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Legal Issues

by Mike Masnick


Filed Under:
sales tax, taxes, texas

Companies:
amazon



Now Texas Is Wondering Why Amazon Doesn't Pay State Taxes

from the chain-reaction dept

Following New York's decision to change its laws to force Amazon.com to collect sales tax for New York-related transactions, other states are apparently going back and reevaluating Amazon and taxes. Texas, for example, has been alerted to the fact that Amazon probably should be paying sales tax in the state. This is different than the situation in New York. The rule has always been that, if the company has a "physical presence" in the state, it is required to collect and pay sales tax. The question in New York was what counted as a physical presence. Amazon doesn't have offices or a distribution center in New York, but New York was trying to claim that all its Amazon affiliates in New York represent a physical presence. In Texas, however, Amazon actually does have a physical presence in the form of a distribution center. It's just that the state of Texas didn't recognize that until someone from a Dallas newspaper pointed it out. So even if Amazon is successful in fighting the law in New York, it looks like the renewed interest in forcing online retailers to collect and pay sales tax is catching up to Amazon in other ways.

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  • identicon
    Anonymous Coward, 12 May 2008 @ 3:42pm

    Move to Oregon

    No sales taxes! If you put all your physical assets here, you can't be taxed anywhere in the US (New York's desperate assertions nonetheless).

    We're practically socialist and extremely hostile to business, but don't let that stop you.

    reply to this | link to this | view in chronology ]

  • identicon
    Robert, 12 May 2008 @ 4:27pm

    Amazon dosent pay sales tax, customers do.

    This all sounds great, since I live in Texas and I shop often on Amazon. Now my state will be richer and I wont have to pay a penny.


    Wait...actually I will be the one paying the taxes because Amazon will just collect them from me like every other retailer, and my prices will rise. Way to go Texas, way to impact a company that actually funds our state economy by paying high property taxes, creating jobs, and investing on capital in our state while at the same time, rewarding companies who DONT invest in the state by allowing them to avoid collecting sales taxes making their products cheaper.

    reply to this | link to this | view in chronology ]

    • identicon
      TSO, 12 May 2008 @ 5:32pm

      Re: Amazon dosent pay sales tax, customers do.

      > Wait...actually I will be the one paying the taxes

      In fact, you should already be paying those taxes anyways. See http://en.wikipedia.org/wiki/Use_tax

      reply to this | link to this | view in chronology ]

      • identicon
        Texas Programmer, 13 May 2008 @ 8:54am

        Re: Re: Amazon dosent pay sales tax, customers do.

        Have you seen the form for an individual to pay use tax in Texas? Its there, but the comptrollers office certainly doesn't make it easy to find. Its not addressed in the FAQ (last time I checked) or anywhere else on the site.

        If you are an individual in the state of Texas they don't expect you to pay sales tax on out of state purchases, regardless of the law.

        If you are a business with a sales tax permit (required to collect sales tax, and of course mandatory to sell within the state) you are required to pay sales tax on your out of state purchases at the time you remit the tax you collected. They audit this, and companies frequently get enormous bills for back taxes.

        reply to this | link to this | view in chronology ]

    • identicon
      kev, 13 May 2008 @ 8:25am

      Re: Amazon dosent pay sales tax, customers do.

      >Way to go Texas, way to impact a company that actually funds >our state economy by paying high property taxes, creating >jobs, and investing on capital in our state while at the same >time, rewarding companies who DONT invest in the state by >allowing them to avoid collecting sales taxes making their >products cheaper.

      Amazon was given ~10 years of tax rebates from the city of Irving for moving in, so some of that benefit is muted.

      In the long run, Texas will have to make up for declining sales tax collections with higher property taxes. That affects renters, not just homeowners, so everyone ends up paying in the end.

      reply to this | link to this | view in chronology ]

      • identicon
        John Duncan Yoyo, 13 May 2008 @ 6:34pm

        Re: Re: Amazon dosent pay sales tax, customers do.

        Eh I'd bet Amazon at least threatens to move to next state over before this is all over.

        reply to this | link to this | view in chronology ]

  • identicon
    tserrof nosnibor, 12 May 2008 @ 5:09pm

    The web/tax controversy

    My solution to this, since it is coming eventually, is to require the web store to collect taxes AS IF the customer is local to the business's physical location (state of incorporation). They won't have to keep up with a multitude of local and state taxes, thus driving up expenses even more.

    And an added benefit is that it puts pressure on local/state agencies to keep taxes lower so that these huge online businesses can/will stay competitive and in business.

    reply to this | link to this | view in chronology ]

  • identicon
    Haywood, 12 May 2008 @ 5:38pm

    I'll shop elsewhere

    The main reason I shop online is that the lack of taxes offsets the shipping cost. Take that away, and I might as well shop locally. The politicians won't be content until they kill the goose that laid the golden egg. The lone sector of retail that is growing exponentially is online. If the internet and shopping hadn't been combined, we would have had the present recession years ago.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 May 2008 @ 4:39am

      Re: I'll shop elsewhere

      You have no effing clue what you're talking about. Retail has no impact on this "recession" as you call it. Retail is suffering because of the cost of oil and a decline in the housing and construction industries.

      reply to this | link to this | view in chronology ]

  • identicon
    Rekrul, 12 May 2008 @ 5:40pm

    Who cares if they drive up prices and hurt an online retailer, at least they'll get their immediate cut, and that's all that matters to them.

    reply to this | link to this | view in chronology ]

  • identicon
    matt, 12 May 2008 @ 5:56pm

    If only Amazon would really make a difference

    It would hurt their sales, but there is something Amazon could do that would change the law in NY, and prevent the same thing from happening in other states. Simply refuse to sell to anyone in NY.

    It is only when people are significantly effected that they will they stand up for themselves. Once the citizens of NY learn that they are cut off, because of their legislature, they will take action.

    And if I'm wrong, it would certainly be fun to watch anyway.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 May 2008 @ 4:42am

      Re: If only Amazon would really make a difference

      Right - let's not sell to 6 million customers. That'll teach 'em.

      Oh, you mean we have to lay off 200 people in our DC? And a whole bunch of CSRs?

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 May 2008 @ 5:57pm

    I think everyone's kinda missing a point here.

    Amazon is legally required to pay taxes in Texas, and always has been since it set up? Yet no one even thought about it until a NEWSPAPER pointed it out?

    I don't know if Amazon is cheeky, Texas officials incompetant (for not even knowing), or both.

    reply to this | link to this | view in chronology ]

  • identicon
    Overcast, 12 May 2008 @ 6:00pm

    We are your government - give us MORE money!

    reply to this | link to this | view in chronology ]

  • identicon
    newmanae, 12 May 2008 @ 7:03pm

    Devils Advocate

    I mean seriously why shouldn't Amazon or any other online retailer charge and pay sales tax? Yes, I shop online, frequently, constantly some say and I enjoy a deal like everyone else. But there is something to be said for a level playing field, our local retailers suffer from our local tax burdens why shouldn't Amazon share the load? Even without a physical presence in most of our states they do benefit from our legal and social infrastructures.
    One of the main criticisms of Walmart is the harm they do to the local business community. The same could be said of online retailers it's just a matter of scale.

    reply to this | link to this | view in chronology ]

    • identicon
      Hypocrites are everywhere, 13 May 2008 @ 12:35am

      Re: Devils Advocate

      Mail order (e.g. catalog houses) have been exempt from sales taxes since Ben Franklin first invented the concept in 1744. Why should "online" retailers be any different from mail-order or phone-in order retailers?

      Ordinarily, if company "A" does not have a business presence in New York, that company, by Federal law, does not collect and remit New York State sales tax for purchases shipped into New York. The buyer might owe NY "use tax", but that's his problem, not the seller's.

      Presumably, any change in Federal law to mandate "online" retailers collect sales tax would also apply to mail order, putting the final nail in the mail order catalog coffin.

      reply to this | link to this | view in chronology ]

  • identicon
    David, 12 May 2008 @ 7:17pm

    Not quite right

    Well there is more to the story that the summary states. Amazon has a _subsidiary_ in Texas, and they are arguing that under Texas law, the subsidiary doesn't count. This is apparently backed up by Texas law which states as much. I say apparently, because the full story isn't out yet, I'm sure. It'll suck, but Amazon will still probably be cheaper on many things.

    reply to this | link to this | view in chronology ]

  • identicon
    Jason pays Taxes Too, 12 May 2008 @ 8:21pm

    exploitation

    Use my land for dollars pay me for roads and parks ya big jerk.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 May 2008 @ 8:22pm

    Well hon, I got fired today....

    If you work there...start looking for another job. It's fairly easy to move a $5 million warehouse. Especially if they tax every item moving through it, even if sold to a consumer in another state.

    reply to this | link to this | view in chronology ]

  • identicon
    Texas Amazon Shopper, 12 May 2008 @ 9:01pm

    Tx Sales Tax

    I thought that typically you don't pay tax if there is only a distribution center- they apply to a retail center/store in the state. That's what I was told is the customary definition of physical presence.

    reply to this | link to this | view in chronology ]

  • identicon
    Ryan Swayne, 12 May 2008 @ 10:16pm

    what about fact?

    reply to this | link to this | view in chronology ]

  • identicon
    Ryan Swayne, 12 May 2008 @ 10:18pm

    what about fact?

    There is an Amazon.com fulfillment center in Texas, I have visited. Its actually operated by Amazon.com KYDC. Under TX Law, amazon.com is not required to collect and remit state sales tax.

    Sorry TX, you will have to get your money elsewhere.

    reply to this | link to this | view in chronology ]

  • identicon
    grant, 13 May 2008 @ 12:11am

    Tax revenues are way down everywhere and local gov't is looking at all potential tax revenue sources to put their sticky fingers on...wise-up consumers don't let this happen. Gov't needs to learn to live within their means and become leaner and meaner with its available tax revenues and not change laws to grab more of the pie. I am tired of gov't taxing me, giving us less service, and always asking for more in tax revenues.Do they ever give it back in the good times?

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 May 2008 @ 11:30am

    the NY thing is bogus, but if amazon operates a center in TX, they should pay their taxes.

    reply to this | link to this | view in chronology ]


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