Court Says Borders Presence In California Counts For Borders Online Too

from the you're-here-and-you're-paying-taxes dept

The issue of paying taxes for online orders seems to show up every few months, and everybody likes to interpret the law to their own advantage. While the basic law says that companies that have a physical presence in a state owe sales tax on products sold within the state, there have been some sneaky attempts to get around that rule. In the case of Borders, the book and music retailer who outsourced their online operations to Amazon.com, the claim was that, despite the 129 stores it has in California, its online division is totally separate -- and not at all in California. However, the California courts have disagreed, saying that Borders needs to pay up on taxes for orders to California. The ruling likely means that Barnes & Noble is in the same boat. However, the article also suggests that it may bounce back and hit Amazon -- who really doesn't operate in California. The basic rationale for the ruling seems to make some sense -- but the details make it fairly complicated and suggest that perhaps this ruling isn't that fair. Clearly, Borders and Borders Online are tied to the same company. They use the same name and logo. Their stores tell people to go to the website. However, the fact that Amazon runs the site makes the situation tricky. If Amazon isn't subject to the same taxes, despite it really being identical to Borders Online -- it seems to raise a question of fairness. Borders Online is really not much more than a rebranded Amazon.com. So which rules should apply? The rules that impact Amazon.com (to which the Borders Online operation is identical) or those that impact Borders, whose real contribution to Borders Online is a brand? When looked at that way, it certainly seems that the rules that apply to Amazon should apply to Borders Online.


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