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Amazon.com cuts California sales tax deal in stunning turnabout

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

#11

Post by Locke1689 »

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'…

Just because the percent of Amazon's revenue from California is greater than the proportional population of California relative to the US doesn't make it invalid. You need a purchase distribution function to make that claim.

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

#12

Post by quandrum »

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'…

> California comprises about 12% of the US population. The assumption is invalid, because 14% is greater than 12%

I'm not sure that it's that far fetched that a tech oriented culture like California would buy on average more goods from Amazon then other areas of the US.

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

#13

Post by mediaman »

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 rate of buying products online isn't going to be the same in every state, and it's reasonable that it would be slightly higher in CA than in other states.

And on use-tax: have anyone ever met someone who paid use-tax on goods purchased from Amazon? Most consumers don't even know they're supposed to, and audit enforcement is expensive and therefore uncommon.

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

#14

Post by joezydeco »

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?

From another point of view: what if you're not Amazon and doing online retail in California? Amazon now has a one-year price advantage. Is it enough to disrupt market share in that state?

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

#15

Post by nknight »

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.

It's not even non-taxation. It's the fact that no two states with sales taxes have the same rates (which can also vary by locality), rules about what it applies to, or filing mechanism.

Amazon and everyone else involved in ecommerce would be a lot happier if there were a unified system/database for dealing with sales taxes in the US. Rates and rules wouldn't necessarily have to be the same, but there at least has to be one system with unified categorization of products and a unified filing mechanism which can be automatically queried, and as long as the merchants use that system in good faith, they would need to be immune to any sort of lawsuit or prosecution for not meeting the actual legal requirements of any particular state/locality.

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

#16

Post by ericabiz »

joezydeco wrote: post #14
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?

From another point of view: what if you're not Amazon and doing online retail in California? Amazon now has a one-year price advantage. Is it enough to disrupt market share in that state?

Amazon is not currently collecting sales tax in California, so there's no change until Sept. 2012, when it will start collecting sales tax in CA (assuming this goes through.) It's business as usual until then.

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

#17

Post by halostatue »

nknight wrote: post #15
bh42222 wrote: post #5

Earlier quoted context omitted.

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.

It's not even non-taxation. It's the fact that no two states with sales taxes have the same rates (which can also vary by locality), rules about what it applies to, or filing mechanism. Amazon and everyone else involved in ecommerce would be a lot happier if there were a unified system/database for dealing with sales taxes in the US. Rates and rules wouldn't necessarily have to be the same, but there at least has to…

The varying rates aren't a problem, for certain; Amazon deals with those just fine in various localities (Canada has approximately 10 different rates; I don't think that cities are allowed to put additional sales taxes, as that's reserved to the federal government and the provinces/territories). What's problematic for Amazon (IMO) is the wildly varying applicability rules and filing mechanisms.

I think your idea of a unified sales tax database/system is spot on.

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

#18

Post by wilkenm »

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 law doesn't single out Amazon, the $200 million is from all internet retailers that have any sort of presence in California. The core of the new law was defining residents participating in affiliate programs as a physical presence. Assuming nearly all retailers have some sort of affiliate program with a CA resident, the $200 million figure is how much uncollected tax revenue is available across all online retailers.

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

#20

Post by gojomo »

msumpter wrote: post #10
bh42222 wrote: post #5

Earlier quoted context omitted.

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…

Somewhat unlikely. Amazon has a number of wholly-owned subsidiaries in California with sizable technical staffs: A9 (search; Palo Alto), A2Z (mobile/media product development; 5 California offices), Alexa (analytics; San Francisco), and probably others. There's also a Northern California EC2 Region. That's a very strong 'nexus' that would cost them a lot (in money and talent) to uproot.

I suspect Amazon sees the way things are going and (as in other states) have tried to get what forbearance they can while they can, and also expect a national harmonization of cross-state sales taxes at some point.

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