Amazon & Collecting State Sales Taxes

A load of sarcasm...but a load of honesty and insight too.

 

I think everyone realizes this. It's been known for years. We just don't WANT to pay it, if we're all honest.

I do a lot of music, movie, book, and other buying on the net. To be able to afford it all, I have to be a bargain hunter and so I'm very price sensitive.

 

Sorry but you are incorrect. You are personalizing what regressive means. A tax being regressive has nothing to do with burden. It is all mathematical...and your math is wrong.

PS- The "urban" definition of a regressive tax brings in ability to pay however, the old school economics definition deals only with the math. EG-The tax gets bigger as the income gets bigger...progressive...the tax remains the same for all levels of income...regressive.

Of course, we are we over the purpose of this thread with this stuff.

 

It is interesting how most states now require you to put in a number on the use tax line on your state tax return...zero or something else. Hmmm.............they now have a legal position for fraud and we lose our defense of ignorance.
We never had the defense in the courts when it comes to the tax...but now we don't have one when it comes to abatement of penalties.

 

Don't get me wrong. I like Texas. But the state can lick my ***** on this.

 

I grew up in Oregon. Shame about those terribly high property taxes . . .

 

http://www.kalw.org/post/today-your-call-what-amazon-s-agenda

My local NPR interviews Steve Wasserman, who has written on the rise of Amazon. Interesting history.
Includes the State Tax thing.

 

Not an issue in Texas, which has no state income tax (but see further comment below).

While this thread has focused on Amazon collecting sales tax, the bigger underlying issue is total taxation burden that citizens bear in any particular state. Just because a state doesn't have a state income tax doesn't mean its citizens are paying less taxes than those of another state. E.g., like Oregon, Texas has high property taxes. In the past, they were even higher (due to the so-called Robin Hood Act), which was eventually thrown out but I don't think they even went back as far down as most home owners had hoped.

One needs to compare total tax burden from one state to another to determine which state has the least total tax burden. This might be a good place to start:

http://www.retirementliving.com/taxes-by-state

Sure we all owe sales tax, but I think most of us feel that we are taxed to death and are not too keen on paying any more than we absolutely have to. Since governments are in the habit of spending money they don't have, that egregious behavior doesn't encourage citizens to pay their fair share.

Many forms of taxation are subtle, indirect, but significant. E.g, though Texans pay taxes for road and highway construction, the state continues to contract out road building with the result that toll roads are becoming more numerous. My wife pays ~40.00 per month to commute to work down the Dallas North Tollway. No, she doesn't have to take it, but we live due north of her place of work and there is not anywhere near an equivalent alternative route of travel. That's an additional 480.00 per year in taxation. I once thought that once enough tolls are collected, eventually the road would be paid for and convert to a public highway. I don't know if this ever really happened, but if it did, it is no longer part of the model. Tollways are permanent features of modern life and an additional user tax on citizenry.

So don't expect the citizenry to rush to pay more taxes.

 

If we had a "Like" button I would use it.

 

You make a good point. I would bet most people (me included) could not tell you what goods and services or anything else they paid some form of tax on in the last month. Half of it would be forgotten. For instance, I paid a "fee" to park and hike at a park in NH. It really is a tax in disguise.

 

Good point on the taxes elsewhere. Some place though in the USA, do pay more in aggregate. Here in NY state, property taxes are high, as is income tax, plus were have higher than average sales tax, plus higher than average gas taxes. There really are no loopholes anymore in revenue.

 

And it all flows to the Big Apple. Gets ya mad don't it?

 

Now the big question is how many actually paid it?

 

Most states have a use tax law like PA.

 

I said basically the same thing on page two of this thread, but everyone ignored it for whatever reason.

 

We don't want to be reminded we've been bilking the gov't out of tons of tax revenue. That's why!

 

Everybody ignores me.

 

Can someone please present a compelling argument as to why Amazon (and other online stores) should NOT be subject to the same tax laws as any other retailer??

So far I've just seen people complain that it's yet another tax. Well, do you think that there should be no sales tax (for online and B&M businesses), period? Because you can't let different retailers play by different rules. That's not a level playing field and it's not a "free market."

 

It is very complicated and has to do with what is called nexus or the extent of the connection the retailer has to any state. Constitutionality is also involved.
Lawyers have made it a mess with different state compacts.

The fact that it is online complicates the legal matters. If it was all brick and mortar, it would be easy to make the determination.

 

Agreed. According to one site I checked, total tax burden ranges from highest (New Jersey at 11.8%) to lowest (Alaska at 6.4%). New York, where you live, was second highest at 11.7% (data from 2010, it may have changed--gone up more?). Your perception that you live under a high tax burden is correct; only a New Jersey resident has it worse.

Another indirect form of taxation in Texas: annual vehicle safety/emissions inspection. This is distinct from annual vehicle registration (which cost me about 55.00 a year; I'm OK w/ that, got it?). Only 17 states have a periodic vehicle safety/emissions inspection. So every year, Texans pony up (cost varies, I think depending on county and vehicle type?--it cost me about 35.00 year). My 1994 Honda Civic, w/ > 150,000 miles, has never failed a safety or emissions checkup. Even if you have a brand new car, you'll pony up to make sure its not emitting pollution. Why do brand new (or one-year old) vehicles need their emissions checked? I'm all for eliminating or reducing pollution of the land, air, and water. Seriously. But this program is just a form of additional taxation.

 

It's not Amazon that is or would be subject to the tax. It's buyers who are subject to the tax. The issue is whether states can force Amazon or any out of state retailer to serve as their tax collector.

This is the most often cited court case on the matter.

B&M stores have the advantage of not having to charge shipping or ship their product to customers. Online retailers either charge shipping, or cover it themselves, meaning they price it in. I think a lot of people feel one or the other (shipping or sales tax) is fair, but don't want to be dinged with both.

 

Interesting thread. Because of on-line shopping, this trend is likely to continue. Amazon isn't the only company to charge state taxes to its customers on-line or mail-order purchases. I know that if a company has a physical presence in a particular state (store, distribution center, etc.) the state they are in requires that they collect sales tax. States are getting hard-up for revenue, so they are going to take a more active approach to sales tax collection in the future.

Here in Florida, there is a law on the books (passed probably 15 years ago or so) that requires Florida residents to pay use tax on all out-of-state purchases (it isn't well enforced) whether or not you purchased the item in person or by mail. Here's their twisted and arcane logic: Let's say you go to a high-end audio dealer in Atlanta and buy a VPI turntable for $5,000; you'll owe the State of Georgia $200 in sales tax (it's 4%, and I'm leaving out the county sales taxes for simplicity's sake). Florida law says that when you bring your new turntable home, you owe the State of Florida an additional $100 in use tax, because you have to make up the difference between what you paid in Georgia and what you would have paid in Florida (Florida's sales tax is 6%.) Now here's the really stupid part: Florida expects you to willingly divulge all out-of-state purchases (buy a t-shirt at the Grand Canyon? you owe Florida use tax on it!!!) and cough up the money. Crazy no???

 

I don't see how a shipping charge is in any way a replacement for sales tax. None of that money goes towards funding our government.

Charging both makes sense to me. The shipping charges are the price you pay for convenience, ie, being able to shop from home and all that that entails.

 

The states have been bantering this around for many years and have tried to come up with a solution. Here is one way that they have tried but not all states join in. It is all politics.

The Streamlined Sales Tax Project (“SST” or “Project”) was primarily intended to simplify the collection and remittance requirements imposed on U.S. businesses of all sizes. The SST Governing Board adopted the Streamlined Sales and Use Tax Agreement (“SSUTA”) in November of 2002 and began registering business that chose to collect and remit sales and use tax in member states regardless of whether or not they were required to do so. At the time, many of these registrants were seeking amnesty for unpaid tax in an effort to move forward with a clean slate. Has the reason for registering with SST changed over the years? Yes, the reasons have and will continue to change as the result of states beginning to extend nexus to remote sellers via their “affiliates” or other related companies operating within the state. But was this the intention of SST all along?



As large states, such as New York, Texas and California, begin to reinterpret their definition of nexus and extend it to remote sellers, the value of SST becomes increasingly important, even for those states that are not members of the Project. Since the SST Governing Board adopted the SSUTA, they have consistently promoted federal legislation that would overturn the 1992 Quill decision that currently prevents states from asserting nexus over remote sellers. By holding fast to a clause in Quill that would allow Congress to overturn the decision provided that the burden on sellers to collect and remit is sufficiently minimized, SST has laid the framework for its member states, and possibly non-member states, to begin imposing nexus on remote sellers that wish to conduct business in the state. With several reliable and affordable software solutions available to taxpayers of all sizes and needs, as well as the shift of that burden from taxpayer to the taxpayer’s Certified Service Provider for accurate tax calculation, it would appear that SST has successfully put in place a model that can be adopted by all states allowing them to very easily assert nexus over remote sellers.



The current bill before Congress (HR 5660: full text available at http://www.opencongress.org/bill/111-h5660/show) would enact federal legislation that would allow SSUTA member states to begin requiring all remote sellers that do not meet the small business exception to collect and remit sales tax in their state. This small business exception is sparking debate with California lawmakers and has garnered significant negative feedback in several other states where no such exception exists. Would a re-drafted version of the ruling, which includes a small business exception, be more readily accepted? Reactions and general opinion among the business community indicate that states want a new ruling. The SSUTA was written with the intention of minimizing tax burden on small businesses, but the California law does not always agree.



So, where do we go from here? It is doubtful that California will become a member to the SSUTA any time soon. The same is true for other larger states like New York and Texas. However, federal legislation that overturns the Quill decision may give these states the fuel that they need to get all-encompassing laws passed. States may still have to contend with large remote sellers cutting ties with their state, as Amazon has done in New York, Illinois, South Carolina and Texas, but they should be in a much better position to begin requiring collection.

 

Unfortunately too many people are of the mindset that everything must be cheaper online. A mindset that has, up until now at least, been reinforced by the online-only retailers who can sell cheaper due to no retail overhead, sell without charging tax, and often offer free or cheap shipping as an added incentive. I don't think anyone is blind to how this hurts the local businesses, but I don't think enough people really care anymore. Some of these folks even rally against WalMart coming to town, but then leave the rally and go home and order some books from Amazon rather than their local bookshop.