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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

#51

Post by yohui »

joezydeco wrote: post #49
ericabiz wrote: post #16

Earlier quoted context omitted.

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.

Everyone selling things online in California is supposed to be collecting sales tax as of July 1st. This delay until September 2012 applies only to Amazon . Everyone else selling online in CA with similar areas (Zappos, Barnes and Noble, etc) still needs to pay the tax this year.

> Everyone else selling online in CA with similar areas (Zappos, Barnes and Noble, etc) still needs to pay the tax this year.

As Amazon owns Zappos, I would have assumed that they'd be covered by such a deal as well.

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

#52

Post by aphexairlines »

nknight wrote: post #38
gojomo wrote: post #20

Earlier quoted context omitted.

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…

You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail…

How are a9 and a2z not involved in retail?

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

#53

Post by impendia »

tzs wrote: post #44
impendia wrote: post #42

Very good! I can start shopping Amazon again with a clear conscience. I say this not as sarcasm but as literal truth. I know many HN'ers disagree that they were doing anything wrong -- but personally, their behavior turned my stomach and I was avoiding buying anything from them which I could easily get elsewhere.

Couldn't you buy from Amazon and then report the purchase (as required by California law) to the State and pay the tax?

Sure. But that doesn't change the fact that Amazon tried to weasel out of charging the same sales tax as every other retailer who sells books in California; that they were going to try and get legally guaranteed special treatment by promoting a state referendum (as other corporations have also done); and that they abruptly screwed over their 10,000 affiliates in the state.

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

#54

Post by tzs »

impendia wrote: post #53
tzs wrote: post #44

Earlier quoted context omitted.

Couldn't you buy from Amazon and then report the purchase (as required by California law) to the State and pay the tax?

Sure. But that doesn't change the fact that Amazon tried to weasel out of charging the same sales tax as every other retailer who sells books in California; that they were going to try and get legally guaranteed special treatment by promoting a state referendum (as other corporations have also done); and that they abruptly screwed over their 10,000 affiliates in the state.

There are plenty of retailers who sell books to California residents without collecting sales tax. (And the other way around--I, in Washington, have bought books from California retailers who did not collect Washington sales tax).

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

#55

Post by gergles »

I am really disappointed to hear this news, actually. I would rather Amazon have fought the state's clear attempt to unconstitutionally tax interstate commerce and gotten clear precedent that forcing companies without a physical presence in a state to collect sales tax there is bullshit.

It's the same reason why I do not believe in 'use tax'. It is a tax which exists solely to tax interstate commerce (which is exclusively the domain of the Federal government) that I am stunned nobody has attempted to fight yet.

The argument that "Amazon gets an unfair advantage abloobloo" is garbage -- Amazon has to pay a local company to ultimately get the items to you, which absolutely does pay local tax - UPS has to buy gas in California, pay employees in California (and pay the associated exorbitant California payroll tax), pay for inspections, facilities, etc... The state is collecting their pound of flesh out of the transaction in one way or another.

(Not to mention the complexities of the tax code that aren't even consistent on a ZIP code basis - it's the last weekend of August, you're shipping to an address covered by the HRT district in Virginia Beach, VA, and you're selling a $105 bikini. For $500, what's the tax rate? Hint: all of those factors (date, exact location down to the house number, price, item type) play into how much the tax rate is. It is not a naive lookup table of "zip code: tax rate".)

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

#56

Post by gergles »

earl wrote: post #48
thematt wrote: post #28

Earlier quoted context omitted.

Yes, Amazon does. But if it applies to Amazon then it will apply to all the other smaller internet retailers as well. The historical precedent was that it creates an undue burden on said retailers who have to collect such a tax. It's not an excuse , it's a Supreme Court ruling.

it's an excuse. Thanks to sokoloff for digging it up, but here's at least one software suite that does just what I sugggested: http://onesource.thomsonreuters.com/solutions/indirect-tax/s...

So your solution to the problem of there being hundreds of thousands of potential tax rates for every single item is to require everyone selling anything online to pay Thomson Reuters for a subscription to their database?

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

#57

Post by nknight »

aphexairlines wrote: post #52
nknight wrote: post #38

Earlier quoted context omitted.

You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail…

How are a9 and a2z not involved in retail?

Company A buys software from company B to carry on its business. Company B does not become liable for the acts of Company A.

A9 and A2Z are providing software and/or services to Amazon.com which Amazon.com uses in its retail business. This is completely different from A9 and A2Z engaging in that business. They do not buy, sell, distribute, or ship the products Amazon.com does.

So long as Amazon.com maintains arms-length dealings with A9 and A2Z (which is trivially easy for any company with semi-competent legal counsel to accomplish), the ownership of A9 and A2Z is irrelevant to Amazon.com's dealings with California.

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

#58

Post by nknight »

gojomo wrote: post #45
nknight wrote: post #38

Earlier quoted context omitted.

You've just cited a bunch of companies that are separate entities owned by Amazon. US courts have a very strong presumption against attributing the acts, economic or otherwise, of a corporation to its owners. It would be virtually impossible for California to win in court on the grounds of A9, A2Z, Alexa, or Amazon AWS having offices in California. None of those companies are involved in Amazon.com's separate retail…

Most individual states would disagree, especially when the wholly-owned subsidiary exists primarily to avoid taxes. If Amazon's technique was legally unassailable, they wouldn't be paying sales tax even in the 5 states where they already do. They'd just assign whatever creates 'nexus' in those states to new 'non-selling' subsidiaries.

Piercing the corporate veil becomes easier the more closely integrated the companies and their management structure are.

Amazon can maintain arms-length relations with most of their subsidiaries because those subsidiaries are not part of Amazon's core business, and can operate semi-independently with little to no loss in efficiency.

Maintaining such a relationship with subsidiaries directly involved in the day-to-day operations of Amazon's retail business (maintaining stock, setting prices, making sales, packing and shipping product, etc.) would be much more difficult, costly, and risky.

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

#59

Post by runningdogx »

impendia wrote: post #41
mediaman wrote: post #13

Earlier quoted context omitted.

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.

I did. I think it's reasonably clear in the state tax forms that you're supposed to pay use tax, and the clean conscience was worth the $13 or whatever it was. Obviously, though, as you say you can pay nothing without suffering any consequences.

$13 isn't a lot to pay. However, if it takes an hour to save and itemize out of state invoices, in order to pay taxes on them, I'm going to guess that's less than you make per hour, so the entire exercise represents a net loss (other than the benefit to your conscience).

Many people spend way more on out-of-state purchases, so their sales tax bill would be in the hundreds or thousands of dollars. There's real incentive not to pay, unless you're itemizing those purchases as deductions on your income tax or unless you're making the purchases as an incorporated entity.

People get audited on their income taxes all the time. Businesses get audited. I have never heard of an individual getting audited for failure to pay state use tax on out-of-state purchases when they didn't declare those purchases on any official forms.

A few states don't even have income tax; in those states there are no state tax forms that the average citizen ever encounters.

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