Amazon threatens Texas exit over tax bill Cloud pioneer and webtailer Amazon is messin' with Texas, threatening to scrap a local depot thanks to a dispute over taxes owed to the Lone-Star state. Amazon has reportedly told employees by email that it will be closing down its Irving, Texas distribution facility and will cancel plans to hire up to 1,000 workers. Texas …
This post has been deleted by its author
When your great great grandaddy was born, how did they keep track of regional tax variations within a state (i.e., some states allow the counties to collect additional tax, offer seniors breaks on tax, etc.)? What about sales tax holidays? If you want to buy a gift for someone and ship it direct, why shouldn't your state get the sales tax? Why should taxation be different if I ship it to myself and then reship to someone?
Because there is a difference between interstate and intrastate commerce. A real shop has a physical presence and must abide by local laws. Some states have a flat sales tax across the state, others it varies by county and by city. Now a retailer needs to figure out what the sales tax rate is so they can collect it. You cannot go by zip code as that zip could be in different cities or counties.
True story. In Texas the state collects the sales tax and then distributes it to the county and city. For three years the state collected sales tax and they gave the sales tax in one small area to the wrong city. So the state didn't even know where the money was suppose to go.
Why is it up to the retailer that has no presence in a state to collect sales taxes? The state has no jurisdiction over them and the state should be talking to its residents.
Late last year the Amazon and Overstock lost their appeal against the State of New York's sales tax law because they have (or had in Overstock's case) affiliates in the state.
The law there is that if a company has a nexus in the state (warehouse, office, sales agent, online affiliate) then they are considered to be engaged in intrastate commerce and they have to collect the sales tax.
Under Texas law, if the company has no nexus in Texas the company is not required to collected and remit sales tax.
When an entity files an application for a sales tax license they are required to put the address of the business on the application. If a mistake is made the tax can be sent to the wrong city.
No, the shop rarely pays the sales tax on retail products. The sales tax is added on at the end of the purchase and directly forwarded to the customer. In the case of online, catalog or mail order purchases where the distributer is based outside of the state, then no sales tax is collected. Instead, the purchaser is generally expected to pay a use tax, which is set at the same rate as the local sales tax. So, this means that the customer ends up paying the same amount of tax whether the product is bought from a local retailer or from an online one. Assuming, of course, that the customer isn't evading paying their taxes. All the local stores do that online ones don't, is to collect and forward the taxes to the appropriate government agencies. If anything, it seems wrong to force the local stores to work as tax collectors.
Usually, that argument is used as an excuse for why local businesses can't seem to compete with online retailers like Amazon. It would be better to realize that companies like Amazon are just able to play Walmart's game, but without the overhead of local shops.
"The sales tax is added on at the end of the purchase and directly forwarded to the customer. In the case of online, catalog or mail order purchases where the distributer is based outside of the state, then no sales tax is collected."
Precisiely. The shop-owner gets screwed over as it costs X% more to buy from than that to buy from the webtailer, beause the webtailer bleats that it is "too hard" to work out the tax (which is could well be if every state, town, count and dog kennel can raise a local tax).
Although in another blockheaded move, some states are attempting to impose it as a use tax. But it still has all the problems the original catalog case determined: You only have to collect sales tax if you have a physical presence. In the case of the old catalog companies like Sears and JC Penny's this point has become moot because they HAVE a physical presence in all 50 states. Amazon stuck with strictly catalog sales, and the rapidity with which the modern parcel delivery system operates moots the need for physical presence.
welcome to the 21st century, online businesses more so than any business in the history of business are capalble of going else where for minimum effort if they think it's worth their while. Like it or not the internet makes the world a far smaller place and there's only so much beurocrats can do about it.
The U.S. federal government should step in here and mandate a U.S. wide interstate tax, also making it illegal for rebates for it, so all jurisdictions are subject to it.
All government entities are screaming for additional income so if they were to present a united front they could make the corporate freeloaders pay their fair share.
It's not the Federal Government's job to collect state sales-tax, and indeed, would be completely out of line. Sales tax varies widely from state to state (indeed from municipality to municipality), there are even 5 states which have no general sales tax at all. (Deleware, New Hampshire, Oregon, Montana, and Alaska although Montana and Alaska permit a local tax to be applied, and New Hampshire and Oregon tax "prepaired food" (I imagine that means restraunts))
Sales tax is not somthing actually paid by the corperation, It's paid by the purcheser. Out of convience, brick-and-morter stores collect it at check-out. Generally, if a mail-order bussness has a major presence in a state, they will collect for transcations in that state. (This is in contrast to Arizona's "transaction privilege tax" which is levied on the vendor, but then the vendor has to be IN arizona)
For transactions from out-of-state entities, the sales-tax is supposed to be reported and paid by the buyer (because it is not paid at the time of purcase). It sounds like Texas just doesn't want to have much around with tracking down all the resedents who owe.
it seem rather then "corporate freeloaders" you really mean "citizen freeloaders," because it's the citizens of Texas who have been freeloading, not Amazon.
So the US should tax your paycheck before you get it and then when you go to spend it? Sorry, they couldn't call it a tax and it would infringe upon states rights as I can guarantee you that a state would start a "sales tax" again to get more revenue. You also have differing state, county and city sales taxes across the US. How much do you think it would cost to have big brother collect it? They cannot do anything cheap.
"So the US should tax your paycheck before you get it and then when you go to spend it?"
Welcome to the way the rest of the world works.
In Australia, we have our income tax that is deducted from each paycheck, then there is a 10% flat rate GST applied to 99% of all goods and services obtained.
"you'd just love buying petrol in the UK! You even get to pay VAT on your tax."
And petrol is the biggest driver of inflation over here. So the cretins in the goverment _raise_ the duty on petrol by the rate of inflation plus 1% each year. Positive feedback anoyone? Naturally this increases the VAT take too. (Which also just rose to 20%).
So, today's maths question:
You get taxed on your tax, and the tax goes up every yeay by more than the rate of inflation. How long till the government have all the money?
I would welcome a price rise to £2 a litre on fuel for domestic and business, but I think Transport fuel should be reduced to keep down inflation.
And guess what high petrol price do reduce the number of cars on the roads ( or the mileage they do) ! It may be unfair on poor people but hard doo doos. Keep the motor heads off the road.
Perhaps you should check the efficency of Medicare - You'll find they're more efficient than Private Health Insurers with your money - Big Government can be efficient.
Many countries tax you on both paychecks and spending. Like every state in the EU.
The US gvt collecting a national sales tax wouldnt be an infringement of state rights, but I think you were trying to indicate that telling the states not to collect sales tax would be - that much is correct.
I'm going to call Shenanigans on your claim. The US Government spends the same on healthcare as the entire private sector in the US. Given that, at present, the government only does Medicare, which provides healthcare to a much smaller section of the population than private healthcare, I don't think your figures add up. My figures are based on a recent Economist article - where were yours made up?
Amazon is on shaky ground here, as I believe if a business has any physical presence within a state it's obliged to collect sales tax for sales made within that state*. In all probability they are liable for uncollected sales tax on items sold to Texans from any Amazon location. They can avoid this unpleasantness in future by moving out of Texas altogether and locating in Alaska, Montana, New Hampshire or Oregon, none of which states has a sales tax.
Note, this is nothing directly to do with corporate profiteering - right or wrong, most people prefer to avoid sales tax if at all possible. If you could buy everything VAT-free by mail order from Belgium, don't tell me you wouldn't take advantage.
(* This can be a bit of a pain. As an individual who sells widgets, if I accept orders from residents of my own state I would be obliged to register for sales tax, probably have to put up a bond, make monthly returns whether I owe any money or not, and become liable for penalties if I am ever late with a return. Plus I have to know the proper sales tax rate for every city and county in the state, since they are all different. So I don't.)
In California, if a vendor has any physical presence within the state, the vendor must collect sales taxes for all purchases shipped to California addresses. A physical presence means as little as one sales representative working out of his/her home office, or a drop box for mail, or a full brick-and-mortar retail store. Doesn't matter if the sale is made on line or by telephone, and shipped from Bangor, Maine. And if the vendor marks up the shipping cost (shipping and handling), then collecting the tax on the portion over and above their actual shipping cost (not including packaging) is mandatory as well.
Hand grenade because eventually some big online retailer is going to get caught and have to pay a honking huge fine plus all the back taxes.
"The U.S. federal government should step in here and mandate a U.S. wide interstate tax, also making it illegal for rebates for it, so all jurisdictions are subject to it."
Oh no they shouldn't. Such an iniquity wouldn't fall on "corporate freeloaders" at all, but on the public - you do understand how VAT works, yes? If government entities don't have enough income, they can do what I do - spend less.
But equally some companies try to get around charging VAT where they can. Look at Tesco mail order CDs/DVDs etc. They legally ship them from an affiliate in Jersey, and as long as the goods are worth less than £10 each they are not subject to VAT.
This puts Tesco (and others that do this) at a competitive advantage over fully domestic retailers. Sure it is us the consumer that has to pay the VAT rather than the retailer (although there is a cost associated with the retailer collecting, accounting and paying the collected VAT), but clearly customers would elect to buy their goods 20% cheaper where they can, and the retailer gets the double whammy of increased sales and no per-item reduction in profit.
Same with Amazon in the US, they want to reduce point of sale prices by effectively getting schools, police, streetlights, hospitals, welfare and basically anything* that is funded through sales tax / VAT to pay the extra as long as they get the profit rather than anyone else.
*I accept not all of these examples may be paid for by state sales tax (or state taxes on businesses that are losing out to Amazon etc.) but I am not minded to look it up. Just go with the overall sentiment.
This post has been deleted by its author
Amazon isn't paying any taxes either way. These are sales taxes that are paid by the buyer. What Texas wants is sales taxes that Amazon likely didn't collect and therefore can't give to Texas. Amazon's beef is that every state has their own tax laws each with different rates and on different items. Some states are easy and tax everything or nothing, others only tax certain items that aren't considered necessities and some even have different rates on different items. Some examples I've seen in my travels: trousers, no; belt, yes; shirt, no; tie, yes; shoes, depends on the shoe; steak, no; steak sandwich, yes; milk, no; beer, (and you'll agree this is just wrong) yes. Add to that total mess and you have sales taxes collected by local municipalities. California alone is a giant mess where literally traveling a block to the Charbucks in the next town can change the price of your superhalfcafventivanillamochalattepuchino grande a few percent.
That said I imagine keeping track of all of this is quite a hassle and would likely require the resources of a giant compute cluster and armies of people in every state keeping track as local governments each adjust their rates. Should the seller also collect sales taxes for the state they ship from as if the purchase was done in person? Why should the "ship to" state have all the revenue fun? Perhaps the delivery agent should pay the sales tax where they pick up and collect the sales tax where they deliver.
I guess the problem in Texas is that they have a sales distribution fulfillment center there and that looks very like a store. Given that we don't know what Amazon knows or what Texas knows, the question becomes one of the basis. What exactly is Texas basing its numbers on? Does Texas have the sales data for sales made in Texas? If they did, why don't they send bills to the people actually responsible for paying the tax, the customers in Texas? Or could it be based on that particular fulfillment centers revenue, a number they would have, and thereby taxing all items even those delivered out of state? Most likely, Texas is doing what every other state does and says, hmm, we're $265m short, who can we try to get that from?
In the long run what really matters is the law. Does the law require Amazon to collect the sales tax and on what? The only thing that's clear is that Amazon and Texas don't agree and it remains to be seen if Texas will turn away or go to court and will Amazon turn away or pick up its ball and go.
"Real shops can not avoid it so why should they be allowed to?" But where does it stop? If you order a book online, say in Arizona, that gets delivered to Texas, Arizona gets to collect sales tax, but what if Texas then steps up and says, "well it was ordered from Texas, delivered to Texas, and paid from from a bank account in Texas, therefore the sales tax belongs to texas, and they tax it. With a bricks and mortar shop that's no argument, with online shops it becomes a moot point.
Actually if you order a book from an online seller based in Arizona for delivery to Texas, the online seller pays no sales tax to either Arizona or Texas. Currently under US law, Texas is responsible for collecting the tax from the individual who bought the book. In reality, most people don't report out of state sales on their tax return.
If the government stopped paying welfare then watch what happens. You will have the homeless dying in the streets from lack of food, you'll have unemployed people committing crimes and dealing drugs just to feed their kids. Then there are the flow on effects like increased insurance premiums and the prison and judicial systems would need to drastically increase spending to account for the extra load.
If you stopped supporting illegals then who would do all the menial little tasks, or the dirty or dangerous ones that no one else in their right mind would do, cleaning public toilets, working sanitation, working with hazardous and biological wastes.
If you really wanted to save a serious amount of money, even greater than several countries GDPs.. cut military spending and stop showing up to every little skermish that breaks out around the world. If you shaved even 2% off the annual military budget, every american could have free healthcare for life, no insurance, no bills.
Amazon is having a temper tantrum, and is holding its staff (or, rather, the jobs of its employees) hostage in order to get its way. Whether or not Texas officials decide to give in to the company's demands remains to be seen.
The low-life, greedy creeps at Amazon and other similarly dispositioned corporations should be run out of the country, perhaps to set up shop in a more appropriate locale, such as Haiti, where corruption and self-serving methodologies would be warmly welcomed.
Some states don't have sales taxes. If you drive your car to one of those states, and buy something there, you don't have to pay taxes in that state. When you drive home with your purchase, you do not have to go through customs to declare your purchases on the way in.
So, if you order something by mail in another state, and they ship it to you, it works the same way.
The states charging sales tax on out-of-state purchases are claiming that the companies people purchased the items from are somehow "doing business" in those states; instead of being a business in another state, the sale should be viewed just like a purchase from a store inside the state. This is why the Amazon affiliates were considered significant.
Even in Canada, we have similar problems with provincial sales taxes, because the Federal government isn't dealing aggressively with attempts by provincial governments to exceed their jurisdiction. This has nothing to do with companies breaking laws, it has to do with local governments breaking laws, and attempting to illegally rule over people outside their jurisdiction.
It's not about "enforcing the law". It's about States trying to enact laws taxing entities that neither reside in the State nor have a physical business presence in the State. The US Constitution does not allow that - Article 1 Section 10 of the US Constitution (Powers prohibited of States) expressly prohibits this. But that does not stop dumb @ss State Legislators from passing such laws anyway, thus trying up the Federal Courts until the State's appeals are exhausted.
This has nothing to do with greedy corporations and everything to do with greedy (inasmuch as price sensitivity makes an individual greedy) customers factoring in the avoidance of a regressive tax schema into their bargain-hunting.
Just like P2P and torrents signal the unrealistic market expectations of studios and labels (whether they realise it as such or try to mischaracterize it as piracy), so does rampant untaxed e-commerce signal the unbalanced taxation of middle and lower income households.
So the good ol's OSofA has tax laws that allow different areas of the "country" to charge different rates of tax based on what you earn, what you buy, and where you buy it.
What a stupid idea!
That would be like giving the Scottish Governement the right to change the tax rate in Scotland, creating a similar two tier system within the UK.
Oh, wait .....
As I recall from a few years ago dealing with a Californian company when it came to Sales Tax we had to consider delivery address, billing address and where the company was headquarteed in determining if it was an interstate sale, so a shipment to Texas could be subject to California sales tax as you were billing a California address. Then there is that entire 'nexus' issue, if you have an engineeer on-site for 6 months for install and commissioning do you have a presence?
Have to say as much as I've complained about VAT over the years it's a breeze compared to US sales tax returns.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
