An acquisition Microsoft made more than a decade ago could result in a massive tax bill in Denmark.
Everyone has their own reasons for hating Mondays, but no matter how long your work week is looking right about now, at least you didn't wake up this morning to a $1 billion tax bill. Microsoft did, or so says DR News, a news outlet based in Denmark. According to the report, Microsoft owes the Danish Treasury a total of 5.8 billion kroner (about $1.01 billion) related to a 2002 acquisition of Navision, a Danish software company.
Remember yesterday when we told you of the horrible dystopian future California faced as they considered forcing online retailers to collect state sales tax? Well, they’re going ahead with it, causing an outcry from Internet retail giants including Amazon and Overstock. The change goes into effect Friday.
It’s getting to be a highly predictable pattern. A state starts working on a bill that would force Amazon to pay sales tax up front on its sales in said state. Amazon then starts playing hardball by cancelling business deals and ending associate programs, and that’s what’s happening in California today.
It seems that wherever Amazon goes, sales tax issues will follow. After pulling out of planned distribution centers in both South Carolina and Texas, the online retailer may now be leaving a planned facility behind in Tennessee. The company is usually unlikely to issue press statements on such issues, but this time Amazon is coming out swinging.
Amazon is throwing a minor temper tantrum in response to a new tax bill recently passed by Illinois Governor Pat Quinn, and it could leave affiliate members in the state high and dry if it gets signed into law. A sharply worded e-mail sent out to Illinois based affiliates late last week makes Amazon’s position on the matter quite clear. "We regret to inform you that the Illinois state legislature has passed an unconstitutional tax collection scheme that, if signed by Governor Quinn, would leave Amazon.com little choice but to end its relationships with Illinois-based Associates”.
Illinois law currently only requires a 6.25 percent sales tax be collected by organizations with a presence in the state, but the new law seeks to redefine this “presence” to include affiliates who help Amazon link to product pages. Realistically this move shouldn’t have affected tax revenues in the state because residences are required to pay a “use tax” already, but they have no way to prove you wrong should you choose to bend the truth come tax time. The new law would require Amazon to collect the tax in this case rather than relying on individual honesty, and as you could imagine, this would probably be bad for business.
Hopefully this move will make Illinois lawmakers think twice since Amazon has proven in the past that they are more than willing to follow up on their threats. The online retailer has already closed its affiliate program in Colorado, Rhode Island, and North Carolina for similar reasons.
Amazon's third quarter financial results came with an unexpected twist. According to the retailer's SEC filings, the state of Texas handed Amazon a bill for $269 million for uncollected state sales tax. Amazon has said that the assessment of taxes is "without merit" and they plan to pursue the matter legally.
This isn't the first time Amazon has been at odds with state regulators. Businesses have traditionally only had to pay taxes in states where they have facilities or employees. Some states have tried to use Amazon's affiliate program as an excuse to levy taxes. Both North Carolina and Rhode Island went that route, so Amazon ended the affiliate programs there.
As state budgets continue to tighten, more legislatures may look to the wildly successful online retailer as a source of cash. Do you think Amazon and other sites should have to pay (and presumably charge you) state sales tax in all states?
Nothing is worse than when the government decides to levy another tax someplace. Newegg customers of New York were irked on June 1, 2008 when they found out that Newegg was being required to collect sales tax to orders sent to New York, even though Newegg doesn’t have a store there.
However, Newegg has backed away from that stance, sending out an email from Newegg Company Spokesperson and Vice President of Merchandising, Bernard Luthi, saying that it reversed it’s decision based on feedback from it’s customers.
“This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers.” He went on to thank customers for their patience as they worked things out.
Of course, New York residents are still responsible for paying their sales tax.
Newegg should be applauded for taking a stand. Collecting taxes for different states, counties, and localities would be a terrible mess for any online retailer to wade through. It would only serve to drive up prices for consumers and stifle internet commerce.
How do you feel about taxes on items purchased over the web?