Amazon.com cuts California sales tax deal in stunning turnabout

#1

Post by scommab » Thu, Sep 08, 2011, 8:03 PM UTC

Amazon.com cuts California sales tax deal in stunning turnabout
mercurynews.com

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#2

Post by aero142 » Thu, Sep 08, 2011, 8:51 PM UTC

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#3

Post by staunch » Thu, Sep 08, 2011, 8:54 PM UTC

So does this mean Amazon is going to allow CA affiliates again?

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#4

Post by reemrevnivek » Thu, Sep 08, 2011, 8:58 PM UTC

> While Democrats and Gov. Jerry Brown fretted that they would lose $200 million a year in sales taxes

California residents are supposed to pay use tax on internet purchases regardless of the physical presence of the retailer, right?

Running the math: the $200 million/year loss that they claim is an estimate on tax fraud on just Amazon purchases? At a 7.25% tax rate, that's a tax on $2.7 billion in sales, and Amazon's US sales last year were 18.7 billion [1]. They're estimating that unreported purchases in California comprise 14% of Amazon's revenue in the US.

California comprises about 12% of the US population. The assumption is invalid, because 14% is greater than 12% - but, assuming it's reasonably close, we can still say that either (1) the politicians are ignoring the use tax or (2) there is a massive amount of fraud going on in use tax reporting.

[1] http://www.internetretailer.com/2011/01/27/amazon-sales-and-...

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#5

Post by bh42222 » Thu, Sep 08, 2011, 8:59 PM UTC

aero142 wrote: post #2

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

I'm guessing for California they'll lobby to extend it for another year, and another year, etc...

Nationally, I'm not sure Congress can force non-taxation on the sates, I think that's a constitutional issue. I think Amazon's plan there is just to use their market dominance and hope the states fold.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#6

Post by ck2 » Thu, Sep 08, 2011, 8:59 PM UTC

For some reason I cannot see the article linked.

Using this instead http://news.google.com/news/story?ncl=dZ6jw2rLSA2UmxMxmSxu9F...

I guess this is the critical line:

   If Amazon cannot get a change in federal tax policy by next June
   it will start collecting the tax in September 2012.

So I guess the door is now open and every state will go after amazon for sales tax.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#7

Post by gte910h » Thu, Sep 08, 2011, 9:00 PM UTC

aero142 wrote: post #2

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

Not even state by state. County by county and municipality by municipality. What's taxable, how much, etc.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#8

Post by gte910h » Thu, Sep 08, 2011, 9:01 PM UTC

bh42222 wrote: post #5

aero142 wrote: post #2

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

I'm guessing for California they'll lobby to extend it for another year, and another year, etc... Nationally, I'm not sure Congress can force non-taxation on the sates, I think that's a constitutional issue. I think Amazon's plan there is just to use their market dominance and hope the states fold.

Interstate commerce clause allows them to most likely.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#9

Post by joshhart » Thu, Sep 08, 2011, 9:02 PM UTC

reemrevnivek wrote: post #4

> While Democrats and Gov. Jerry Brown fretted that they would lose $200 million a year in sales taxes California residents are supposed to pay use tax on internet purchases regardless of the physical presence of the retailer, right? Running the math: the $200 million/year loss that they claim is an estimate on tax fraud on just Amazon purchases? At a 7.25% tax rate, that's a tax on $2.7 billion in sales, and Amazon'…

The assumption doesn't have to be invalid. California citizens may be wealthier than those other states and spend more money on Amazon goods. California may also have more computer users with decent internet access than, say, Wyoming.

Re: Amazon.com cuts California sales tax deal in stunning turnabout

#10

Post by msumpter » Thu, Sep 08, 2011, 9:03 PM UTC

bh42222 wrote: post #5

aero142 wrote: post #2

I'm unsure of what Amazon's long term plan is. Is it their hope that Congress deals with this on a national level and makes it workable? They just don't want to deal with the mess on a state by state basis?

I'm guessing for California they'll lobby to extend it for another year, and another year, etc... Nationally, I'm not sure Congress can force non-taxation on the sates, I think that's a constitutional issue. I think Amazon's plan there is just to use their market dominance and hope the states fold.

Or maybe just buy them enough time to close up operations in an orderly fashion and leave California. I'm not sure if Amazon has a physical presence in the state but if they have a distribution plant or other company owned assets this will give them time to relocate. I believe Amazon had already notified their affiliates that they were terminating the relationship when the law was passed (similar to what they do when other states passed nexus provisions).