"Amazon.com was audited for sales tax covering the time period of December 2005 to December 2009. They were assessed a liability and billed in August 2010. The company has requested a re-determination which means this is an ongoing audit and could be decided as part of the administrative hearings process. The company would send documents and this process will continue."
Amazon will undoubtedly settle. Texas is trying to close a budget short fall for the next cycle that begins in 2011. Amazon has a distribution center in Texas and Texas believes that means they have a nexus of operations. Amazon disagrees. Texas wants/needs money and Amazon certainly doesn't want the court to rule that they are subject to paying sales tax because their distribution constitutes sufficient operations to conclude they do business in Texas. Therefore, my prediction: settlement.
Good way to help the decision for Amazon where the next distribution center will be built, not in Texas. They are already getting jobs and tax revenue from employees there. They should change Texas to Taxes.
That won't help with the ongoing litigation. It won't even put pressure on the state officials. It would just cut into Amazon's existing business with people in the state.
I agree and the comment was mostly tongue-in-cheek. But it does make you wonder about local legislative bodies, and their jurisdiction.
Let's say tomorrow some country decides that any website their citizenry has access to is taxable. At what point does a company just say "not worth it". That decision would have a more to do with the wealth and power of the country than objective merit of the claims.
I can't help but be sympathetic to local businesses though - lack of sales tax probably pushes a lot of their former customers towards online shopping; and to be fair, it is an unfair playing field (after all, the brick and mortars can't very well stop charging sales tax).
I for one order all of my expensive hardware from out of state...
I'm not from the US so I don't really understand the details.
What this always sounds like to me is that ecommerce broke the American sales tax system. Transferring responsibility to individuals is obviously a nonexistent solution to loose ends that never got tied up because they represented such a small portion of sales. I really don't understand how this will get fixed again without nationalizing sales tax.
Historically, mail-order purchases were exempted from sales tax - unless the seller had a presence in the state. Before there was the internet, before there was telephone, some retail companies got their start shipping catalogs to rural people. The people would order items via mail, and the items would be shipped via train or mail.
Two of the biggest mail order retailers were Sears and Montgomery Ward. To make sure that customers reached for the Sears catalog first, they made theirs slightly smaller (about 1 cm smaller in width and height) so that the folks in the house would stack the smaller catalog (Sears) on top of the larger one (MW). Those old catalogs had everything: clothes, furniture, tools and even house kits.
Most would prefer to buy locally if prices are competitive. They don't mind paying reasonable taxes. But when the price of things on Amazon are significantly less ...
New York is one of the states that treats co-lo as enough of a presence to trigger the "you must now collect sales tax" requirement. I think TN is another.
However, in this case Amazon had at least one warehouse and at least one office in TX.
It does not matter where you ship from, if you have a "presence" in the state you get dinged for sales tax on sales to residents in the state (or at least that is what TX and a lot of other states are claiming...)
But the warehouse in Texas will be owned by Amazon(texas) inc and the delivery was from a completely separate company Amazon(NM) - they all happen to be owned by Amazon(Bermuda)
These taxes aren't on the commerce in the items. Rather, they are written as taxes on using the items in the state. The courts (including the Supreme Court) have decided that this is OK under the interstate commerce clause as long as the tax doesn't make goods from out of state cost more than goods from in state.
So, if a state were to try to enforce a tax on mail-order goods from out of state, but did not tax those goods when bought in state, then they would be in for a Constitutional smack down.
This gets interesting when a tax was also collected by the state the goods came from. What the courts have decided is that the destination state can only collect the difference between what the receiver paid to the origin state and what the tax would have been for a local purchase. Thus, if you buy a car in a state with a 4% tax, and then take it to a state with a 6% tax and try to register it there, they can collect 2%.
None of this, though, is the issue in this case. No one seriously disputes that Texas can make Texas residents pay this tax. The issue is whether Texas can make Amazon collect the tax at time of purchase for Texas. If not, Texas will have to ask its residents to track their Amazon purchases themselves and remit the tax they owe. That's what most states do now--and it is widely ignored. Most people, in fact, have no idea that they are supposed to keep track of the out of state purchases and pay state tax on them.
This can be difficult to explain. Sales tax or 'Sales and Use tax 'SUT' is the responsibility of the customer not the vendor. I'm an accountant and often a small business will send us a bill that doesn't include sales tax. Some things are exempt from sales tax, but some things are not. It's up to us to decide if we need to 'assess' ourselves sales tax based on the service/product that we received. We send a check to the government for the sales tax the vendor didn't charge us. When we're audited this is one of the big issues that we need to provide documentation. It seems to be a concept that's turned around, but it's up to the customer to make sure the tax is paid, not the vendor. Although it is different state to state.
The only way I see Amazon liable for sales tax is through the purchase of their inventory, not the actual sales to customers like us, although it is normally assumed that large corporations charge sales tax and there might be a tax law that says just that. I looked at my last Amazon order and I wasn't charged sales tax, so I'm not sure how Amazon gets around this.
I'm neither an accountant nor an American, but I thought that e-commerce was a grey area with respect to sales taxes in the US. Most e-commerce companies didn't charge sales tax outside of the state they operated in.
During the dotcom days I was assigned to research the implications of interstate transactions, and honestly, all that nexus stuff was dizzying.
I only recall hearing periodically (every couple of years) that the ecommerce sales tax moratorium (if you can call it that) had been extended yet again. Is that still the case?
I'm not quite sure what makes the difference. I'm sure there are laws for large corporations vs. a small business. All I know is when our corporation isn't charged sales tax on a non-exempt item, it's our responsibility to pay the sales tax, even though we were the customer.
When did the Texas "nexus" law come into effect? I thought it was just passed this year, so surely this makes their attempt at collection ex post facto?
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[ 5.1 ms ] story [ 120 ms ] thread"Amazon.com was audited for sales tax covering the time period of December 2005 to December 2009. They were assessed a liability and billed in August 2010. The company has requested a re-determination which means this is an ongoing audit and could be decided as part of the administrative hearings process. The company would send documents and this process will continue."
Let's say tomorrow some country decides that any website their citizenry has access to is taxable. At what point does a company just say "not worth it". That decision would have a more to do with the wealth and power of the country than objective merit of the claims.
I for one order all of my expensive hardware from out of state...
What this always sounds like to me is that ecommerce broke the American sales tax system. Transferring responsibility to individuals is obviously a nonexistent solution to loose ends that never got tied up because they represented such a small portion of sales. I really don't understand how this will get fixed again without nationalizing sales tax.
Two of the biggest mail order retailers were Sears and Montgomery Ward. To make sure that customers reached for the Sears catalog first, they made theirs slightly smaller (about 1 cm smaller in width and height) so that the folks in the house would stack the smaller catalog (Sears) on top of the larger one (MW). Those old catalogs had everything: clothes, furniture, tools and even house kits.
The 1897 one even had opium: http://www.amazon.com/1897-Sears-Roebuck-Catalogue-Israel/dp...
click on computer. thing arrives at my door. vs get in car, drive in traffic, deal with idiot shoppers, salesoids etc.
Amazon has fulfillment centers in Texas and a subsidiary as well. This may be sufficient to trigger Texas' state sales tax laws.
However, in this case Amazon had at least one warehouse and at least one office in TX.
All the orders are taken by Amazon Bermuda.
So, if a state were to try to enforce a tax on mail-order goods from out of state, but did not tax those goods when bought in state, then they would be in for a Constitutional smack down.
This gets interesting when a tax was also collected by the state the goods came from. What the courts have decided is that the destination state can only collect the difference between what the receiver paid to the origin state and what the tax would have been for a local purchase. Thus, if you buy a car in a state with a 4% tax, and then take it to a state with a 6% tax and try to register it there, they can collect 2%.
None of this, though, is the issue in this case. No one seriously disputes that Texas can make Texas residents pay this tax. The issue is whether Texas can make Amazon collect the tax at time of purchase for Texas. If not, Texas will have to ask its residents to track their Amazon purchases themselves and remit the tax they owe. That's what most states do now--and it is widely ignored. Most people, in fact, have no idea that they are supposed to keep track of the out of state purchases and pay state tax on them.
During the dotcom days I was assigned to research the implications of interstate transactions, and honestly, all that nexus stuff was dizzying.
I only recall hearing periodically (every couple of years) that the ecommerce sales tax moratorium (if you can call it that) had been extended yet again. Is that still the case?
Wouldn't that imply that a vendor could just not charge sales tax and not be fined for it? Which doesn't seem right.