Why SHOULD Amazon have to pay sales taxes in states they don't operate?

[PokerGuy]

Why do you keep saying "thousands"? Most counties, and cities have the same sales tax as their state.

Absolutely not. Most states have a rate, but then every single jurisdiction in that state can tack on additional rates. Further, it's not just a rate, it also depends on what products. For example, selling eggs in one state is exempt from sales tax, in another it's not, and in another it's only in a pack of a dozen.

The states are trying to force their logistics problem to be a problem for the vendors.

 

[xj0hnx]

How so?

If they don't have any buildings and no employees in a state then they have no presence. Does Amazon operate in all 50 states?

If I can order from Amazon from my house, it seems pretty obvious they have a presence in my state.

 

[xj0hnx]

Absolutely not. Most states have a rate, but then every single jurisdiction in that state can tack on additional rates. Further, it's not just a rate, it also depends on what products. For example, selling eggs in one state is exempt from sales tax, in another it's not, and in another it's only in a pack of a dozen.

The states are trying to force their logistics problem to be a problem for the vendors.

They can, but most do not. Who's calling for them to collect city taxes? State taxes are fair enough.

 

[PokerGuy]

I'm not arguing the sales tax should not apply nor that the people don't have to pay them, but making the vendor do that work doesn't make any sense. The only way it makes sense is if there's some sort of national rate established for all purchases across state lines or something like that. Easy to do.

You'd still have the same enforcement issues though: if you are the state of OK, how do you know if company x in North Carolina sold something to one of your citizens?

And nobody has a good answer for international sales either, with no mechanism to enforce sales taxes.

 

[her209]

How so?

If they don't have any buildings and no employees in a state then they have no presence. Does Amazon operate in all 50 states?

For the third time:

http://aws.amazon.com/ec2/

Multiple Locations – Amazon EC2 provides the ability to place instances in multiple locations. Amazon EC2 locations are composed of Regions and Availability Zones. Availability Zones are distinct locations that are engineered to be insulated from failures in other Availability Zones and provide inexpensive, low latency network connectivity to other Availability Zones in the same Region. By launching instances in separate Availability Zones, you can protect your applications from failure of a single location. Regions consist of one or more Availability Zones, are geographically dispersed, and will be in separate geographic areas or countries. The Amazon EC2 Service Level Agreement commitment is 99.95% availability for each Amazon EC2 Region. Amazon EC2 is currently available in five regions: US East (Northern Virginia), US West (Northern California), EU (Ireland), Asia Pacific (Singapore), and Asia Pacific (Tokyo).

Having a datacenter in Northern California and advertising your business with the Amazon name and logo, but claiming your not Amazon, Inc. LOOPHOLE!

 

[PokerGuy]

If I can order from Amazon from my house, it seems pretty obvious they have a presence in my state.

That's flat out wrong. It's wrong by the legal definition, and it's wrong conceptually. If someone in Belgium wants me to send them a widget (which I sell for $5), does that mean I have a "presence" in Belgium and should learn every rule / rate for that country? Makes no sense.

 

[Wreckem]

No they shouldn't.
But if they do have ANY business presence(offices, distro centers, wholly owned subsidiarys doing order fulfillment etc), they should.

 

[ProfJohn]

Two things.

1. There is no law about collecting internet taxes and amazon isn't using a loophole. It was the Supreme Court who ruled that states can not make a business in another state collect their sales taxes because it violated the interstate commerce rule of the constitution.

It would require the Federal government to mandate the collection of local/state taxes.

2. My question has NOTHING to do with that.

My question is why should a business that does not operate in a state be expected to pay/collect taxes for that state? And why should a person living in Texas who buys an item in Ohio have to pay Texas sales tax on that item?

 

[PokerGuy]

They can, but most do not. Who's calling for them to collect city taxes? State taxes are fair enough.

Wait, why draw that distinction? Either the burden is on the vendor or not. Now you're just drawing a line and saying "well, state taxes is fair enough, other stuff, no". By what logic?

Wouldn't the town of East Podunk say "hey, what about my 2% sales tax that I charge on top of TN sales tax? I can't collect it. Vendor, you should collect it for me!"

 

[ProfJohn]

Having a datacenter in Northern California and advertising your business with the Amazon name and logo, but claiming your not Amazon, Inc. LOOPHOLE!

Wrong thread!

This isn't about Cali.

This is a philosophical discussion about sales taxes and who should and should not have to pay them.

 

[xj0hnx]

I'm not arguing the sales tax should not apply nor that the people don't have to pay them, but making the vendor do that work doesn't make any sense. The only way it makes sense is if there's some sort of national rate established for all purchases across state lines or something like that. Easy to do.

You'd still have the same enforcement issues though: if you are the state of OK, how do you know if company x in North Carolina sold something to one of your citizens?

And nobody has a good answer for international sales either, with no mechanism to enforce sales taxes.

It's not much work at all, it's pretty much done by computer in the background.

That's flat out wrong. It's wrong by the legal definition, and it's wrong conceptually. If someone in Belgium wants me to send them a widget (which I sell for $5), does that mean I have a "presence" in Belgium and should learn every rule / rate for that country? Makes no sense.

How did he buy your widget? It is "conceptually" 100% accurate. If he has access to you in Belgium, you have a presence there. You are not physically there, but you still have a presence.

 

[PokerGuy]

No they shouldn't.
But if they do have ANY business presence(offices, distro centers, wholly owned subsidiarys doing order fulfillment etc), they should.

That's essentially what states like CA are trying to do, using a "loophole" of their own to try and force Amazon to collect for them. "Hey look, I saw an ad for Amazon on TV, that must mean they have a local presence!". They are making just about anything qualify as nexus.

 

[KK]

If I travel to SC and buy something, why do I have to pay SC taxes. Some of you are saying that I should only pay GA the taxes on the money I spent in SC. Or should I pay SC and GA sales tax?

Now say I'm on vacation in NY and I go online buy something from a store in VA, and have it shipped to GA. Should I pay NY, VA, and GA taxes?

 

[Wreckem]

Two things.

1. There is no law about collecting internet taxes and amazon isn't using a loophole. It was the Supreme Court who ruled that states can not make a business in another state collect their sales taxes because it violated the interstate commerce rule of the constitution.

It would require the Federal government to mandate the collection of local/state taxes.

2. My question has NOTHING to do with that.

My question is why should a business that does not operate in a state be expected to pay/collect taxes for that state? And why should a person living in Texas who buys an item in Ohio have to pay Texas sales tax on that item?

Because Amazon has a business presence in Texas.

 

[Wreckem]

That's essentially what states like CA are trying to do, using a "loophole" of their own to try and force Amazon to collect for them. "Hey look, I saw an ad for Amazon on TV, that must mean they have a local presence!". They are making just about anything qualify as nexus.

Most of Amazon's distro centers are in states that have sales taxes, they do not collect sales taxes in most of these states. This includes the large one in Dallas/Fort Worth.

 

[PokerGuy]

It's not much work at all, it's pretty much done by computer in the background.

Again, an assumption that everyone uses such systems. A lot of people don't. They cost money. Regardless, saying "well, it's not really that hard" is not an excuse for flawed logic of putting the onus on the wrong party.

How did he buy your widget? It is "conceptually" 100% accurate. If he has access to you in Belgium, you have a presence there. You are not physically there, but you still have a presence.

No, he could have sent me an envelope with cash, based on something a friend told him. Yet by your logic, by simply mailing something to someone I have a 'presence' wherever that person lives.

That's not how the law is, which frankly is a good thing because that's absurd.

 

[xj0hnx]

That's essentially what states like CA are trying to do, using a "loophole" of their own to try and force Amazon to collect for them. "Hey look, I saw an ad for Amazon on TV, that must mean they have a local presence!". They are making just about anything qualify as nexus.

Seeing an ad on TV isn't the same as an online store that you can actually purchase through. With the TV ad you still have to go to the store to purchase the product.

 

[PokerGuy]

Most of Amazon's distro centers are in states that have sales taxes, they do not collect sales taxes in most of these states. This includes the large one in Dallas/Fort Worth.

Are those distro centers owned by Amazon? Then that would constitute a presence and I'd imagine they would have to collect sales taxes there.

 

[ProfJohn]

If I travel to SC and buy something, why do I have to pay SC taxes. Some of you are saying that I should only pay GA the taxes on the money I spent in SC. Or should I pay SC and GA sales tax?

Now say I'm on vacation in NY and I go online buy something from a store in VA, and have it shipped to GA. Should I pay NY, VA, and GA taxes?

You pay the sales tax at the location you bought the item.

 

[Craig234]

I live in South Carolina. If I drive less than a mile I am in North Carolina and do most of my shopping there and yet no one would ever suggest that I should pay sales taxes on items I buy in NC and bring back across the boarder.

Why is Amazon any different than that?

You're a tax evader.

Sales tax is imposed on the sale of goods and certain services in South Carolina. Use tax is imposed on goods and certain services purchased out of state and brought into South Carolina or on which no sales tax has been paid. The statewide sales and use tax rate is 6%....

Use Tax

Use Tax: Purchases of tangible goods for use in South Carolina on which no South Carolina sales or use tax has been paid are subject to the use tax. Examples include: catalog purchases, goods bought on-line over the internet, or furniture purchased out of state and delivered in South Carolina on which no or insufficient South Carolina tax was paid. (Contrary to popular misconception, the federal Internet Tax Freedom Act governs taxation of access to the internet through your internet-access provider. Goods purchased over the internet are not tax free.) When figuring your use tax liability, please review any credit card statements from the taxable year. In addition, please recall any large purchases made during the taxable year.

http://www.sctax.org/Tax+Information/Sales+and+Use+Tax/Sales+and+Use+Tax+Web+Page.htm

 

[her209]

Wrong thread!

This isn't about Cali.

This is a philosophical discussion about sales taxes and who should and should not have to pay them.

It was just an example. Sactoking provided another excellent example of Amazon using corporate structuring loopholes in the other thread.

 

[PokerGuy]

Seeing an ad on TV isn't the same as an online store that you can actually purchase through. With the TV ad you still have to go to the store to purchase the product.

My point was, they're trying to stretch the definition of nexus to the absurd in an attempt to collect. I understand why they do it, but it doesn't make sense to allow nexus to be defined so broadly as to include just about anything. This stuff is playing out in courts as we speak.

 

[ProfJohn]

Are those distro centers owned by Amazon? Then that would constitute a presence and I'd imagine they would have to collect sales taxes there.

The states exempt them from paying sales taxes in order to get their business.

That is what is going on in SC right now. Amazon wanted to open a center and provide 1000 jobs and the state exempted them from paying taxes. But locals freaks out so state took away exception and Amazon said 'screw you' and took its 1000 jobs some place else.

 

[xj0hnx]

Again, an assumption that everyone uses such systems. A lot of people don't. They cost money. Regardless, saying "well, it's not really that hard" is not an excuse for flawed logic of putting the onus on the wrong party.

That's a pretty weak argument that someone selling online isn't using "such systems". Yea ok, some business are still using Quicken for their store, but most, at least that I have seen, are using some type of retail software already.

No, he could have sent me an envelope with cash, based on something a friend told him. Yet by your logic, by simply mailing something to someone I have a 'presence' wherever that person lives.

That's not how the law is, which frankly is a good thing because that's absurd.

That isn't the same thing as being an online vendor.

 

[PokerGuy]

You pay the sales tax at the location you bought the item.

No. I don't know how it works in all states, but I know for a fact in some states you can be exempted from paying local sales tax if you can demonstrate that the product is going out of state. You are then responsible to report that purchase in the state where you "use" the product and pay use taxes