Amazon Two-Stepping Out of Texas Over Sales Tax

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Jox

The company I work for, which is located near Toronto, Canada, has to charge California state tax on anything we sell there because one of our salesmen happens to live in California.

It's his personal residence.  No part of it belongs to the company.

-Jox

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jaygregz

Texas should make illegals pay amazon sales tax. Texas is just another money hungry state looking for a handout that turned sour. It's funny that Rick Perry would step out to defend amazon here to save face. I watched him in the primaries a while back and seen him dodge nearly every question asked. Yet he managed to get elected.

Unrelated to texas taxes but interesting none the less, here's a story. I'm from Missouri. I moved to Texas to attend Business school at University of Texas after serving 6 years in the military. I still had residency in Missouri. So for all intended purposed I was considered an out of state student. I had already exhausted all of my gi benefits. My tuition was 3x the times of an instate student. I actually had no problem with paying out of state tuition. Although the amount was high, I understand that this is a pretty typical universal policy. The problem I had and still have though was that OUT OF COUNTRY illegal immigrants paid instate tuition. Now I've never asked for any hand outs but I am a realist. Tell me how that one made sense.

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kris79

Hmmmmm. It's not about the (in)equality of taxes. It's about the state (Texas) telling a business (Amazon) that doesn't physically sell the product, that it must collect taxes for the State from its affliates who actually sell the product. Now I only spent a minute looking over Amazon's affiliate program, but it seems to me that Amazon provides the structure, advertising and referrals for the businesses in various states and the businesses are obligated to pay the actual sales taxes on profits in the states they are in. Amazon doesn't appear to know or even care about collecting sales receipts from those companies. It seems that the businesses pay the sales tax while the states think that they also have the right to tax Amazon's profits from its web advertising etc.. Sigh, Please don't pontificate on the legality/illegality of this issue as I'm sure that Amazon is well stocked with lawyers of its own. Anyway, that means that Amazon would have to have another division to simply keep track of everything that the businesses in all 50 states are selling and make sure that they they are all paying their taxes, you know, so that each state government doesn't have to. Massachusetts recently tried to make New Hampshire forward all their out-of-state receipts to MA's tax division to scarf up those tax cheats who bought stuff out of state. NH told them that it was not in the business of collecting MA taxes for it, and to stuff it. Sort of like Amazon seems to be doing to TX.
Hey Texas bureaucrats, how's those extra long unemployment lines working out for ya? Oh yeah, you have your government job, don't you...

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Eoraptor

It's not a perfect summary, but it's fairly close. Amazon has two businesses, it's own Amazon.com bookstore, and the Affiliates program through which it posts the offerings of independant retailers. those individual retailers are responsible for paying the sales tax on their offerings, though often they do not. Amazon, like Ebay, mearly acts as a third party vendor in these cases. and just like Ebay, Amazon is not responsible for acting as an eforcement branch of the Texas (or any other state's) revenue department for making those people pay their tax cuts.

But Texas's legislature and AG are lazy, and Amazon is a big juicy target, much easier to go after than several thousand independant electronic retailers. Oh, and of course texas also wants a bigger share of Amazon's own sales than it is entitled to.

 

Indeed I do wonder how they like those unemployment lines, when they just drove a major retailer out of their state, along with its employment taxes, legitmate sales taxes, oh and hundreds, if not thousands of jobs?

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kris79

Thanks for the finer points!

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Eoraptor

What a lot of people are missing is the crux of WHAT taxes TX was asking Amazon to pay. Just as with the other four states mentioned where the big book store has closed out its affiliates programs and distro centers, Texas didn't want just the sales taxes proceeds of people who live IN texas and bought things from Amazon... it wanted sales tax proceeds on <em>most or all</em> of Amazon's sales.

If I stop at a gas station in Texas, Colorado, North Carolina, or Rhode Island, and buy a candybar and a tank of gas, I expect to pay sales tax to the tax district I bought it in. But I live in Iowa; why should I pay Texas' state sales tax when I buy something while located in Iowa, especially for something that may not even be shipped out of the lone star state, simply becatse my money electronically passes through TX at some point in the transaction?

If a customer lives in a state where a business has a physical pressence (whether it has a front end counter or not) I'll pay sales tax. I do so often to comapnies like Bass Pro, Cabelas, and Best Buy, even though I use their online portals more often than I go into a store. But there is no Amazon building or employees in my state, and my stuff might come from anywhere in the nation. I shouldn't be burdened to another states taxes just because they want to run a shake down racket.

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kris79

Eoraptor said it so much better than I...

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ShyLinuxGuy

Before we know it, Amazon will be two-stepping out of EVERY state, except Oregon and a few other no-tax states. Makes you wonder if they are even playing fair when the time comes to file their taxes. And, Amazon assumably has a presence in the state, so the states rightfully collect taxes.  If it didn't, that's another story--zero tax should be paid by the proprietor or the consumer on a transaction in a state of which the proprietor has no presence (example: me buying stuff from Newegg in WA--Newegg doesn't have any presence in WA).

Somebody above mentioned that the one of the HIGHEST sales tax rates in Texas is 7.75%. Washington's LOWEST is like 8.5% or something. Be thankful your highest tax rate is some states' lowest tax rates...Sure, the incomes are higher in WA than in TX, and we all know the cost of living in TX is lower than WA, but yeah, Washingtonians have to pay AT LEAST 8-8.5%, and probably more, because some of our officials evidently don't know how to add or subtract (we have a REALLY screwed up budget) or think money is an infinite resource. I'm sure in some places here it could be as high as 15%.

 

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chipmunkofdoom2

Good for Amazon.

 

What they're doing is technically against the law, but the tax code is WAY behind the business of online retailing. Taxes are always a touchy subject. Are there ways that taxes could be managed, spent and assessed more appropriately? Of course. Are we ever going to get away from taxes? Unfortunately, no.. I hate seeing my post-tax paycheck or my couple hundred dollar purchase after taxes at the local electronics store just as much as anyone else.

 

If you check out tax revenue as a percentage of GDP, the US does pretty well as far as developed countries go and tax percentages, but that doesn't mean there isn't room for improvement. One thing is for sure, the US government has to reassess the way they collect and spend taxes. Mistreating huge companies that introduce a substantial amount of money (and JOBS) into an area is not smart in any fiscal time, let alone a recession/depression, even if the government has the tax code on their side.

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MrHorspwer

Good for Amazon.

In every example of Amazon's tax issues, it has been a state who begins "bending" their already ambigious tax laws in an attempt to fit Amazon and other online retailers into the picture. For the longest time, only those online and catalog retailers who have *retail* establishments in a state have had to collet sales tax. Amazon doesn't have any retail establishments. Since you can't tax Amazon through those means, states are beginning to rewrite or reinterpret taxs laws to include those that have distribution centers and e-commerce hubs.

It's a money grab by politicans. They see easy dollars, they go after them. It's their right I suppose. However, it's also Amazon's right to close those distribution centers and e-commerce oppertunities and move their jobs to a state that doesn't intend on screwing them over by rewriting tax laws.

This isn't Amazon refusing to pay taxes. This is Amazon crying foul because the rules changed halfway through the game. They get to take the ball and go home now. Game over for Texas. Nobody wins.

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weaslem32

I live in Texas just north of the Dallas area. I also owned a small business. And guess what, my small business did not have a retail front/store just like Amazon, but I still had to pay state sales tax. Every business that operates in the State of Texas has to pay state sales tax. - Let's also be clear here that we do not have a State Income Tax, so no confusion, it's sales tax. -  It's pretty cut and dry in our tax code. No loop holes, no funny business, no political stunts.

I like the poster below also hate paying taxes and filing a tax return but it does fund our roadways, public services (fire, police, emergency, etc.), education, etc., etc. Personally, I don't know how e-tailers have gone this long without having to charge sales tax (many do make you, but not all). I don't care how big or small of a business you have, if your business is in a state that has a state sales tax, you should do your due diligence to pay what you owe.

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Guisano

Why should we subsidize businesses such as Amazon at the expense of those proprietors that have physical store fronts?  This not only makes no sense but a basic tenet of fairness is broken.  For the record, I also oppose big tax giveaways to companies such as WalMart that come into a market making exaggerated employment claims and then proceed to lay waste to the existing wage structure of a community while simultaneously destroying the revenue stream of that same community.

It's past time that these giveaways are halted.

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MrHorspwer

Whether you had a retail storefront or not, you were still making retail sales from a Texas-based business to citizens of Texas. Amazon makes their sales from Seattle, Washington. Amazon doesn't *sell* you anything in Texas, they sell to you from Washington. They distribute from Texas.

Now, if Texas charges sales tax on all transactions, regardless of the transaction type, then they should be going after all e-retailers, Zappos, Newegg, etc., for sales tax. They're not. Why? Because they don't have distribution centers in the state. The distribution center is the key.

Can I go to the distribution center, plunk down some cash, and walk away with an item? No, I can't. Why? Because Amazon doesn't sell from Texas! I have to go online, BUY my stuff from Amazon IN WASHINGTON, and it will be SHIPPED from Texas.

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bachman

We'd be happy to have Amazon here in sales tax-free NH

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pastorbob

First let me preface this with a simple statement - I hate paying taxes. I cringe every time I make a purchase in nearby Springfield and have to pay the 7-3/4% sales tax that is one of the highest in the state. And I dread doing my tax returns every year. Having to get everything organized and all of my receipts categorized is a chore no matter how well I have kept my records throughout the year.  But I am also a pragmatic person and recognize that taxes are necessary in order for the state and federal governments to function and provide the services that they give us. National defense is a necessary evil and our tax dollars fund that. I like driving on roads that are at least minimally maintained.  I know they aren't the greatest money managers in the world. There is a lot of government waste. But without those tax dollars we would be in sorry shape as a nation. Could we find a better way to provide the needed funds for those expenses. I suppose we could rely on the benevolence of each citizen to just donate whatever they believe they can afford. Yeah right!

All of that said, I would not set up a business and expect to avoid paying the required taxes to the state. That is exactly what Amazon is trying to do. If a state enforces the tax code they take their ball and run home. It's really kind of pathetic when you think about it. If they don't want to charge sales tax then let them set up the distribution centers in states without sales tax. They remind me of people who fail to pay their income taxes for several years and when they get caught run to tax attorneys and expect to get off for a fraction of the amount owed. And guess what? They usually do and we foot the bill.

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M3g4d37h

but it doesn't remind you of beuracracies that invite a prominent online retailer to build a distribution center under a given rules set, then change the agreed-upon rules once the proprieters are successfull, then viewed by the same inefficient beauracrats after a while as a golden goose -- agreed upon laws be damned?

 

what the hell are you sheep drinking?  do you not recognize a money grab when you see it?

 

or is is because it's not happening to you?

 

 

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pastorbob

What I recognize is that laws are dynamic and ever changing. Tax laws are no exception. I don't know that Texas "invited" Amazon to set up shop there. But I do know that the tax laws, for whatever reason or motivation, now require Amazon to charge sales tax. Call it a "money grab" or whatever label you choose to put on it but it's the law in Texas. If Amazon doesn't like it they can lobby and work to change the law, strike some sort of exemption agreement with the tax authorities, or do just what they are doing, close and leave Texas. But whining about how unfair it is and ignoring it is not an option in my book. And playing the "we provide numerous jobs and revenue" card to justify cheating on taxes is lame.

If that makes me a sheep so be it. Baaaaa!

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