Amazon is not the bad guy in sales tax fight
When state legislatures across the country started trying to solve their budget woes- they looked for a scapegoat for their dropping sales tax collections and found Amazon.
But before you blame Amazon, try looking at the insane sales tax laws we have in Ohio- and I’m sure are duplicated in other states: different sales tax rates in every county- a nightmare for any business doing business across the country.
From the New York Times:
SAN FRANCISCO — Across the country, state officials struggling with big budget shortfalls are trying to get Amazon.com to take on a role it does not want: tax collector.
Amazon’s skirmishes with states over whether it should collect sales taxes have been an ongoing battle. But the fighting has recently escalated, coinciding with the economic woes that have left a number of states struggling with multibillion-dollar deficits, and looking for money wherever they can find it.
Last Thursday, Gov. Pat Quinn, Democrat of Illinois, signed a law that compels online retailers that work with affiliates in his state to collect sales tax on purchases by residents.
Affiliates are partner sites that earn commissions by advertising or linking to an online retailer’s products, sending traffic that way. Lawmakers in California, Hawaii, New Mexico, Minnesota and Vermont have introduced similar legislation.
Amazon, based in Seattle, is fighting back. It vehemently opposes the legislative efforts, and in letters to state officials, has called the provisions unconstitutional and counterproductive….
A state can compel companies to collect taxes only if they have a physical presence in the state, or a nexus, as the Supreme Court ruled in Quill Corporation v. North Dakota in 1992. Absent a nexus, online retailers and mail-order companies can sell products without collecting the tax.
What many people fail to realize, however, is that the tax is still due. Residents are supposed to self-report what they owe in their annual state tax filing, but most people do not….
Eliminating the tax gap would provide more than enough money to offset proposed cuts to California’s universities or to its programs for the developmentally disabled. But Ms. Yee said any law would most likely be challenged in court and would therefore be unlikely to lift state revenue for some time.
Amazon collects sales tax in only five states — Kansas, Kentucky, New York, North Dakota and Washington — where it has offices or another physical presence.
It avoids collecting in several other states where it has warehouses by assigning their ownership to a subsidiary. Until the tax dispute in Texas, Amazon had encountered few problems with that arrangement….
Despite its protests to collecting the sales tax, Amazon supports a streamlined system simplifying the current hodgepodge of state and local levies. But a streamlined system, which has the support of two dozen states, requires Congressional action.
via Struggling States Try to Get Amazon to Collect Sales Tax – NYTimes.com.
I’ve written about this previously: http://esrati.com/?s=internet+sales+tax but the post that has the answer is: http://esrati.com/the-long-view-on-the-current-crisis-time-for-an-internet-sales-tax-for-education/1482/
This is a perfect example of legislators treating businesses differently based on size. There is no equitable way to set and collect internet sales tax unless either the government gets into the payment processing business and provides an automatic lookup, calculation and collection system- or simplifies the process with a single tax rate on all online transactions that is paid to a single entity and then distributed.
Attacking Amazon, and its affiliate network almost reeks of political grandstanding as a way to screw bloggers who question our politicians- since many of them depend on revenues from Amazon Affiliate sales to help fund their blogs.