonable maximum for the money that can be received by

Re:Tax rate too low?

[swillden]

No, I just said taxing revenue is a bad idea.

Re:Tax rate too low?

[mcgrew]

Agreed, but by taxing income, you allow taxation to be avoided by deferring income, having income received outside the country, etc.

Only because the tax law allows it. Just take away all deductions, all deferrals, and tax all citizens no matter where the income comes from. After all, if you live in East St Louis and work in St Louis you're going to pay income tax in Illinois and Missouri both. Will I be taxed on income for sales of my book to Europeans? I think I should, it's income.

BTW, get rid of the capital gains tax and tax capital gains as regular income. It would go a long way towards bringing down the deficit.

Rule 263

[Anonymous Coward]

Never allow doubt to tarnish your lust for wealth

Re:Rule 263

[mitgib]

Never allow doubt to tarnish your lust for wealth

Which rule of acquisition is that?

Re:Rule 263

[camperdave]

Never allow doubt to tarnish your lust for wealth

Which rule of acquisition is that?

Rule of Acquisition #263: Never allow doubt to tarnish your love of latinum.

S&H is taxable in NJ

[SpaceWiz]

It's because S&H is taxable in NJ.

From http://www.state.nj.us/treasury/taxation/emailfaqs.shtml

Are shipping and handling subject to sales tax?
Effective October 1, 2005, the law provides for a new definition of "delivery charges." For transactions occurring on or after October 1, 2005, handling charges are included within the definition of delivery charges, and are therefore exempt from tax whether or not they are separately stated to the purchaser.

Prior to October 1, 2005, a separately stated charge for the transportation (shipping) of tangible personal property from the vendor to the customer was not subject to New Jersey sales tax. Depending on the circumstances, a separately stated “handling” charge could be considered part of the taxable receipt (amount on which sales tax is due) because it occurs prior to actual shipment. However, when “shipping and handling” charges were billed together, both amounts were considered exempt transportation charges for New Jersey sales tax purposes.

As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable.

Re:S&H is taxable in NJ

[KRL]

Confusing much? Welcome to the hell that is sales tax.

Re:S&H is taxable in NJ

[JLennox]

I assume it's to stop the 0.99cents buy price + $9.99 s/h scheme of tax avoidance.

Re:S&H is taxable in NJ

[olsmeister]

So go make your purchase in Delaware.

Re:S&H is taxable in NJ

[slashmydots]

In the case of Amazon's room full of lawyers vs some guy from this article, I rule in favor of Amazon's room full of lawyers. Thanks for your expert testimony, lol.

Re:S&H is taxable in NJ

[pspahn]

If you deliver with your own equipment, you will also have to collect sales tax.

Re:S&H is taxable in NJ

[gl4ss]

Drive there with a big truck, fill it up with 0.99 cent items. NO SHIPPING because you're operating the truck yourself. Then you sell the underpriced stuff for $5 at incredible profit.

in the rare occasion they would sell the items for you in person they could and would still charge you for handling.

S&H is taxable in NJ!

[EmagGeek]

S&H is absolutely taxable in New Jersey, if the shipment contains taxable goods.

Re:10.5%? Big deal...

[Impy the Impiuos Imp]

Oh, we're trying to do it all here -- income taxes, sales taxes, high corporate taxes, capital gains taxes. And every few years they toy with a VAT to replace most, but not all, of that (in this way, they can slowly start jacking the other rates back up again.)

Re:Amazon Makes?

[Attila Dimedici]

No, it is Amazon making the sales. The line you quoted did not actually mention the sales tax. Now unless New Jersey's taxes are even worse than I have been led to believe, Amazon does not turn over the proceeds from their sales to the state of New Jersey, only the proceeds from the sales tax they collect in New Jersey.

timothy strikes again

[LordNimon]

Posted by timothy
from the insult-to-injury dept.

The insult is that I read another stupid post from timothy.

Re:timothy strikes again

[Anonymous Coward]

Who pays for shipping anyway? Although I noticed Amazon.com recently raised the minimum from $25 to $35 to get free shipping.

Re:timothy strikes again

[dale.furno]

interesting how?

Re:Wait what, only 10 %?

[Virtucon]

Have you seen New Jersey? 20% may not be enough.

Re:10.5%? Big deal...

[GateGuy]

You're lucky! Maryland taxes you on rain.

Re:Well if it's true..

[Anonymous Coward]

it goes to NJ. If it doesn't, then the state's auditor will find out and the additional fines/penalty would be so severe as to not make it worth it.

Here is a tip to everyone, from someone inside the sales and use tax business: companies across America overcharge sales taxes on a regular basis. I'm talking specific sales taxes on specific TPP (tangible personal property) and services. If a rule is 'gray' and can be interpreted as either exempt or 1%, for example, then the vendor will often charge the 1%, collect it from the buyer, and then simply remit it to the state/jurisdiction. Why? Because it's easier than arguing the other way with the auditor. The jurisdiction will not penalize vendors for overcharging so long as you remit it.

Whingedot.org

[craznar]

Personal whinging seems to be out of place here on slashdot.

We could fill a whole site with what Telstra Australia gets wrong :)

What's the problem?

[Orne]

Isn't the real problem that NJ state's tax code is so expansive that its own citizens don't even know what they should or should not pay taxes on?

Tax law is one item that Amazon is paying extremely close attention to as of late. They are actually leading the discussion for the national sales tax, because it forces their competition (eBay) to play by the same rules. Amazon is a distribution system masquerading as an online retail store. They have physical nexus and are being required to collect taxes on behalf of customers in at least 16 states.

Re: Wait what, only 10 %?

[Anonymous Coward]

NJ only gets back about 75 cents on the dollar for the federal taxes it pays. Start there.

Amazon Prime

[psypher69571]

How about ya get Amazon Prime if you buy so much from Amazon that's worth bitching about something you have no clear understanding about. Then shipping is free!

Re:Amazon Prime

[fafaforza]

Next, you'll tell us that part of that money goes to the state to cover shipping taxes, even though the customer paid nothing for shipping. Pshah.

Going to get worse before it gets better

[frinsore]

As several people have pointed out Amazon appears to be applying the correct sales tax. The fact that the resident of NJ doesn't understand his own sales tax demonstrates how complex sales tax can be. Every state, county, and city can have their own sales tax laws which have to all be correctly applied based upon arbitrary characteristics. A state can have a tax rate of 4% with an additional 3% for prepared foods and then a city in that state could have a 2% tax on sugary treats. What counts as a prepared food or sugary treat? That will vary just as much and may not even follow common sense, tomatoes have even been legally defined as vegetables for tax reasons.

A national sales tax could make a lot things a lot simpler but would force states to relinquish a lot of power as every business that could use the national sales tax instead of the local taxes would. States with high sales tax would see a large revenue drop while residents of states without a sales tax would be penalized. I could see brick and mortar stores jumping through hoops to selectively use the lower tax rate, if the local tax rate is higher then the national one they'd "order" the item for the customer and then "deliver" it from the backroom.

The best solution I can see is if the federal government runs a sales tax database that every retailer can query. The retailer submits the location, price, item, and some relevant descriptors: "luxury", "food", "service", "book" and the API spits back what the sales tax should be for the item. It's then beholden to the states to keep their relevant data updated. The states would be limited in how creative their sales taxes could be as the software would need to support it but the states wouldn't need to cede power to the federal government.

Re:Going to get worse before it gets better

[Grishnakh]

No way. The problem with your solution is that there's no way to remit the taxes to the ~10,000 different tax jurisdictions across the country, unless you're the size of Amazon. Some 1 or 2-person internet shop being run out of a basement might be able to handle getting their shopping cart set up to use the Federal API you propose (it'd just be built into all the major shopping cart programs after all), but remitting those taxes requires cutting checks to all the different authorities, and there's no way to do that efficiently, unless this Federal program is also going to do collections and remission, so that sellers only have to remit the tax to one place (the Federal government agency put in charge of this), and then that place doles out the money to the 10k places it's supposed to go to.

Also, the other big problem is expecting this API and service to actually work correctly. The ObamaCare rollout disaster should make it obvious that you can't trust the Federal government to roll out any internet-based service that will actually work right when it's needed. What's going to happen when the broken code they got some overpaid consulting firm to make barfs, and sellers can't query the API for an hour (or even 5 minutes)? All internet transactions nationwide will be unable to go through for that time. That's unacceptable.

What we really need is a choice for the states: either 1) a Federal law that forbids municipalities or counties from charging separate sales tax, and forbids any exceptions in sales tax for any items at all, and requires all sales taxes to be uniform, so that the only thing sellers need to figure out is the tax rate in each state, meaning they only need to know 51 different percentages, and only have to remit to 51 different places maximum. OR, 2) a Federal law forbidding sales taxes to be charged on out-of-state purchases, and they can keep all the wacky exceptions and municipal add-ons they want. Their choice.

Re:Going to get worse before it gets better

[SuperKendall]

Actually the residents of states without a sales tax are only partially penalized, since the sales tax collected would go back to those states and in theory benefit the buyer in some other way...

Or possibly if a state were really committed they could take money sent from Amazon for a national sales tax, and allow people to issue claims to recover sales tax. It would be a pretty good system for everyone because people that cared still wouldn't pay sales tax, while enough people wouldn't bother than the state would get added income.

Re:Going to get worse before it gets better

[Grishnakh]

Ok, if they all do that (it might need to be mandated Federally though), that would solve that problem. However, it still doesn't solve the other problem, which is: what do you do when the Federal site goes down? Again, the ObamaCare rollout disaster shows that the Federal government isn't exactly competent at setting up reliable web services.

You think that's bad?

[reboot246]

Here in my state the taxes levied by the state, county and city on tobacco products are included in the price of the product, but you STILL pay sales tax. That's paying tax on taxes!!

You don't do that when you buy gasoline, which has all the various taxes include in the price. Why are tobacco products treated differently? Political correctness, of course. If you even suspect that I have a snus portion in my mouth, you might get cancer! Panic, panic, panic!

You don't pay sales tax on newspapers, but if you buy one from some retailers, you pay sales tax. That's illegal and they still get away with it.

You don't pay sales tax on labor, but you better look at you bill from your local garage before you pay it. Some charge tax on labor and try to get away with it.

What I don't understand is that if you buy something while you're on vacation or while you're working in another state, you pay the local sales tax where you buy the product and your home state doesn't give a rat's ass about it. They would be hard pressed to prove where you bought it. But if you buy online over the "internet", your home state thinks they deserve to tax your purchase.

Don't you think it's about time for the FairTax?

Re:You think that's bad?

[ArbitraryName]

What I don't understand is that if you buy something while you're on vacation or while you're working in another state, you pay the local sales tax where you buy the product and your home state doesn't give a rat's ass about it. They would be hard pressed to prove where you bought it. But if you buy online over the "internet", your home state thinks they deserve to tax your purchase.

If you buy something outside your state and bring it back to your home state you are expected to declare the amount on your tax return and pay a use tax on it, minus a credit for the sales tax you paid to the other jurisdiction. Exactly the same as buying things online. I live in a border town and the neighboring sales tax is 1.5% lower. Once I bought a car out of state, when I went to register it they demanded proof of tax paid and made me pay the difference before they would register it.

Re:You think that's bad?

[PPH]

What I don't understand is that if you buy something while you're on vacation or while you're working in another state, you pay the local sales tax where you buy the product and your home state doesn't give a rat's ass about it. They would be hard pressed to prove where you bought it. But if you buy online over the "internet", your home state thinks they deserve to tax your purchase.

Not so in Washington State. Purchasers are still liable for paying a 'use tax' on items not taxed at the point of sale. So if you bring an item back into the state, you had better fill out the proper state tax forms and sent them a check.

In reality, they aren't going to enforce this for minor purchases. But for major ones, they do. A friend of mine spent a couple of grand on a fancy camera in Oregon (no sales tax) about a decade ago. At the end of the tax year, the Wash State dept of revenue contacted her with a copy of her credit card records in hand demanding payment.

Yes, apparently our state watches your credit card records. Just wait until we get GPS based road taxes. Travel to Portland and the revenue people will interrogate you upon your return.

User botches reading comprehension

[silas_moeckel]

News at 11. The included link says that yes it's taxable if the item shipped was also taxable.

Illigal

[wisnoskij]

I bet that incorrectly labelling tax is a felony. You cannot just collect a tax, and then keep it for yourself because you charged more than the government required.

Re:Illigal

[Greyfox]

Not sure I want to be taking legal advice from someone who can't spell "Illegal" :-P

Also pretty sure that's not illegal, as every cell phone carrier and credit card company seems to do just that on a monthly basis.

Re:Illigal

[Greyfox]

IllIgIl?

Re:Amazon Makes?

[hawguy]

"But it's a whopper! Just consider the hundreds-of-millions of dollars in sales Amazon makes in New Jersey each year."
Wouldn't that be NJ making it?
How do you know they're aren't dutifully recording it all (Amazon) and handing it over to NJ?

In most (all?) states where sales tax is collected, any excess sales tax collected must be refunded to the customer or turned over to the state -- the company doesn't get to keep it.

From the linked site on NJ taxation

[dosun88888]

As of October 1, 2006, the exemption for delivery charges imposed by the seller is repealed for taxable goods and services. For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable.

---

I don't understand how this made the front page of Slashdot.

A thorny problem

[minstrelmike]

There are 6000 different taxing entities in the United States.
Each one of them charges different taxes on different categories of goods.
Each one of them can use a different categorization, each one can charge different taxes on different categories or items, and the tax rate can change at pretty much any time.
And none of them have an obligation to inform anyone about outside the State/County/City about the rate change.
Now go write me some code that works.

Re:A thorny problem

[BitZtream]

And buying the tax information database is trivial for me, a normal person. It's trivial for Amazon too.

If Quickbooks can do it, so can they, considering their accounting department alone is bigger than Quickbooks entire software staff and support personal

Re:A thorny problem

[Stormy Dragon]

And you've personally verified that QuickBooks correctly calculates the sales tax for each and every product in each and every jurisdiction? Even all the bizarre rules like that fact in Pennsylvania that mounds are taxable because they're candy but Almond Joys aren't because the almonds make it food instead of candy? Or like the fact in New York that milk in a carton is non-taxable but milk in a cup is taxable?

Or is it more likely that there's all kinds of oversights or outright errors in the database and most people just don't bother to check?

Or amazon prime

[goombah99]

What about amazon primes shipping, or free shipping over $35. or all the books that sell for 1 cents plus $3.99 shipping. thar's commerce in that handling.

Re: Wait what, only 10 %?

[Anonymous Coward]

what has the government ever done for me? I was on food stamps and welfare and did anyone hel p me? fuck no!

This is STUPID

[WindBourne]

All items bought via delivery from out of state, should simply be taxed at 10% and have the delivery company collect it. Then allow that company to keep 10% of that collection. Then divide the rest between local, state, and fed.

Regardless, this approach solves the issue of local sales tax disappearing, and allows localities/states to focus on infrastructure. And for companies that ship, a flat 10% makes it easy to avoid dealing with major software issues.

No, the state does tax S&H

[mysidia]

And pretty much all states tax S&H.

I noticed the charges were way off. The book cost $8.09. The tax I was to be levied was $0.85. That's a 10.5% tax rate! Why am I being charged 10.5%? It turns out that Amazon is also charging me tax on the $3.99 cost of shipping and handling.

This is why the arguments for a national sales tax to "level the playing field" with B&M retailers are totally bogus.

They always want to tax shipping and handling.

Buyers from B&M retailers do not have to pay for delivery to complete the sale

Therefore, taxing the sale and the delivery at the same rate, doesn't level the playing field It gives B&M retailers an unfair advantage

By the way, this unfair advantage comes from increased usage of the roads and other infrastructure (people driving to stores), and pollution by people's automobiles ---- so the B&M retailers actually create more costs for the government, and it's only fair that the taxes should be greater for the B&M firms.

Re:No, the state does tax S&H

[mysidia]

if the retailers buys something for $10 and it costs them $1 to get is shipped to them, then at a minimum they charge $11. Thus, the shipping cost IS taxed, just not directly.

Those are distribution costs, not shipping costs.

Amazon has distribution costs as well --- they have to get products from their suppliers, to their warehouses and fulfillment centers.

However, these bulk distribution costs are likely on the order of $0.03 to $0.05 an item, not $1.

Whether they're a retailer or Amazon; they're certainly not going to ship a package containing the item from warehouse to warehouse; it will get loaded on a semi; which won't depart, until it's filled with things going out from that supplier.

Re:It's a clear tax scam

[ScottCooperDotNet]

Amazon is just counting on people to not notice it. They're stealing money and they know it.

This is a very common scam that almost nobody gets busted on, mostly because the IRS is too fucking lazy to do its goddamned job.

The IRS doesn't handle state sales tax issues. If you're going to complain, at least be accurate. Well, unless you're trying to become a talking head on cable news.

People Warned This Was Going to Happen

[Stormy Dragon]

That's a problem, because New Jersey does not tax shipping and handling as I confirmed on the state's web site.

Which is precisely the problem with taxing internet transactions. There are almost ten thousand different sales tax jurisdictions in the US. It's ridiculous to expect Amazon to keep track of minor variations in sales tax rules for all of them.

Re:People Warned This Was Going to Happen

[0123456]

It's ridiculous to expect Amazon to keep track of minor variations in sales tax rules for all of them.

Oh, Amazon can easily do it. It's their smaller competitors who can't afford to do so and will go out of business, which is why big Internet companies have started saying 'hey, let's make everyone pay sales tax on internet sales, that's a great idea.'

The left whine and whine about the evils of Big Business, then do everything in their power to make them bigger.

Re:It's a clear tax scam

[nedlohs]

No they're following the rules and the complainer is a moron who can't read.

Re:It's been done before

[jedidiah]

I rather doubt you've actually confirmed this.

Re:Wait what, only 10 %?

[Grishnakh]

No, sales taxes are the most regressive form of taxation, that is they hit the poor the hardest. Interesting then, that the northeast Blue states all have high sales taxes and other regressive forms of taxation (like all the toll roads and bridges with insanely-high tolls).

Also, NJ is famous for the highest property taxes in the US. The reason for this is racism: every little municipality (there's ~550 of them) has its own separate school district and property tax. They refuse to merge the school districts into county-wide districts like most other states, because no one wants their town's school to be in the same school district as some poorer (mostly black) township or city on the other side of the county. The phrase "home rule" is used a lot here as a euphamism for the real reason no one wants consolidation. Interesting that the northeast liberals are the most racist people in the country.

Re:Wait what, only 10 %?

[Jmc23]

So are you a southwestern conservative prejudiced dick?

Anyways, insults aside, sales tax doesn't apply to essentials. If you're poor and buying non-essentials, well, there's the reason why you're poor.

n.b. I am poor.

Re:Wait what, only 10 %?

[Grishnakh]

Are you an idiot? What kind of conservative complains about regressive taxation?

Sales tax does apply to essentials, it depends on the state. Lots of states tax food, clothing, etc.

If you're poor and buying non-essentials, well, there's the reason why you're poor.
So are you a southwestern conservative prejudiced dick?

With an attitude like that, you sound like the conservative prejudiced dick.

Re:It's a clear tax scam

[wonkey_monkey]

It's a clear tax scam

Actually, it turns out the submitter is wrong, so not that clear at all.

Hopefully you won't be so quick to believe the next thing you read (especially if it's come via Timothy).

Someone owes Amazon (+ us) an apology in this case

[wonkey_monkey]

So it seems that the submitter of this rant was entirely wrong, and sales tax does indeed apply to the delivery costs of taxable goods in NJ.

Will Hodejo1 or Timothy now hold their hands up, admit their mistake and promise to do better in future?

Re:Well if it's true..

[pspahn]

Or, even better, use a tax service that remits all your payments for you and provides audit protection. If a problem should ever arise, you point to them and go back to work.

Re:It's been done before

[pspahn]

Listen, it's really not that difficult to charge sales tax online. It might take some time to organize and get working correctly, but it's not difficult.

There are plenty of tax service providers out there these days that all knew this day was coming. TaxCloud, Avalara, Taxware, etc.

While developing our business's new site, this was an area I was adamant about getting correct. Whether we charge sales tax to every state right now or only those we have nexus in, it should be a simple method to begin collecting sales tax in a new state.

I signed for a tax service API, spent a week or so integrating it with our cart platform (Magento), and now when someone checks out, their address is validated down to a Zip+5 (via free service from USPS) and their local tax rate is calculated and added to their order. At the end of a quarter (or whatever fiscal period it is, I can't recall) the payments are remitted to whichever municipality or state associated with the order. We literally do nothing but cut the tax service a lump-sum check and they handle the rest (they do this because they are subsidized by the states that want some extra tax revenue).

I keep reading and hearing comments about how difficult it will be for small business to implement sales tax. It's absolute bullshit and nothing but FUD. Fortunately for our small business, I am experienced enough in Magento development that I know how to do this, but even for those businesses that don't have someone like myself, they can easily hire one that is capable. Not to mention I also intend to open-source my module/solution for others to use (once I polish it up further and it's releasable to the masses).

There is absolutely no reason why Amazon would fail at collecting sales taxes other than they: A) meant to be in error. B) used a third-party service that caused the error. C) It was a front-end error due to a stale cache or something.

Re:Who is getting the over charge

[Kalriath]

There is no overcharge, so no one does. The taxes are exactly spot on.

Been there, done that

[Trax3001BBS]

I'm a Washington state resident, I ordered something through Amazon many years ago;
at the check out I was told there's a chance that a tax may be required on this item
in the future, and if not they'd just keep the spare change (in a round about way).
Then placed a tax to the item price.

Yes Amazon is located in Washington state, and yes they tax in Washington but
they weren't required to at the time, and it wasn't retroactive when they were.

I haven't shopped Amazon since, NewEgg.com all the way, put many computers together
with their help. Amazon.com I read reviews on an items to get two site opinions then
order Newegg.com.

Newegg.com

[Trax3001BBS]

As a side note: every time someone mentions buying something they Mention newegg.com
very rarely Amazon.com I don't see why Amazon.com is always talked about and little about
Newegg.com. Other than Amazon pays for the press.

Chatting while playing games for many years, if someone says damn this sucks I need a new
video card (a common complaint), almost always someone mentions a deal on Newegg.com,
never has Amazon been mentioned. I don't know why, it's just the way it works.

Re:It's a clear tax scam

[Khyber]

They're not paying taxes on extra 'income' from overcharging shipping.

Re:It's a clear tax scam

[Khyber]

It is standard practice in pretty much any online retailer business to overcharge on shipping for extra income, taxes or not.

Mainly because the shipping carriers only add an ESTIMATE on plus tax using their automated systems. The actual billing cost to the company is typically lower.

There is still money being pocketed.

not a scam

[TheSHAD0W]

It's unlikely Amazon would be scamming using this method; the fines involved would be horrendous. It would only take one person noticing to trigger an investigation and audit by the state.

From most of the responders to this thread, this is unlikely to also be a mistake. But even if it were, Amazon wouldn't be keeping the money, but would be handing it over to the NJ tax authorities. (That would also probably result in a fine, but not a catastrophic one.)

Re:Someone owes Amazon (+ us) an apology in this c

[swillden]

Will Hodejo1 or Timothy now hold their hands up, admit their mistake and promise to do better in future?

Maybe Hodejo1, but the suggestion that Timothy might deserves a +6 Funny.

Re:It's been done before

[pspahn]

...and you haven't even touched on exemptions due to the type of product or service you're selling

First off, taxability codes are trivial to implement in Magento. The service I use allows a product to have a tax class assigned, so there are absolutely no worries there other than the data entry that's involved. Second, why would I bother to worry about possible taxability status for products or services I don't sell? I have the products in my own catalog tagged with tax codes, so when those line items are validated in the cart, their codes are compared to the state's list of codes that need to be taxable.

By Zip+5 I assume you mean Zip+4, and actually, yeah, it's pretty accurate to determine sales tax. Even the state of Washington agrees, stating on their DOR website:

It is ideal if the shopping cart can use the actual delivery address or the corresponding ZIP+4 code, either of which will deliver an accurate tax rate and taxing jurisdiction. However, that is not available to many sellers at this time.

Honestly, if there happens to be an edge case where someone needs to be charged a different sales tax because they're in a different suite or something, you handle it when it comes up. If you're an Amazon or Ebay, well, you just implement deeper, but if you're a small business where this doesn't happen that often, you have them contact customer service and handle things accordingly.

Speaking of auditors, let them come. That's the whole point of using a streamlined service. They remit payment for you and provide audit protection. Remember, states aren't going to be going after the people that are doing their best to be compliant and have audit protection. They're going to go after the low-hanging fruit businesses that are negligent.

Re:Don't buy from Amazon if you in a sate they are

[casab1anca]

The number of such states is dwindling rapidly. It won't be long before Amazon has a presence in all states, and there will likely be a national sales tax as well. Oh, and even if Amazon isn't currently charging sales tax in your state, you're supposed to be reporting your purchases to the state yourself.

Re:It's been done before

[TrollstonButterbeans]

> It might take some time to organize and get working correctly, but it's not difficult.

That IS the definition of difficult.

Re:It's a clear tax scam

[wonkey_monkey]

There is still money being pocketed.

It's called profit, not a tax scam. I hear they'll even charge you more for the products you order than what they actually paid for them, too! Scandalous!

All the costs are displayed, Amazon aren't charging any tax they shouldn't and pocketing it, and no-one's forcing anyone to click Submit.

Re:Wait what, only 10 %?

[NoImNotNineVolt]

As someone that lives (and grew up in) NJ, I can only say that you're misattributing the cause of this situation.

Follow the money. In February of 2011, school superintendent salaries were capped (depending on district size) at $125k-$175k, because they were previously in excess of $200k in many instances. These "jobs" are quite awesome. The pay is great (especially compared against other gigs in education). The benefits are great (you get to keep rolling over sick days [because you work from home when you're actually sick], eventually cashing out literally years worth of paid time off when you retire). Many greed-motivated teachers (a minority among teachers) see the position of superintendent as the only way to "win" in their career track. Even now, with the cap in place, the median district superintendent salary is $176,505, with the highest salary being $264,579. This issue was even more ridiculous pre-cap.

But there's only a fixed number of these positions! How terrible! Well, at least there's ~550 of them. Do you think people vying for these truly enviable positions will allow their chances of getting one to be cut? Of course, consolidating districts would mean axing superintendents. While this would be amazing for the education budget in this state, freeing up shitloads of cash to actually, you know, educate kids, there's no way it will happen. There's too many people with a vested interest in having as many districts as possible. You'll see districts being split up even further before you seem them being merged together.

But blame it on racism, in a state where "as of 2011, 56.4% of New Jersey's population younger than age 1 were minorities(note: children born to white hispanics are counted as minority group)", according to Wikipedia. Based on my anecdotal experience, the citizens here have no race-based aversion against merging districts. I'm not sure how being in the same "district" as a poorly performing school (or "blacks", as you suggest) would have any impact on anything. I mean, they're already in the same "state" as these undesirable schools, sometimes in the same "county", and yet things keep chugging along just fine. I'm not sure why people would think that rearranging administrative boundaries would have any actual impact on their own town's schools. If anything, having your district include shittier inner-city schools could be a boon to you, as districts with the poorest-performing schools are the ones that get the lions share of the funding.

Really, you're looking at this from the wrong angle. You're looking at it as an outsider, as a citizen not directly involved in the education industry here. I can tell you that there are only two groups of people that have significant sway when it comes to education-related issues in NJ: the teachers [union], and the old people [that don't want to pay property taxes for education services they don't personally need]. They're the ones that go battle at the polls. They're the ones that actually get policy crafted. They're the reason we spend close to $100M every year on school district superintendents alone. I can assure you, there is no organized racist movement to keep districts from being consolidated.

Re:Wait what, only 10 %?

[Grishnakh]

Obviously, people in power will do things to keep themselves enriched and in power, but they have to justify it to the voters somehow. Telling them "we need more highly-paid superintendents" isn't going to go over very well. However, telling the people in richer towns that poor kids are going to be bused to their schools, and that their kids are going to be bused to schools in the ghetto town on the other side of the county, WILL cause them to vote against consolidation. It doesn't matter much what the percentage of minorities is: minorities in city A don't get to vote in rich town B's elections because they don't live there. (Moreover, minorities tend not to vote nearly as much anyway.)

I'm not sure how being in the same "district" as a poorly performing school (or "blacks", as you suggest) would have any impact on anything. I mean, they're already in the same "state" as these undesirable schools, sometimes in the same "county", and yet things keep chugging along just fine.

Of course they do, because they're in entirely separate school districts, so it's no different than being in a different state. By having different districts, funding for school(s) in one district have no effect on the funding on school(s) in another district. So rich white people don't have to worry about their property taxes being used to fund minorities in another part of the county or state.

If anything, having your district include shittier inner-city schools could be a boon to you, as districts with the poorest-performing schools are the ones that get the lions share of the funding.

No, they don't. Property taxes only go to fund the school in the district those property taxes come from. So rich neighborhoods, with high property tax revenues (because of the high house values there) keep all their money and pour it into their own schools, while poor neighborhoods in a poor district in the same county have to make-do with much lower funding since the property values in the ghetto are very low and consequently property tax revenues per capita are much lower. It doesn't help that rich people tend to have far fewer kids than poor people, so that's even more funding per child in the rich districts than the poor districts. The poor districts might get some Federal funding to help out, but it's probably still nowhere near the per-capita funding that the rich kids get.

It's not an "organized racist movement", but then again neither is "white flight", it's just richer people working and voting to keep themselves separate from poorer people, and these divisions are usually along racial lines since minorities tend to be much poorer (making it completely impossible to really tell how much racism is involved versus simple classism but it's usually safe to assume a certain level of it).

Re:Wait what, only 10 %?

[NoImNotNineVolt]

No, they don't. Property taxes only go to fund the school in the district those property taxes come from. So rich neighborhoods, with high property tax revenues (because of the high house values there) keep all their money and pour it into their own schools, while poor neighborhoods in a poor district in the same county have to make-do with much lower funding since the property values in the ghetto are very low and consequently property tax revenues per capita are much lower.

Right, you'd think that, because it makes sense. But you'd be wrong. While some wealthier areas do in fact spend more per pupil, you'll see that Newark spends 28% more per pupil than the average. In case you haven't been there, Newark isn't exactly a "rich neighborhood". If you look at that map, you'll notice that some of the highest per-pupil spending happens in the urban areas (where, as you might imagine, outcomes are below average).

The fact of the matter is that our worst-performing, poorest districts are the ones that have some of the highest spending per pupil. The federal and state funding that these shithole districts get does in fact rival and in many cases dwarf the per-pupil funding that property taxes generate. This only further shows that while you can simply throw money at the problem, that approach is not guaranteed to produce desirable results.

Re:Someone owes Amazon (+ us) an apology in this c

[wonkey_monkey]

If Amazon charged for the actual shipping cost, separate from handling or item price, the shipping would not be taxed.

How'd you work that out?

For transactions occurring on or after October 1, 2005, handling charges are included within the definition of delivery charges

For deliveries on and after October 1, 2006, if a shipment includes both taxable and exempt property, the seller should allocate the delivery charge based on either the total sales price or the total weight, and collect tax on the portion of the delivery charge allocated to the taxable goods. In such mixed transactions, if the seller does not allocate the delivery charge, the entire delivery charge is taxable.