NY Times, LA Times Want Amazon To Collect More State Taxes 507
theodp writes "Recalling that CEO Jeff Bezos originally explored placing Amazon.com on an Indian Reservation near San Francisco to 'have access to talent without all the tax consequences,' the NY Times argues it's time to put an end to the e-tailer's 'entity isolation' tax-avoidance games. The LA Times chimes in, saying Amazon's claims that collecting sales tax constitute an undue burden are 'worth a horselaugh,' noting that Amazon boasts it has no problem keeping track of millions of unique products."
How do you think it works in the EU ? (Score:4, Informative)
Amazon UK manages it (Score:5, Informative)
Amazon UK manages to collect the appropriate VAT, depending on country. Which is why, if you buy from e.g. Denmark, you should order from one of the smaller UK book stores so you get to pay the UK VAT (0% on books) instead of the Danish one (25% on everything).
Re:Note the lack of mentioning all the other taxes (Score:3, Informative)
I could be paying 12-13% sales tax for an item while someone 50 miles west of me in Rockford, IL (same state - 45 min drive on highway @65 MPH) pays only 6.5%.
To be honest, if I drive the 3 miles from one town's shopping center to another here in IL, I never have any idea what the exact rate I'll be paying other than it'll be too much.
Re:How do you think it works in the EU ? (Score:4, Informative)
* I think Cook County may be the only county in the country that is legally permitted to levy its own sales tax, but I'm not sure.
http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States. I know for a fact that counties in georgia also levy sales taxes, theres more listed here.. trust me cook county isnt the only one, and to assume so showed you have never left home.
"Georgia has a 4% state sales tax rate. Groceries are exempt from the state sales tax, but still subject to tax by the local sales tax rate. Counties may impose local sales tax of 1%, 2%, or 3%, consisting of up to three 1% local-option sales taxes (out of a set of five) as permitted by Georgia law."
MANY MANY MANY counties have sales taxes across the country.
Re:How do you think it works in the EU ? (Score:2, Informative)
Re:How do you think it works in the EU ? (Score:2, Informative)
* I think Cook County may be the only county in the country that is legally permitted to levy its own sales tax, but I'm not sure.
I'm not sure about others, but in NY we have taxes at the state, county and city level.
This seems like a case of the states trying to make a grab for more money without upping their own taxes.
Catalogs have never had to pay out of state sales tax unless the company owned land in the state they were shipping to, like a warehouse, store or distribution center.
NY has been pushing this idea for a while now. Most people don't realize that NYS now demands sales tax on any item purchased out of state for use or consumption within NYS. They passed the law a couple years ago without much fanfare and buried it in a small easily overlooked section of the NYS tax return. I imagine it's just lurking there until they find an easy way to track incoming parcels from amazon and QVC.
So if you walk over the border to Pennsylvania, buy a candybar and don't eat it till you return home to NYS, you're supposed note that purchase on your tax return and pay the applicable sales tax on April 15th.
Re:Only amazon? (Score:4, Informative)
Apple seems to handle collection of local taxes quite well. They even know that part of my zip code is PIMA county instead of Tucson city, and thus has a (slightly) different tax rate.
I am starting a business with a friend (actually, she does the hard work, and I provide the business and some financial backing), but we collect sales tax in Arizona, and California for selling our images. Amazingly, Quickbooks handles this fine. I just do not happen to live on an Indian Reservation, like Amazon did in placing their Arizona presence.
Truth be told, I do not pick retailers online due to tax free or not. I pick them by reputation, and past experiences. If Amazon one day started collecting taxes and whatnot for the goods purchased through them, I probably wouldn't blink. And I venture to guess that most of their customers wouldn't either. They need to rethink their business plan.
What this really points out is that the tax code (federal and state) needs a thorough cleansing and simplification. Remove the loopholes, tighten the standards, and make the collection and rates balanced, and much of this behavior should disappear.
I suspect I will see pigs flying before this happens though
Re:How do you think it works in the EU ? (Score:3, Informative)
In Louisiana, there are also Water Districts and Levee Districts, which overlap county boundaries and almost certainly overlap zip code boundaries.
The constantly changing tax rates, plus constantly changing exception lists, makes management a nightmare.
But a jillion national brand brick-and-mortar companies (Walmart, Home Depot, Sears, JCPenney, etc, etc) know how to do it, so Amazon and NewEgg can figure out how to do it.
Re:The dangers of stupid taxes (Score:3, Informative)
Which their warehouse has property taxes, the employees pay income tax on, also the fed-ex and ups charges include fuel costs and taxes.
The fuel costs and taxes are insufficient to cover the cost of the damage done by shipping. On average a semi-tractor with a reefer unit will get about 6-7 mpg, which is a third to a quarter (say) of the mileage of an auto, yet it does more than three or four times the damage that the car would do; The relative damaging effect of an axle is considered to be approximately proportional to the fourth power of the load. [lib.unb.ca] In other words, a 40 ton truck can easily [chicagoboyz.net] cause as much damage to a typical road as 60,000 one-ton cars. Yet they pay only a few times as much in fuel taxes (since that is tied to fuel consumption) and only a few times as much in registration fees. There are several orders of magnitude unaccounted for here. Where do you propose the difference should come from? The pockets of those who live in the same tax region?
It's Not Tax Evasion (Score:3, Informative)
As with catalog sales in the days before the Internet, Amazon.com is not required to collect taxes in any jurisdiction where it doesn't have a business presence. There's no trickery involved. Amazon doesn't collect any taxes it isn't required by law to collect, just like you don't pay taxes in states that you've never set foot in.
Since only the federal government can regulate interstate commerce, the ability of State X to force Amazon.com to collect its taxes when it doesn't have a presence in that state would require federal legislation to that effect. Also, for any such federal law to work it seems to me that tax rules and rates would have to be simplified across all 50 states. There's an effort to do so called the Streamlined Sales Tax Project, but despite its name it strikes me as ridiculously overcomplicated (as in "you need a certified computer program to handle the differences between each state's rules") due to the desire to please all the participating states.
Re:How do you think it works in the EU ? (Score:5, Informative)
It's not just a tax rate per address. It's per address per product. For example, in New York, clothing under $110 is exempt from state taxes but not necessarily exempt from county, city or other local taxes. Any clothing item over $110 is charged tax on the full price. In Massachusetts, clothing under $175 is exempt from state level sales tax but only the portion above $175 is taxed for higher ticket clothing items. In Connecticut only some clothing items under $50 are exempt from state sales tax. So, just in the category clothing, you can see that what is taxed, which portion is taxed and which items are included in the category definition is different. This is just on the state level and not including the myriad city, county, district and other taxes.
Taxes may be based on types of products: in Massachusetts, the American flag, among other items, is exempt from taxes; in Pennsylvania, textbooks and disposable diapers, among other items, are exempt; or as another poster mentioned, the Chicago Soft Drink Tax (where additional taxes are charged for "soft drinks".) Taxes may be based on areas: higher taxes for Bay Area Rapid Transit district and Louisiana tourism district or reduced taxes for New Jersey's Urban Enterprise Zones. Taxes can be charged based on intended use: in Indiana, a 15 ounce bag of potato chips is tax exempt (food items are exempt) whereas a personal sized bag is taxed because it is for immediate consumption and in California fertilizer is exempt if it's used to grow food.
Realistically, taxes can be based on any criteria that enters the twisted mind of a politician in the tiniest of jurisdictions, Currently, sales taxes can differ based upon temperature of food, whether the customer is a college student, distance from an airport, whether the product is in its original package, whether the product is intended to be used at home, etc. Most sales taxes are charged based upon the sales price while Hawaii also charges a portion of their excise tax (their sales tax equivalent) on the wholesale price and other states only charge on a portion of the sales price (such as the amount of clothing over $175 above.) Many states and municipalities also charge a restaurant and/or hotel tax and it's amazing what can get swept into that tax, such as candy, chips, soft drinks, juice boxes, bottled water, or other immediately consumable items, which an online retailer may sell.
In addition, many states have tax "holidays" when taxes are not charged: in Florida, a "back-to-school" tax holiday is often enacted on clothing, books and school supplies under a certain price; in Georgia, a tax Holiday, usually in October, is enacted on Energy Star rated appliances; Texas's tax holiday lasts for an entire weekend and applies to many items and exempts clothing and footwear under $100 but still taxes golf shoes, no matter the price.
Sales taxes are much more complicated than most people realize and they are completely at the whims of state, county, regional and municipal government officials. The category definitions are different from state to state and often different for local taxes within the state. This means the local taxes are often different from other locations within the state but also means that the local definition may differ from the state's own definitions. So for any given product, any of the taxes; state, county or municipal; may or may not apply. For a physical store, a local accountant can advise you how the taxes apply for that particular location but an online store would need to know what rate applies for every single product for every single address. Obviously, most of these combinations would never actually occur but the databases would need to contain a solution prior to the person placing the order.
Re:How do you think it works in the EU ? (Score:4, Informative)
And I thought Ohio was the only state that had such fucked up sales tax laws. In Ohio, too, you cannot plainly use a zip code to determine sales tax, because the county lines to not abide by them. So you have to factor address, city, county and zip code.
You can find some information from the state of ohio in pdf's and csv's to try and help you sort through it. However, the same information can change depending on the election cycle ( https://thefinder.tax.ohio.gov/StreamlineSalesTaxWeb/ [ohio.gov] ).
While a prior poster mentioned that surely Amazon is full of intelligent people who can figure all this out, I do not believe they should have to. I cannot imagine having to put together a system that deals with each and every states archaic tax laws that change at any given time. What a pain in the ass that'd be. And how costly that would be to implement, ugh.
Re:How do you think it works in the EU ? (Score:3, Informative)
Please read the discussion - zip2tax provides only zip code tax information, which is 100% useless for many places, where zip codes cross county and city lines at will. Much greater specificity than zip code alone is needed; whether that entails lat/long coordinates or merely address tracking is not clear.
Re:How do you think it works in the EU ? (Score:2, Informative)
It's even more complicated than that, really. As the post points out, Amazon boasts about being able to track millions of individual products. Not only does each taxing jurisdiction (state, county, local) have its own tax rate, but some may have different tax rates for different types of products.
A snickers bar, for example, may be considered 'food' in one state and taxed at an appropriate rate. Whereas another state may consider it to be 'candy' and taxed differently. Some states base their classification on the ingredients... Does it contain peanuts?... ok, it's food. Some states consider it 'food' only if the product is served with eating utensils... i.e. a fork.
So, you can imagine... It's not as simple as plugging in a percentage for a sales order going from point A to point B. It's stupid complicated, unrealistic to expect businesses to do the government's dirty work. The states need to get their tax laws in-tune with the modern age.
Amazon alone would be required to hire hundreds or literally thousands of people... JUST to keep track of this stuff. Now guess how much MORE you're gonna be paying for that little trinket you just bought because it took 2 full-time employees three months to classify the product in all taxing jurisdictions and keep track of the ever-changing laws. It's nuts!
Re:Wouldn't it be wonderful, (Score:1, Informative)
Funny you mention that. Amazon doesn't pay sales tax, you and I do. Amazon is the tax collector in this case. Also, there is a line on your tax forms where you are supposed to enter in the amount of sales tax you owe but didn't pay. But I bet you always put "0" for that line. You don't pay the tax because it's difficult to keep track of and because you know that you won't get caught.
Assuming I'm correct and that you don't manually tally up the sales tax on all non-local purchases -- if you go on vacation in another state and buy some knickknacks, you are technically supposed to pay your local sales tax on them, even if the other state also charges a sales tax! -- then it would appear that businesses do pay what they owe just like the rest of us. That is, when it's easier and cheaper to pay than it is not to, or when there's a high probability they would get caught cheating.
Of course, I'm being a little glib here, and I admit that. I do recognize that companies... well, perhaps it's not cheating, exactly, but they certainly do engage in some practices which clearly are not in the spirit of the law. They get away with it because they have armies of tax lawyers to defend them against the IRS. That's an advantage that big companies have which you and I don't: the government is still bigger and badder than they are, but not nearly so much as for us individual private citizens. And I think it's the difference: I firmly believe that someone making $40k a year would engage in exactly the same sort of loophole-finding, rule-bending behavior when it comes to taxes if he had the opportunity to do so. So I don't think we can exactly claim the moral high ground here. IBM et al. are just acting the way you or I would if we had their resources available to us.