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Time for Amazon to pay up

By Kay Bell · Bankrate.com
Thursday, August 11, 2011
Posted: 1 pm ET

Amazon.com Inc is leading an effort to put California's recently enacted online sales tax law to the voters next year. If you're one of the few who didn't think the online giant was ballsy enough in its sheer opposition to collecting sales taxes from customers and its threats to pull projects from states to obtain tax waivers, then the company's approach to the ballot initiative petition drive should convince you.

Amazon reps have been stopping California folks outside major brick-and-mortar stores asking the shoppers to support the online sales tax recall effort. Yep, the company has put its agents literally on the front porches of the businesses that have long complained that they've lost millions in sales to Amazon.

If enough qualified California voters sign the petition, the state's residents will get their direct say sometime next year on the whether the tax, which could bring in an estimated $200 million per year to the money-starved state treasury, should stay or go.

I understand that Amazon doesn't want to give up its competitive advantage. And a lot of people specifically shop online so they don't have to pay sales tax on their purchases.

But to Amazon and other online shoppers, I say quit tax cheating.

Technically, California online shoppers, you owe the state tax collector the use tax on your products. This is the same rate as the sales tax and applies to items that are not taxed by the state because they were bought elsewhere but are used within California's boundaries.

Remember, ignorance of the law is no defense. And now you know about it, so you have absolutely no reason to not pay your rightful use taxes.

As for Amazon, get real. The company argues that it doesn't have a physical presence in California so per the prevailing U.S. Supreme Court ruling on this matter, it doesn't have to pay. Well, many folks would consider all of Amazon's subsidiaries with primary offices in the state as sufficient presence, or nexus to use the legal term.

Plus, California has taken care of that presence argument with its new law that includes provisions requiring online retailers that have corporate subsidiaries and distribution centers in the state to collect sales tax from customers. It also clarifies when other kinds of physical presence require a sales tax to be collected.

Amazon's other argument is that it's too difficult for it to set up a tax collection process to deal with all the different states that have sales taxes (only five states are sales tax free).

Really, Amazon? You're the world's biggest online retailer and you don't have the wherewithal to find some tax and tech whizzes who could create such a program? I doubt that.

If you'd fire the attorneys that I'm sure are getting a nice chunk of change to fight state sales tax laws and simply comply, you'd probably come out ahead.

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7 Comments
dharma
September 23, 2011 at 5:43 pm

I'm going to search out that petition & sign it! If B&M shops can't compete with Amazon, too bad. Jerry Brown lost my vote over this one.

Ron
August 15, 2011 at 2:42 pm

In all.. I believe a Internet TAX rate should be created. No Cross State line games, or different city codes. Taxes are paid per the Ordering ZIP Code, as per utilizing a credit card, have to provide zip code.
Im DEFINITELY not into taxing for the right of it. Online is a awesome thing, but yah, they are courting with Free like beer not like air. ITS the way of the game, in which they , and Im including all E-Commerce Companies. E-Com has made shipping companies very rich, and kept jobs.. BUT also has destroyed local shops, as online can save the MIN 6% of sales tax, (using Michigan as example). 6% on $20 is not bad, but 6% on $1000 is $60, which causes one to think again. Taxing + Shipping will hurt Ecom, BUT We all have to pay one way or another.. Too many free things have gotten us where we are today.

Bill
August 15, 2011 at 11:55 am

I could not agree more! Everyone needs to quit cheating on their taxes and Amazon is wanting them too. Amazon needs to collect the tax. It is part of doing business in the state. Those taxes help to benefit the states. You do not get something for nothing. Amazon is putting up bogus arguments and are clinching onto people being naive so that they do not have to pay extra taxes. Soon we just won't have local stores!

Ash
August 12, 2011 at 6:15 pm

If I live on the border of State A, and I drive to State B to fill my gas tank, the gas station in State B is in no way obligated to collect and remit the sales or gasoline taxes for State A -- even if the station is owned by an oil company that has stations in both states, and even though I'll burn 99.99% of that fuel in State A.

Tell me please, how you came to the conclusion that Amazon is any different? In my view, the missing revenue isn't the problem for state and local governments any more that it's the problem for the Feds. All governments have to stop wasting our money and live within their means.

Frank in midtown
August 12, 2011 at 10:14 am

Jeremy,
Every national retailer deals quite well with the collection of sales taxes, as well as any local taxes on assets, payroll, and energy. This is a phony baloney competitive advantage that is unfair to the competitors who pay all the local taxes where they compete.

Jeremy
August 11, 2011 at 7:45 pm

Once you open the collect sales tax door, it's a wide door indeed. Forty-five states levy a sales tax. But what about when counties and cities sue to have Amazon collect and distribute sales taxes on their behalf? How many different tax codes, changed on the whim of city councils, is that to keep track of? Amazon has expanded beyond books, and some areas have complicated rules on not taxing certain "basic necessities". Additionally, I voting district is town A, my street address is in town B, and the post office zip code says I'm in town C. Which tax code does Amazon apply?

There's going to be big money in a sales tax consolidator site to track/process this info for online retailers.