Amazon & Collecting State Sales Taxes

At the end of the day, I'm all for anything that puts the online retailers and the physical stores on a level playing field. If that's helped by Amazon collecting sales taxes in some cases, so be it. Don't like that? Lobby for a lower tax rate.

 

are they taxing downloads yet?

 

You know most of what said here, is complete scam, cooked up your local elected officials
and not drop of money will cut smog reducation.
We have the same nonsense in ca.

 

Just for the record, I got my order in yesterday, the last day of tax-free holiday for Texans on Amazon purchases.

Today, I went and put an object in my shopping cart, and took it through the motions just to see how this worked.

I choose an object that was < $25.00 to see how shipping/handling costs might effect taxes. "The estimated tax to be collected" INCLUDES not only the item, but also shipping/handling costs. So taxes are also collected on the shipping and handling costs. I guess that is how it is normally done on Internet purchases from in-state retailers, but I hadn't thought it through.

Then I put an object < $25.00 in cart from an out-of-state Amazon reseller. The final price was: item price + 2.98 shipping/handling fee + ZERO tax, just as we would expect.

Some conclusions:
1) The tax burden on the consumer is higher for Internet vs. local purchases, since taxes are figured on shipping/handling costs. Of course, it costs to drive to your local store to pick up an item.
2) Without the burden of inflated product price due to local sales taxes, Amazon resellers should be may even more competitive than they (already?) were. Yes, Amazon can combat this by free shipping/handling costs (as already done for > $25.00 purchases).
3) On large purchases, Amazon probably will not be able to compete. Take a 1,000.00 high end digital camera (e.g., the new Olympus micro 4/3s). Even w/ free shipping, Amazon's cost will be 82.50 more than say, Adorama's or B&H Photo.
4) With state and local governments hurting for cash, more Internet taxation is on the way. Expect federal legislation sooner rather than later. That will put some Internet resellers out of business.

 

So, Amazon go from being preferred/lowest to less preferred. Until the next round when all out of state purchases have required in-state holding (might never happen). I'm sure Amazon's lobbyists are preparing to ask for that playing field to be leveled. I've done a share of buying from J&R and BHphoto.

 

Really? That doesn't sound right to me... I don't think I've ever (knowingly) paid sales tax on the shipping, whether I ordered online, via a catalog or any other non-retail means.

 

Local state tax, local state rules. It varies, sometimes in quite a complex way. That's another thing that Amazon used to delay this: the rules are all over the place.

 

I'm pretty sure that both Columbia House and BMG Music Service charged me sales tax on the shipping and handling, though at least one of them stopped charging sales tax altogether towards the end of their existence.

 

Between making their constituents happy, i.e. the B&M stores within their borders and bringing more tax revenues into the state coffers to help plug the budget gaps, many states just cannot resist. As I mainly buy music (exclusively classical) from Amazon, I will just stop buying from Amazon and make all my purchases in Europe where the etailers will not collect any sale tax for my state.

 

What about pre-order items that were ordered pre-sales tax but aren't expected to ship until post-sales tax? I just checked my pre-order for all of the new Zappa remasters (not expected to ship until the end of the month) and noticed that estimated sales tax is still zero.

 

That is a good question.

A similar one would be: what about orders placed before 7/1 that were sold via Amazon, but not in stock? I went a bit crazy this weekend, and bought quite a few necessary items. Most were in stock, but some were not. I fully expect to have them filled by Amazon.

Also, have you ever noticed that when Amazon runs out of an item (that they normally stock) it will say "ships in 3-4 weeks" or similar. I've found that if you go ahead and purchase the item, it must expedite the order, because it typically ships within 48 hours, along with the "good news!" email from Amazon.

 

I'd rather Amazon collect the tax than have to figure out again what I owe in use tax.

It did not go unnoticed that in Pennsylvania, which introduced the use tax to its income tax forms this year, that the estimates taxpayers were invited to use actually resulted in a higher use-tax rate for lower incomes than for the highest income bracket (.04% of income if you made $30,000, .029% of income if you made $200,000).

 

Yesterday I heard of an interesting addendum to this; it deserves further thinking.

Amazon seems to be using this 'change of playing field' to expand it's warehousing and shipping into every state (while allegedly wringing as much local concession as they can for doing this) and may be planning to offer even faster delivery everywhere in the USA.

Yes, everything will have local sales tax. But if it's delivered this afternoon, will you still take that trip out to your local store? Just when you think the playing field is level (and your local B&M is safe).

Interesting times..
http://www.slate.com/articles/busin...ommerce_giant_will_destroy_local_retail_.html

 

While this latest move will speed up the delivery time, the collection of local sales tax is still a big negative and Amazon will probably lose business. The least impacted may be the Amazon MP vendors, which generally underprice Amazon anyway ...

 

You think it would hurt Amazon's business? I guess maybe a little but not enough for them to get worried IMO.

 

Amazon is now into selling its cloud computing services and a host of other new business initiatives that will not be impacted by this local sales tax. At the end of the day, this local sales tax collection probably will have minimal impact on its overall revenues. I wonder if you decide to buy downloaded music from Amazon, will the local sales tax still be applicable?

 

Yes, for certain.

 

But you are buying downloaded music off some non-local server?

 

The Air Force pays $500 for a hammer or toilet or whatever. I can say for a fact there is welfare abuse. National Public Radio has a million$ budget that some feel the government shouldn't pay for. And on and on.

But no enterprise is perfect. PRIVATE companies waste money, sometimes massively. Government will never be perfect either, and the amount of waste is a small amount of total budgets. Like, if we kill NPR, does that pay down the national debt? Not even!

So I agree, I don't want to hear whining that "I don't want to pay more taxes because the government wastes my money"-that just comes with the territory, and it's small potatoes. And sometimes (back to welfare fraud) it can cost MORE to investigate it than what you save!

Anyway, the online tax discussion should be about equity. If we say sales tax supports state infrastructure, out of state retailers shouldn't have to collect. If we agree that it is really just another revenue stream, and that earmarks (gas tax supposedly for roads etc) really don't matter, then states should tell all sellers "if you want to sell to our citizens, you have to pay us tax."

I cannot believe that in these days of mammoth SAP and similar software systems, keeping the tax straight for various jurisdictions is such a huge hurdle. Troublesome, of course. But shouldn't be too too difficult to calculate. PAYING the tax to each jurisdiction could be the real killer if you are a small business, whether by check or by transfer. Also the possibility of audit from multiple jurisdictions.

 

I don't believe that has ever happened yet. It certainly did not in Illinois, where the government-run tollway just keeps charging, decades after it was supposed to become free.

I read speculation that an LA-area tollway will revert to the state in like 20 years...right when it is degraded and needing massive expenses for maintenance.

 

It's not where the product comes from, it's who you're paying.

 

They don't. They cut that out in California; you don't need inspection for a few years, then it's I think every two years, then eventually annually. And at least they went to a rolling dyno test, which is better than a static test. Still unsatisfactory, since many cars spew out crud under acceleration or sudden deceleration, and the dyno tests are constant speed. There used to be waivers if your car didn't pass and repairs were too expensive, but now I think you run out of luck and can't reregister the car. That's fine by me, I don't want you driving by puking up my air just because your income is lower.

I also HATE paying more to register newer cars. It's stupid! The state wants you to drive newer cars with less emissions...so they penalize you! In my opinion, they should charge flat rate or actually INCREASE registration for every year the car ages, as a discouragement.

That money could fund a program where they pay me a big fat salary to sit by the freeway on the lookout for cars spewing too many emissions

 

Did a lot of posts go missing between SBurke's 7/2/2012 post and MikeyH's today post?

Or is it merely a Friday the 13th coincidence? Hmm...

 

Check your email notifications.

 

Huh? What e-mail notification might that be?