It's the consumer's obligation, and affiliates, who have a local presence, are helping consumers do tax avoidance. THAT is a criminal offense, and Amazon, by facilitating it, is vulnerable.
They didn't get Al Capone on all the other stuff he did - they got him for taxes.
I think a good way of explaining affiliates is this way... Think of a Wal-mart. In many Walmarts, there is a fast-food joint, usually some type of salon, an eye doctor of some kind. These are all companies operating inside a Walmart (and walmart sells their own goods of course). Walmart is not in the business of collecting taxes for these shops inside its own store. That's the responsibility of the individual shops to ensure that they are doing what they are supposed to be doing (collecting taxes).
You've never dealt with the anal-probe invasiveness of a WalMart contract. They want EVERYTHING. The rent is not just the base fee, but also a percentage of sales, same as most retail franchises. It's less "arms-length" than you'd think. Affiliates, even less arms-length, because the affiliates can't operate for even a second without Amazon and the services Amazon provides. The eye doctor in WalMart can always go independent. Not so the Amazon affiliate. Each affiliate is intimately tied to Amazon, not just for general stuff, but for every step of any and every transaction. If the eye doctor in my example had to ask you to pay at WalMarts' cash register, you can be sure WallyWorld would be on the hook for the taxes. How is an Amazon affiliate any different?
Have you ever tried to pay sales tax? We operate a small breeding program that hardly makes any money. Keeping up with all the tax forms that have to be filed is quite a pain and we don't make enough even to hire an accountant. In fact, we haven't made any money at all yet. Filing quarterly sales tax in our state alone is hard enough (a 2 page form with a number of calculations). I cannot even begin to imagine having to file 50 forms every quarter! We advertise and sell on-line and many of our sales are to different states. Currently we only have to file sales tax if we are selling to people that either reside within our base state or drive to personally pick up their new pet and all those taxes go to our state of permanent residence.
I hope you're not one of those people selling dogs. "Fucking breeders". The deal for selling pure-bred dogs should be simple - no sales w/o ID. You pick it up in person only, have to be ID'd, and the dog chipped. And the dog's papers? I agree with Time magazine - pedigree papers are only worth the paper they're pissed on. Shelters are full of dogs that were irresponsibly bred, that have genetic disorders from too much inbreeding, etc. I've heard too much BS about "but we're responsible breeders" - I don't buy it. Truly responsible breeders would demand the end of the pedigree system, and would refuse to participate in it. "Oh, but then we can't make money!" Tough shit. Some things are more important than mnoney. Go live in a shelter kennel for a couple of weeks.
If you're NOT one of those "fucking breeders", my apologies for the rant.
State taxes are not uniform for all products, it's not a flat rate and it's continually changing.
I don't know about you but I'm pretty sure any company regardless of size and resources would have a nightmare of a time just trying to keep things up to date to make sure they're collecting the proper taxes. And don't forget having to generate, distribute, and maintain reports and submittal forms for each and every one of these taxing entities so they know the taxes that they should be getting will be a requirement.
Two points:
National retailers doing the "old-skool" brick and mortar thing manage to keep up to date on all the tax rules in all the jurisdictions in which they operate. They manage to fill in the forms, submit the reports, etc. Maybe Amazon can outsource it to them, since (according to you and others posting here) it's an impossible job even with a cloud of computers.
I doubt anyone's going to ship bread to individual addresses across the country when people can get it fresher, and cheaper, locally.:-)
We currently have Sales taxes fast approaching 10%, chasing the merchants from the state. Brick and Mortar shops cannot compete with Amazon's sales tax free setup, even if the prices are the same, and you include shipping!
We wouldn't be in this problem if the legislature (Democratic LOCKED)got off its fat ass and started to CUT spending on programs that do nothing but ensure voters vote for (D) candidates.
So if it were a republican legislature, brick and mortar would be able to compete w. Amazon? - (just joking).
California has over-spent during the good times, no question about it. Prop 13 is a part (only a part) of the problem, because Cali schools went from some of the finest to the worst because of chronic under-funding. Sacramento kept on spending, riding the bubble just like almost everyone else, and is now teetering on bankruptcy - and the Feds have said they won't bail them out. There's simply not enough money for every bail-out.
Health care won't get fixed - no money, no candy-stripers. Bail-outs sucked the well dry, and Obama blew it, throwing good money after bad instead of following Econ 101 and letting the market clear out the bad debts via bankruptcies and re-orgs, and supported people through the transition to new jobs, not this massive corporate welfare that has changed America into the largest corporate-welfare state in the world. Much as I hate to admit it, Bush had it right - no bailout for GM. (he had it wrong bailing out the banks - they should have been temporarily nationalized as they failed, instead of rewarding incompetence and greed and penalizing those with more acumen).
There shouldn't be a problem getting the data - the local affiliates should have it. If they don't, it's because they're not reporting income.
Amazon is shitting bricks because they know that if it can be shown that they've set up a system that systematically allows their affiliates to do tax avoidance, they're looking at triple penalties, RICO, etc. THAT is why Amazon is dropping their affiliates in the states in question - the liability is huge.
First, you wouldn't have affiliates in those other states - and if you did, they should have the relevant local information available, so either way, it's a non-issue.
Doing this would give the advantage to smaller businesses, who can be more focused on serving their local client base, instead of the inefficiencies of scale that are introduced in large-scale operations.
If economies of scale were a universal rule, GM would have subsumed all the other car manufacturers years ago, the big banks wouldn't have had to be bailed out, morbidly obese people would live longer than the rest of us, and mosquitoes wouldn't exist.
Local businesses can do fine when competing on a level playing field. Amazon doesn't want to compete on a level playing field - because they can't. Too big.
It's not the big e-tailers like Amazon that's the problem, it's the smaller mom and pop shops is who this will kill. Likely there will be 3rd party billing services that will do the work for Mom & Pop for a fee, but the internet is a race to the lowest common denominator. 3% can mean the difference between staying in business and closing up shop.
The mon-and-pop operations don't have a wide network of affiliates providing a business presence by proxy, and they're not enabling their affiliates to help people do tax avoidance. If this kills off affiliate marketing, the mon and pop sops will be more, not less, able to compete.
The USPS is governed by its' own special set of laws. You can't simply apply laws that are specific to the US mail and apply them to other businesses.
Also, even if Amazon doesn't have a business presence in a certain state, the affiliate DOES. That's why Amazon is crapping 2x4s - the law is against the affiliates. Amazon also provides services to its' affiliates in each state, over and above having a business presence there by proxy. By not providing mechanisms for the collection and reporting of sales taxes for their affiliates, Amazon has become an enabler of tax avoidance and tax fraud. Hello, RICO!
As for NewEgg, aren't they selling direct, and not through affiliates, so the example doesn't apply?
If you have someone else selling your software, then THEY should also be reporting tax stuff, right? It's not like the affiliates aren't generating revenue off the sale, so they should also have this information available, same as you or any hypothetical agent acting to sell your software.
What has happened is that the affiliate scheme has become a significant portion of the underground economy, same as ebay, where you can find all sorts of goods being sold new, without any sales or other taxes.
Mail order companies do it all the time for the states they operate in, so why can't Amazon? Not enough computing power? I'm not buying it.
In that case, I believe they assess the sales tax rate based on the location of their operation in that state -- not the delivery address. They have to apply for a sales tax permit, and that specifies the rate and the taxing authorities that must be paid.
If you don't have a physical presence in the state, what address would you use to determine the tax rate? If you use the delivery address, how would you know what the rate is and what taxing authorities to pay? As far as I know, that information doesn't exist in a convenient form, and is determined on a case-by-case basis (when the application for a sales tax permit is made).
The affiliates should have this information already - if they don't, it's because they're not reporting the income. Amazon could simply require that affiliates submit this information, and keep it updated on a timely basis. The affiliates DO have a business presence in the physical world.
Since Amazon's customers aren't paying their fair share of consumption taxes, your local retailer is paying MORE than their fair share.
That sounds an awful lot like an issue between the customer and the state. If you buy my used car, it's your responsibility to pay the taxes on it. In what way is that substantially different for Amazon?
Because Amazon is enabling consumers to commit widespread tax fraud? Maybe Rhode Island should get their AG to file a RICO complaint...
In reality, taxing Internet sales is like taxing tourism: it's a zero-sum game. If your state's citizens pay $100,000 in my state, and my state's citizens pay $100,000 in yours, then it's moneywise exactly as if they'd stayed home and paid their taxes there. If all 50 states begin collecting Internet sales taxes, then the average net revenue flow will be exactly $0.00, at the cost of huge regulatory overheads for every single Internet-using business.
... your example doesn't work specifically BECAUSE tourism isn't a zero-sum game. I doubt as many people are going from Las Vegas, Nevada to Armpit, New Jersey for a vacation as in the other direction...
So it is not just 50 states they have to worry about but the 3,140 counties in the U.S. in addition to any other city taxes and then breakdowns based on good type. Granted this is not an impossible problem, but it is certainly one I would not like to be responsible for figuring out.
Two words: JOB SECURITY! I'd LOVE to have a job like that - it would be interesting from a coding and implementation point of view, and there's the job security angle, since tax laws, interpretations, and implementation are always changing.
Here, let me put it in terms that slashdotters can grok:
database of formulae for calculating taxes, goods, etc
The consumer is certainly governed by the laws of the state of their residence, and is required to pay consumption taxes on all purchases (a sales tax IS a consumption tax). When you buy something out-of-state,you're supposed to pay your local sales tax, and apply for a reimbursement from the originating state. Small purchases have been ignored, but try buying a new boat or car in one state and taking delivery in another - when you go to register the vehicle, you'll be required to pay the sales tax. The only way around that is to plate it in the original state, then bring it into the destination state as a used vehicle - and you'll still get dinged in many places.
Amazon is helping them avoid their legal obligations. I'm surprised the various states don't simply file suit under RICO - just watch the affiliates run like rats when that happens. At that point, it isn't about applying local laws to out-of-state businesses, but applying local laws to local business transaction, and an out-of-state business profiting by enabling locals to break those laws.
Another partial solution would be to go to a VAT-base tax system, but that makes too much sense for it to happen.
More to the point, this is regarding affiliates. Why should someone who refers someone to another location be taxed based on the location of the referrer. If I go to my local Safeway (supermarket), and see a posting on their community board for a motorcycle just across the state line, should the seller have to pay taxes to both states?
Your supermarket isn't getting a cut from the notice on the community board. How much is 10% of zero?
The affiliate, on the other hand, IS getting a cut - they ARE transacting business for profit.
Fuel taxes don't pay for the cost of disposing of the packaging, they don't pay for the cost of recycling the end product, and if you believe that fuel taxes pay for your local streets, you're living in a dream world. Look at the bond issues your local government has to make when they put streets in place - and which residents have to pay for through their municipal taxes.
You can't just assess sales tax according to the destination state. In many states, there are local taxes as well, and it varies based on the locality. A merchant calculates sales tax based on the MERCHANT's location, and the various taxing authorities make sure he/she knows what should be collected.
Mail order companies do it all the time for the states they operate in, so why can't Amazon? Not enough computing power? I'm not buying it.
One of the reasons we are able to get things so cheaply on Amazon is BECAUSE they have lower operating costs. If they have to pay taxes, and if we have to pay sales tax on such things, it increases the costs for everyone.
Sales taxes are consumption-based taxes. They're a tax on the consumer, based on residence. Amazon is enabling consumers to avoid paying their consumption tax. This "tax holiday" was supposed to be temporary. Congress has sat on their behind too long, so individual states are taking matters into their own hands and saying "We're going to enforce state law."
If you buy something out of state, you're supposed to pay the sales tax to your local state and then apply for a reimbursement from the state you paid the original tax in.
And how is buying from an Amazon affiliate the same as buying from a brick and mortar store? Two completely different concepts!
We should try to keep thinks cheap.
So what next - are you going to argue that people earning money off the Internet shouldn't pay income tax because it's two completely different concepts, and we should try to keep things cheap? Don't complain when your job gets off-shored.
They already do, considering that they're consuming approximately 0% of the state's resources.
Sales taxes are taxes on CONSUMPTION. The CONSUMER isn't paying their fair share, and Amazon is the enabler. Consumption taxes help pay for your local schools, etc. Your local retailer does their share, and so do their customers. Since Amazon's customers aren't paying their fair share of consumption taxes, your local retailer is paying MORE than their fair share. Your education budget is also taking a hit, as are other services. The "tax holiday" was supposed to be temporary - Amazon wants it to be permanent. Your local retailer would also like a tax holiday, you know...
Also, they DO consume a portion of your state's resources every time they ship something to or through your state. Extra pollution, wear and tear on the highways, and disposal costs for the packaging and ultimately the product itself when it breaks/wears out/becomes obsolete.
Taxing more things is not a fix for a budget deficit. You don't give a coke addict more coke because they're going through withdrawals. All 50 states need to learn to balance their budgets by *gasp* spending less money.
State revenues have fallen through the floor. California how has the worst credit record around, and on July 2nd will start issuing IOUs instead of cutting cheques, because they're out of money.
They have to do this because lenders won't take California IOUs (bonds) because California can't raise taxes enough, thanks to Proposition 13.
The federal government also has to raise taxes... half the budget is IOUs, and lenders are starting to make noises about wanting their loans counted in yuan or euros, and not greenbacks. The accumulated deficit will be between $20 Trillion and $25 Trillion by 2016 - everyone agrees it's not sustainable, and that taxes will have to rise.
The local state has the right to tax their residents out-of-state purchases. When you buy something in another state, you're supposed to pay your local sales taxes, and then file for a reimbursement from the state you paid the original tax to - but it's not enforced. Now the individual states ARE saying - hey, here's a way we CAN enforce it.
and does not have the accounting muscle to pay 50 different state taxes each quarter. I think that's the main problem
Doesn't have the accounting muscle? Why can't they use their cloud computing cluster?
The "acounting muscle" argument is pure BS - they have enough accounting and computing horsepower to run the rest of their business... and they do a lot of calculations for every shaopping cart on every page refresh. Since they CAN cut off specific states, and they also calculate shipping by state, they can certainly do sales tax by state. They're just doing this to get their affiliates to lobby for them.
Let all the states do this. There's too much affiliate-link spam going on already. Kill 2 birds with one stone - lower spam AND help fix the budget deficits.
The only ones complaining are the affiliates and Amazon - but they're the source of the problem to begin with. Let them pay their fair share of taxes, so that others don't have to pay more than their share to make up for it.
There's one way that recycling can be done profitably for the retailer - let them have bins so we can strip the excess packaging off our purchases. Pre-sorted, easily sellable packaging materials (cardboard and paper, plastic, etc).
They'd make a profit off it AND get the "feel-good" greenies.
Slashdot Mirror
It's the consumer's obligation, and affiliates, who have a local presence, are helping consumers do tax avoidance. THAT is a criminal offense, and Amazon, by facilitating it, is vulnerable.
They didn't get Al Capone on all the other stuff he did - they got him for taxes.
You've never dealt with the anal-probe invasiveness of a WalMart contract. They want EVERYTHING. The rent is not just the base fee, but also a percentage of sales, same as most retail franchises. It's less "arms-length" than you'd think. Affiliates, even less arms-length, because the affiliates can't operate for even a second without Amazon and the services Amazon provides. The eye doctor in WalMart can always go independent. Not so the Amazon affiliate. Each affiliate is intimately tied to Amazon, not just for general stuff, but for every step of any and every transaction. If the eye doctor in my example had to ask you to pay at WalMarts' cash register, you can be sure WallyWorld would be on the hook for the taxes. How is an Amazon affiliate any different?
I hope you're not one of those people selling dogs. "Fucking breeders". The deal for selling pure-bred dogs should be simple - no sales w/o ID. You pick it up in person only, have to be ID'd, and the dog chipped. And the dog's papers? I agree with Time magazine - pedigree papers are only worth the paper they're pissed on. Shelters are full of dogs that were irresponsibly bred, that have genetic disorders from too much inbreeding, etc. I've heard too much BS about "but we're responsible breeders" - I don't buy it. Truly responsible breeders would demand the end of the pedigree system, and would refuse to participate in it. "Oh, but then we can't make money!" Tough shit. Some things are more important than mnoney. Go live in a shelter kennel for a couple of weeks.
If you're NOT one of those "fucking breeders", my apologies for the rant.
Two points:
So if it were a republican legislature, brick and mortar would be able to compete w. Amazon? - (just joking).
California has over-spent during the good times, no question about it. Prop 13 is a part (only a part) of the problem, because Cali schools went from some of the finest to the worst because of chronic under-funding. Sacramento kept on spending, riding the bubble just like almost everyone else, and is now teetering on bankruptcy - and the Feds have said they won't bail them out. There's simply not enough money for every bail-out.
Health care won't get fixed - no money, no candy-stripers. Bail-outs sucked the well dry, and Obama blew it, throwing good money after bad instead of following Econ 101 and letting the market clear out the bad debts via bankruptcies and re-orgs, and supported people through the transition to new jobs, not this massive corporate welfare that has changed America into the largest corporate-welfare state in the world. Much as I hate to admit it, Bush had it right - no bailout for GM. (he had it wrong bailing out the banks - they should have been temporarily nationalized as they failed, instead of rewarding incompetence and greed and penalizing those with more acumen).
There shouldn't be a problem getting the data - the local affiliates should have it. If they don't, it's because they're not reporting income.
Amazon is shitting bricks because they know that if it can be shown that they've set up a system that systematically allows their affiliates to do tax avoidance, they're looking at triple penalties, RICO, etc. THAT is why Amazon is dropping their affiliates in the states in question - the liability is huge.
First, you wouldn't have affiliates in those other states - and if you did, they should have the relevant local information available, so either way, it's a non-issue.
Doing this would give the advantage to smaller businesses, who can be more focused on serving their local client base, instead of the inefficiencies of scale that are introduced in large-scale operations.
If economies of scale were a universal rule, GM would have subsumed all the other car manufacturers years ago, the big banks wouldn't have had to be bailed out, morbidly obese people would live longer than the rest of us, and mosquitoes wouldn't exist.
Local businesses can do fine when competing on a level playing field. Amazon doesn't want to compete on a level playing field - because they can't. Too big.
The mon-and-pop operations don't have a wide network of affiliates providing a business presence by proxy, and they're not enabling their affiliates to help people do tax avoidance. If this kills off affiliate marketing, the mon and pop sops will be more, not less, able to compete.
The USPS is governed by its' own special set of laws. You can't simply apply laws that are specific to the US mail and apply them to other businesses.
Also, even if Amazon doesn't have a business presence in a certain state, the affiliate DOES. That's why Amazon is crapping 2x4s - the law is against the affiliates. Amazon also provides services to its' affiliates in each state, over and above having a business presence there by proxy. By not providing mechanisms for the collection and reporting of sales taxes for their affiliates, Amazon has become an enabler of tax avoidance and tax fraud. Hello, RICO!
As for NewEgg, aren't they selling direct, and not through affiliates, so the example doesn't apply?
If you have someone else selling your software, then THEY should also be reporting tax stuff, right? It's not like the affiliates aren't generating revenue off the sale, so they should also have this information available, same as you or any hypothetical agent acting to sell your software.
What has happened is that the affiliate scheme has become a significant portion of the underground economy, same as ebay, where you can find all sorts of goods being sold new, without any sales or other taxes.
The affiliates should have this information already - if they don't, it's because they're not reporting the income. Amazon could simply require that affiliates submit this information, and keep it updated on a timely basis. The affiliates DO have a business presence in the physical world.
Because Amazon is enabling consumers to commit widespread tax fraud? Maybe Rhode Island should get their AG to file a RICO complaint ...
Same as other commerce isn't a zero-sum game.
Two words: JOB SECURITY! I'd LOVE to have a job like that - it would be interesting from a coding and implementation point of view, and there's the job security angle, since tax laws, interpretations, and implementation are always changing.
Here, let me put it in terms that slashdotters can grok:
In Soviet America, job taxes YOU!
I want the contract ... don't you?
The consumer is certainly governed by the laws of the state of their residence, and is required to pay consumption taxes on all purchases (a sales tax IS a consumption tax). When you buy something out-of-state,you're supposed to pay your local sales tax, and apply for a reimbursement from the originating state. Small purchases have been ignored, but try buying a new boat or car in one state and taking delivery in another - when you go to register the vehicle, you'll be required to pay the sales tax. The only way around that is to plate it in the original state, then bring it into the destination state as a used vehicle - and you'll still get dinged in many places.
Amazon is helping them avoid their legal obligations. I'm surprised the various states don't simply file suit under RICO - just watch the affiliates run like rats when that happens. At that point, it isn't about applying local laws to out-of-state businesses, but applying local laws to local business transaction, and an out-of-state business profiting by enabling locals to break those laws.
Another partial solution would be to go to a VAT-base tax system, but that makes too much sense for it to happen.
Your supermarket isn't getting a cut from the notice on the community board. How much is 10% of zero?
The affiliate, on the other hand, IS getting a cut - they ARE transacting business for profit.
Fuel taxes don't pay for the cost of disposing of the packaging, they don't pay for the cost of recycling the end product, and if you believe that fuel taxes pay for your local streets, you're living in a dream world. Look at the bond issues your local government has to make when they put streets in place - and which residents have to pay for through their municipal taxes.
Mail order companies do it all the time for the states they operate in, so why can't Amazon? Not enough computing power? I'm not buying it.
Sales taxes are consumption-based taxes. They're a tax on the consumer, based on residence. Amazon is enabling consumers to avoid paying their consumption tax. This "tax holiday" was supposed to be temporary. Congress has sat on their behind too long, so individual states are taking matters into their own hands and saying "We're going to enforce state law."
If you buy something out of state, you're supposed to pay the sales tax to your local state and then apply for a reimbursement from the state you paid the original tax in.
So what next - are you going to argue that people earning money off the Internet shouldn't pay income tax because it's two completely different concepts, and we should try to keep things cheap? Don't complain when your job gets off-shored.
Sales taxes are taxes on CONSUMPTION. The CONSUMER isn't paying their fair share, and Amazon is the enabler. Consumption taxes help pay for your local schools, etc. Your local retailer does their share, and so do their customers. Since Amazon's customers aren't paying their fair share of consumption taxes, your local retailer is paying MORE than their fair share. Your education budget is also taking a hit, as are other services. The "tax holiday" was supposed to be temporary - Amazon wants it to be permanent. Your local retailer would also like a tax holiday, you know ...
Also, they DO consume a portion of your state's resources every time they ship something to or through your state. Extra pollution, wear and tear on the highways, and disposal costs for the packaging and ultimately the product itself when it breaks/wears out/becomes obsolete.
Level the playing field.
State revenues have fallen through the floor. California how has the worst credit record around, and on July 2nd will start issuing IOUs instead of cutting cheques, because they're out of money.
They have to do this because lenders won't take California IOUs (bonds) because California can't raise taxes enough, thanks to Proposition 13.
The federal government also has to raise taxes ... half the budget is IOUs, and lenders are starting to make noises about wanting their loans counted in yuan or euros, and not greenbacks. The accumulated deficit will be between $20 Trillion and $25 Trillion by 2016 - everyone agrees it's not sustainable, and that taxes will have to rise.
The local state has the right to tax their residents out-of-state purchases. When you buy something in another state, you're supposed to pay your local sales taxes, and then file for a reimbursement from the state you paid the original tax to - but it's not enforced. Now the individual states ARE saying - hey, here's a way we CAN enforce it.
Doesn't have the accounting muscle? Why can't they use their cloud computing cluster?
The "acounting muscle" argument is pure BS - they have enough accounting and computing horsepower to run the rest of their business ... and they do a lot of calculations for every shaopping cart on every page refresh. Since they CAN cut off specific states, and they also calculate shipping by state, they can certainly do sales tax by state. They're just doing this to get their affiliates to lobby for them.
Let all the states do this. There's too much affiliate-link spam going on already. Kill 2 birds with one stone - lower spam AND help fix the budget deficits.
The only ones complaining are the affiliates and Amazon - but they're the source of the problem to begin with. Let them pay their fair share of taxes, so that others don't have to pay more than their share to make up for it.
There's one way that recycling can be done profitably for the retailer - let them have bins so we can strip the excess packaging off our purchases. Pre-sorted, easily sellable packaging materials (cardboard and paper, plastic, etc).
They'd make a profit off it AND get the "feel-good" greenies.
Just use the RSS or Atom feed instead of the web page.