CA taxes internet, Amazon says no thanks

[abaez]

When did the USSC recently rule on affiliates = nexus?

I'm not talking about affiliates. I was responding to him saying Amazon has a free pass on not paying the taxes and that Amazon's customers don't have to pay the tax. They DO have to pay the tax, but it isn't up to Amazon to collect it. They need to take it upon themselves.

 

[Brainonska511]

I'm not talking about affiliates. I was responding to him saying Amazon has a free pass on not paying the taxes and that Amazon's customers don't have to pay the tax. They DO have to pay the tax, but it isn't up to Amazon to collect it. They need to take it upon themselves.

Who does or doesn't have to collect is up for debate. From what I understand, the nexus concept was rather ambiguous at the time, leaving it up to Congress to further define it (which it hasn't really done). And yes, the individual is responsible for paying the taxes in any case, but going after individuals, when everyone is making these de facto tax free purchases, is not going to be particularly effective cost-wise or time-wise. What's the state going to do? Subpoena hundreds of companies for purchase records and then audit millions of people for Use Tax violations?

 

[abaez]

Pretty much that's what they are going to have to do since the SC has said unless Amazon has a physical presence, they cannot tax them.

CA changed the law so that their subsidiaries count as a nexus/physical presence. Whether or not their Kindle/A9/whatever subsidiaries counts as a physical presence is like you said up to Congress and/or the courts. Right now it's ambiguous and you can't blame Amazon for doing what they're doing.

 

[Brainonska511]

Pretty much that's what they are going to have to do since the SC has said unless Amazon has a physical presence, they cannot tax them.

Whether or not their Kindle/A9/whatever subsidiaries counts as a physical presence is like you said up to Congress and/or the courts. Right now it's ambiguous and you can't blame Amazon for doing what they're doing.

But that ruling was back in the early 90s and didn't really cover the specifics that California is trying to use in their law. They haven't made a ruling on the subject since. Since nexus is an ambiguous concept and Congress hasn't fleshed it out, states are filling in the gaps and forcing the issue on the courts to reach some sort of clarity.

And again, it isn't a tax on Amazon. They would just be forcing Amazon, which has a physical presence, in a technical sense, to collect the tax the citizens already owe, just like a B&M store in the state would have to do.