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State thinks online giant owes them millions of back taxes

Online retailer may owe the state of Texas four years of back sales taxes for purchases from Lone Star residents, due to a fulfillment center the company owns in Irving, Texas.

Following recent developments in New York, which recently passed a controversial sales tax that Amazon feels unfairly targeted by – some state officials nicknamed it the “Amazon Tax” – the Texas Comptroller’s office decided to open an investigation into Amazon’s Irving fulfillment facility, after being contacted by a reporter from the Dallas Morning News with questions regarding the company’s tax payments.

Amazon says that state officials are fully aware of the facility and its operations, and that it does not have to pay sales taxes because it operates the fulfillment center under Amazon subsidiary “, Inc.”

“We remain in compliance with all Texas laws governing sales tax collection,” said Amazon spokeswoman Patty Smith. Texas law doesn’t require subsidiaries to collect sales tax.

Complicating matters are the fulfillment center’s records filed with the state, which in 2006 and 2007 listed “” as the owner instead of its “kydc” subsidiary. Such a mistake, if it was one, would force the company to be liable for millions in back sales taxes over the past four years, which the Comptroller’s office fully intends to collect. The current sales tax rate in Texas is 6.25%.

Currently, internet retailers are only entitled to collect sales tax from customers residing in a state that the company has a significant presence in. While out-of-state customers are still obligated to pay “use tax” for out of state purchases, actual consumption is untracked and, consequently, most consumers choose not to pay it. Both United States federal and state governments have made it clear that they intend to change this system: several states, like New York, are gunning for ways to enforce use taxes, and the IRS last week made it clear that it wants to tax transactions through user-to-user sites like eBay and Craigslist.

Nonetheless, the Texas Comptroller’s Office says it will continue its investigation, and does not know when it will complete.

“We continue to interact with and cooperate with local and state Texas tax officials at many levels,” said Smith. “The state of Texas is fully aware of’s subsidiaries’ Texas operations.”

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The Gov Needs To Back Down
By Nik00117 on 5/14/2008 10:04:24 AM , Rating: 5
We are seeing a new marketing media, one where companies can sell to millions yet keep operating costs lower. The system in place is fine. Leave it be.

RE: The Gov Needs To Back Down
By FITCamaro on 5/14/08, Rating: -1
RE: The Gov Needs To Back Down
By Staples on 5/14/2008 12:08:53 PM , Rating: 1
I support the idea of sale tax for online items however I would like it implemented at a national level. I find it unfair if only Texas has to pay sales tax.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:14:18 PM , Rating: 2
Check out the fairtax, its close to what you want just on everything.

I feel it should be all sales or all income tax (preferebly sales tax to catch illegal money). This double dipping that most states do is BS.

Although the root of the problem is that the government seems to think they own the money. They think that by letting us keep a little of what we earn is doing us some service.

RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:00:26 PM , Rating: 2
I, too, am a FairTax fan ( ). I encourage anyone interested to check it out.

RE: The Gov Needs To Back Down
By dragonbif on 5/14/2008 1:44:49 PM , Rating: 2
People from Oregon can come up into Washington and buy stuff at Costco and not pay sales tax. I know this because each time I go to Costco they always ask what state I am from. I finally asked them why ask that question and they told me that Oregon does not have a sales tax so they do not have to pay Washington’s sales tax.
Soon we are all going to have to pay the sales tax for whatever state we are from not matter what and all the online resellers are going to move to Mexico and send stuff in. Not to mention I currently pay 8.7% sales tax and they are talking about bumping it up to 9%. Try and buy a car with that kind of tax.
Hehe charge Ebay users sales tax, I don’t know how well that is going to go over the next thing you know you are going to be paying sales tax at a yard sale.

RE: The Gov Needs To Back Down
By chrispyski on 5/14/2008 3:44:50 PM , Rating: 2
If you think thats bad, try going to the Costco right on the Oregon border with Washington. I live right next to it and traffic is a constant nightmare of people coming down from Washington to Oregon to avoid sales tax, making any commute an infuriating mess.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:17:12 PM , Rating: 2
by using the word inevitable, you indicate that the govenment is not supposed to work in your best interest. I understand they may not now, but you should believe that they should.

RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:11:34 PM , Rating: 3
I think I see where you're coming from here, but I respectfully take issue. I may be over-sensitive, but that statement has a bit of a paternalistic ring to it.

While it may be a worthy intention, there has nevery really been a government that works for it's citizen's best interest. The US government was sent up to simply be a referee, not a parent.

Our founders had enough foresight to construct a framework (the constitution and bill of rights) whose sole purpose is to protect individuals from government. In essence, our founders believed that government is inherently bad... that concentration of power always leads to corruption, and that we must be diligent to guard against this.

I believe it folly to ever think that anyone else has your best interests in mind (except maybe my mom - she's a jewel).

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 2:14:52 PM , Rating: 4
Our founders had enough foresight to construct a framework (the constitution and bill of rights) whose sole purpose is to protect individuals from government. In essence, our founders believed that government is inherently bad... that concentration of power always leads to corruption, and that we must be diligent to guard against this.

Hence the 2nd ammendment, or as some of my friends call it "the reset switch".

By Johnniewalker on 5/14/2008 5:27:54 PM , Rating: 2

I couldn't have said it better.


RE: The Gov Needs To Back Down
By seamonkey79 on 5/14/2008 8:11:22 PM , Rating: 2
Nice to know I'm not alone out here...

RE: The Gov Needs To Back Down
By dever on 5/15/2008 2:12:12 PM , Rating: 2
Thanks... I too am glad to know that I'm not alone. I often get down-rated for my anti-government-intrusion rants, but I think it's usually due to poor wording on my part.

I'm optimistic and believe that individuals love freedom. However, it's easy to lose appreciation when we have so much.

For some reason, the approach of a mid-life crisis is leading me to an interest in politics and ever-expanding appreciation of liberty, instead of convertible sport cars.

By therealnickdanger on 5/14/2008 10:15:26 AM , Rating: 3
Yeah, WTF?

As if we need one of the bastions of great service and low-cost goods to suddenly be as expensive as everyone else! If all these states just stopped subsidizing ethanol production, they would save millions upon millions (billions?) of dollars and their constituents would pay less for food without also have to worry about their favorite e-tailer suddenly getting more expensive. Everyone wins.

RE: The Gov Needs To Back Down
By SilthDraeth on 5/14/2008 10:17:12 AM , Rating: 2
The "use tax" I hadn't actually heard of or known about this. But it stands to reason. Anytime an item exchanges hands the US wants to tax it again. And even when it doesn't change hands, in the case of land, you have to pay taxes on it every year never mind that the land isn't generating any income.

RE: The Gov Needs To Back Down
By ebakke on 5/14/2008 10:36:12 AM , Rating: 2
Kind of ridiculous, huh?

RE: The Gov Needs To Back Down
By Polynikes on 5/14/2008 11:42:14 AM , Rating: 2
Ridiculously. ;)

RE: The Gov Needs To Back Down
By deeznuts on 5/14/2008 1:30:40 PM , Rating: 2
Yeah, ridiculous that you don't want to help pay for services on that property. You do like water and sewage and electricity and streets and police and ... well you get the point.

It's not the US that wants to tax this stuff, it's the States. A use tax has been around for a while. It was kind of an honor system, and states normally didn't go after you. However, more recently some of the more aggressive states, such as California and New York, started putting use statements into their returns so when you don't declare a use tax, and sign, but you did make out of state purchases, well now you are guilty of falsifying your return. Little useless tidbit I remember from being an enrolled agent a couple of years ago.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:37:43 PM , Rating: 2
I think you're a bit offbase.
Water/sewage/electricity/gas/etc most people pay a private company for. If they do not they are paying the local government. The state doesnt provice any of those services to me.

Streets and police are the only things that make sense in your argument.

To say that i owe tax to my state when making an out of state purchase is BS. If i walk into Best Buy in Ohio (i live in PA) and buy somethig there i pay sales tax there. There is no way i would pay sales tax twice.

As I said in a previous post. In order to buy into this crap, you have to believe the government owns all the money. I dont..

RE: The Gov Needs To Back Down
By ninjit on 5/14/2008 1:57:32 PM , Rating: 2
The worst example of this is the Death Tax. i.e. the tax beneficiaries have to pay when they inherit anything of value from someone else.

It doesn't make any sense, because I can just give everything I own to my kids BEFORE I die, and they wouldn't have to pay anything.

Yet for some reason the government thinks that the loss of a loved one is grounds for taxation??

RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:17:42 PM , Rating: 2
You can even think of this another way:

Different people prefer to give to their children in different ways. Some people think their time would be best spent interacting and teaching their kids directly.

Others believe it would be better for them to work long hours and pay a specialist to do this. Some people may spend their money on private schools while their child is yound, while another may save that money in an account and give it to them after they die.

I have my opinions as to what is best for my circumstances, but other's should be entitled to their's as well. The death tax is just another way to interfere with an individual's liberty to make what they believe to be the best decision for thier children.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 2:18:16 PM , Rating: 2
Actually you cannot just give it all away, if it exceeds a certain yearly/lifetime cap you have to pay gift tax which is just as bad.

The whole idea of double taxation on money for the inheritance tax just bugs me.

If I recall correctly it was done for families like the Rockefellers. If I'm not mistaken it was estimated that if there was no inhert. tax that family would have enough money to buy every acre of land in the US. Now certainly no one wants that, but there has to be something better than the current method.

Let's say I work my lifetime and want to leave $1mil to my kid ($1mil for a lifetime of work is not too far fetched). The tax on that is in the neighborhood of 45% that is just asinine. Fine cap it so if Gates just hordes his money there is a penalty (just to prevent the above senario), but 45% that is almost half! Plus lets not forget we've already collected 10% more than the average person most of his life plus his kids will have an extra 10% taken because they can "afford" it.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 11:00:02 AM , Rating: 2
Problem is that the government (no matter what level) has monetary needs and will get that money from somewhere. The only method they have for getting funds is by taxes. Sales tax is voted on and passed by the public and we have to some extent approved it. The problem is that Etailers have been enjoying a 6.25% advantage over local b&m's why is that fair?

I have no problem with sites like this collecting the tax, as we are legally obligated to pay it anyway. I would much rather see this than a state income tax, excspecially if it resembles the "robin hood" steal from the rich to give to the poor model the Fedral government uses.

RE: The Gov Needs To Back Down
By xsilver on 5/14/2008 11:11:21 AM , Rating: 2
what is the consensus among amercians about a flat rate federal tax just like the brits/aussies have with VAT/GST?

wouldnt it eliminate a lot of confusion and loophole worming?
Or is there a huge discrepancy between state taxes so that a singular figure would be hard to agree to?

RE: The Gov Needs To Back Down
By HVAC on 5/14/2008 11:15:55 AM , Rating: 2
It creates a black market opportunity. An income tax tracks a much better controlled set of transactions: paychecks. A VAT/GST in the percentages needed by a federal government gives enough incentive to make bypassing it lucrative and it is more difficult to enforce on a transaction by transaction basis.

RE: The Gov Needs To Back Down
By xsilver on 5/14/2008 11:25:58 AM , Rating: 2
isnt this 6.25% tax in texas a sales tax?
VAT/GST is also a sales tax, its just universal so that it created less confusion. Everything is taxed at 10%, some items are not taxed at all (essential food products such as milk/bread in australia)
Other products have an excise (alcohol/petrol/cigarettes) so that more tax is collected

what has this got to do with income tax as you mention?
The introduced GST in australia has created less black market opportunities, not more.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:25:44 PM , Rating: 2
So you ignore all the under-the-table workers?
Why should we be taxed on money before its spent?
Why is it anyone's business how much money I make?

In most states you pay a state wage tax and a state sales tax. On top of that there are all sorts of "special" sales taxes (cigs, booze, etc). On top of that you pay sales tax on the "special tax", which is not quite legal. Although it’s the government so was just bend over and take it.

If the taxes keep escalating (and they will with Universal Health around the corner) I imagine people will begin to realize the reason the 2nd amendment was put in place.

If government needs more money cut some of the pet projects and social programs.

RE: The Gov Needs To Back Down
By Spivonious on 5/14/2008 11:18:53 AM , Rating: 2
Just a small example, Pennsylvania is 6%, Maryland was recently 5% but just moved to 6%, New York is 7%, and Delaware has no sales tax. I think it would be very hard to get the states to agree on a flat rate. Also, where would the VAT go? Right now, the federal government does not collect sales tax. I'm sure the states wouldn't be too enthusiastic about losing all of that income.

RE: The Gov Needs To Back Down
By xsilver on 5/14/2008 11:31:49 AM , Rating: 2
yes, I would think it would be very hard to agree on a flat number for the entire country. Would a flat rate of say 8% screw over a considerable number of people?

However all the income can just be redistributed amongst the states for exactly how much you collect if the states are smart/savvy enough to self govern.

A Utopian view would be that it would reduce a lot of people trying to "skip" the sales tax by buying things interstate and create a more level environment. Its not like the money collected will be lost, it can go to the usual suspects of schools,hospitals,infrastructure etc.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:27:46 PM , Rating: 2
Correction. PA is 6%, but in 2 counties (allegheny and philadelphia) there is an extra 1% sales tax. This tax was to pay for stadiums that the voters voted against.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 11:31:24 AM , Rating: 4
I'm personally for it, but the problem is it would just be too much. I don't have the numbers but I'm sure that in order to match the funds that they are getting from the income tax the IRS woul have to have at least a 5% sales tax. Tack that on to the 8.25% I pay in city/state now and and your looking at double digit tax numbers.

However I do think it helps solve some of the illegal immigrant issues. With a income tax based system it is very easy for them to just not pay and still reap the benefits of the current tax system. However if you put a sales tax in place they at least have to contribute something to taxes, sure they can still get around em on a cash transaction basis, but it would be more difficult to avoid.

To your original point the general population is opossed to it becuase they like the current system where the majority of the tax is paid by those that they think can "afford" it. But what most people just don't get is that Evil Corporation A that can afford it will not take a loss, they have a budgetary goal and they (just like everyone) will get their money. So remember that the next time Average Joe's company lays some folks off, or raises the price of goods. Businesses are not out to loose money and just cause the general public thinks they can "afford" the tax differential does not make it true, in fact it is just passed back on to the general public by less jobs and/or higher prices.

Is there a perfect system, I have no idea. But IMHO the only way to fix the high tax problem is to realize it is not a tax problem at all rather a spending problem. If the government spends less, then less tax is needed. So the debate should soley reside there.

RE: The Gov Needs To Back Down
By xsilver on 5/14/2008 11:40:22 AM , Rating: 2
im not sure about VAT, but with GST in australia, you cant skip paying the tax by paying cash.

The only conceivable way to skip the tax is to cook the books which is a huge risk. Suppliers pass on the tax to retailers so there is a long traceable tax trail. (retailers of course can claim the sales tax back on their suppliers so there goes your incentive to cook the books)

You make a great point with the illegal immigrants and with your comments on spending I think a simplified/"naive" view would be to put the sales tax moderately high, lower income taxes instead and still probably be ahead on revenue so that spending on schools etc. is increased so that brownie points can be won that way. This way it only clearly penalizes the illegals as the poor should reap the benefits of increased spending while the rich should stay the same with the rise of sales taxes but lowering of income taxes. I think I make it sound too simple but still....

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 11:56:00 AM , Rating: 3
Again the main reason it does not fly here is that the majority of the people love the fact that the rich pay most of the taxes. If your an Average Joe making $40K then your only paying 25%, but if you happen to be a Corporation and/or rich guy making $357K it is prefectly acceptable to the general public that you pay 35%. And you'll get a whole line of morons arguing that the rich pay way less because they get around the tax some "magic" way. But the fact is that they use the law to do it, the same one Average Joe could use. The only person getting "around" taxes would be a criminal violating the tax law.

That is why I love the Fed Sales tax idea. Punish the rich when he buys his douchebag $400K Ferrari but let him spend it. Consumer spending is what drives the ecomony so why take money out of the people's hands up front, get it when they spend it. That way if your trying to scrape by on $5.15/hr you don't pay hardly any tax (grocery's/essentials would still be exempt), but if your rolling around in your benz pay up.

RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:28:28 PM , Rating: 2
I agree on the preference for a FairTax, but I think you're off on who pays the taxes.

Taxes are paid by upper middle-class. Those who actually declare an income. The top 50% of income earners pay 97% of all income tax (and ironically receive very little of the social largess that the government distributes using their money)...

2005 numbers:,...

However, their are still a lot of people in the "rich" category (whatever that means), who don't work for someone else, so their can be ways around declaring income. The point being, that a complicated tax system will always benefit those most able to study or pay to wiggle through the loop holes. It's not in "everyone's" best interest to simplify the tax code, but the majority.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:32:51 PM , Rating: 2
If you paid NO income tax a sales tax would be much better for you. Lets use round numbers to make it easy.

Lets say you make 52k/yr (easy to divide by 52) you get 1k a week. You probably take home around 800/wk. Now lets say instead you took home $1000/wk. Paying sales tax on things you bought might seem crappy, but the government knows nothing about your income, cant bracket you in anywhere and illegal money (drug money, etc) is taxed as well.

You catch that money for say those 5k/set of rims bought by that guy whos working at BK.

Also if you decide to bank your money you arent taxed for it.

RE: The Gov Needs To Back Down
By FITCamaro on 5/14/2008 12:05:47 PM , Rating: 2
Anyone who actually pays taxes in this country is for a flat federal income tax rate. The problem is that nearly 50% of American's don't pay taxes. If a flat tax went into place, they might have to. Plus all the lower income people say that it would benefit the rich. It would benefit nearly all of us.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 12:19:00 PM , Rating: 2
True to some extent, but I have had several conversations with people (mostly Democrats) that don't like the idea. They feel like the rich can "afford" it and should have to spread the wealth. I tell them that is like a forced 10% charitable contribution except the federal government picks where it goes. That I'd be more inclined to accept, if I could pick the charity cause the government sucks at it :)

RE: The Gov Needs To Back Down
By Nik00117 on 5/14/2008 1:26:21 PM , Rating: 2
The rich can afford it. Lets assume person A doesn't have the best of what life can offer. Therefore he has a decent job making 45k a year. Its enough to feed his faimly, and put some gifts under the tree for christmas. Then you got Person B, now person B was a bit lucky, and had a great idea. he is now making 170k a year. Now the base tax is 25% of your income. Ok so that makes persons B income 33750. Still liveable, but wait a minute Person B still has 127,500. Way can't we take another 10% or so? and now he has 110,500. Hes still a happy man with little worries, he just paid 10% extra though because he can afford it. As simple as that. I intend on beign rich and when I am rich I expect to pay more taxes.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 1:33:11 PM , Rating: 2
The reason you don't take the extra 10% is because this is not a socialist country. That is what socialism is. Yes from a pure numbers point of view he can afford it, but again we are not socialists so what business does government have in determinig how much one person can afford over another. Taxes should be fair and place on everyone equally, they aren't but they should.

RE: The Gov Needs To Back Down
By zombiexl on 5/14/2008 1:44:51 PM , Rating: 2
I intend on beign rich and when I am rich I expect to pay more taxes.

How do you define rich?

I just had this conversation with my 7 y/o who asked if we are poor, rich or just ok. I told him it depends on who you ask.

If you make more you WILL pay more under a flat tax (although i'd prefer a totally use tax based system). There is no reason to punish someone who has worked to get where they are. Even if it is just a lucky idea, its their lucy idea and they deserve what they get.

If you think rich people should pay more, make taxes flat and add a voluntary section to the return. Trust me, no one thinks they have too much money except for someone with less money.

RE: The Gov Needs To Back Down
By dever on 5/14/2008 2:50:46 PM , Rating: 3
We are all rich. If you live in a present day, industrialized nation, you are rich. Period.

The poorest in our society has things that kings a few hundred years ago would have given most of their kingdom for.

The most common anti-biotics are now nearly free (and often free through some private pharmacies). About a hundred years ago, the US president (Coolidge) lost his son to an infection that spread from a blister in his heel from playing tennis, all while under the best medical care in the country.

We have hot and cold running water, indoor plumbing and toilets... unimagineable. No need to trek out to the outhouse in the mud, snow and sleet if you wake up in the middle of the night and realize you have the flu.

I personally have at least one instance where I would have died if it had not been for modern medicine (e-coli, mexican restaurant). In the recent past, most people had one or more close family members die from things we hardly blink an eye at today.

Thousands of food choices that cost a small fraction of the average income. Just a couple hundred years ago, most would have to spend 10 hours a day just working to feed themselves. The main dietary problem of our poor is obesity, not starvation.

The list goes on and on. If we continue increasing in wealth at our current rate, the average person in the US will be as rich as Bill Gates (adjusted for inflation) in about 400 years. Throughout history, the average family income has been about $600/year in today's dollars. We are truly wealthy.

RE: The Gov Needs To Back Down
By frobizzle on 5/15/2008 8:31:21 AM , Rating: 2
The only method they have for getting funds is by taxes.

That's not true! Up until very early in the 20th century, there was no federal income tax. It even required an amendment to the constitution to institute an income tax.

So, how did the Feds get funded? Import tariffs. The repeal of most tariffs is the fundemental reason the US economy is deteriorating at a rapid rate. Reinstituting the tariffs (and scuttling travesties like NAFTA) would and should be the first action taken by Washington. Not only would it significantly reduce the out of control trade defecit, it would revitalize the manufacturing sector and bring jobs back to Americans.

It's the logical path to follow so we can expect the government to never go that route!

RE: The Gov Needs To Back Down
By 16nm on 5/14/2008 11:16:38 AM , Rating: 2
Yes, it should be left alone, but as it is, Amazon appears to owe some taxes. Basically, Amazon screwed up. Let's see what their lawyers can do for them first.

Complicating matters are the fulfillment center’s records filed with the state, which in 2006 and 2007 listed “” as the owner instead of its “kydc” subsidiary. Such a mistake, if it was one, would force the company to be liable for millions in back sales taxes over the past four years, which the Comptroller’s office fully intends to collect.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 11:36:50 AM , Rating: 2
No it shouldn't. Amazon has a 6.25% advantage over sales in TX because they do not collect the tax. How does that encourage a free market when someone is going in with a built in advantage?

RE: The Gov Needs To Back Down
By 16nm on 5/14/2008 11:44:25 AM , Rating: 2
Like it or not, that's the way the law is today. Had Amazon not filed incorrectly, they would not owe the tax as per the law. As the article states, Amazon filed incorrectly so they owe unless their lawyers can work it all out.

RE: The Gov Needs To Back Down
By bhieb on 5/14/2008 12:13:28 PM , Rating: 2
True and if they did screw up then your right.

I was speaking to the bigger issue of Etailers having a competitive edge. Should that be "left alone", IMHO it should be addressed.

Problem is how. If you have company XYZ in OK, and I buy something from them in TX. How does a TX law apply to them? Now you are talking about one state regulating business in another, and that is not how it is done here, states cannot regulate other states. The only way it could work would be at a Federal level, but then who gets the money? Should TX just cause I live here, what about OK they have created a favorable place for XYZ to do business so why don't they get anything?

And take the Amazon or any other Etailer out of the picture, what happens if I just drive accross the border and buy it. OK has no sales tax they rely on income tax. So if i don't file the use form I get off tax free.

Again no perfect answer.

By Johnniewalker on 5/14/2008 5:45:50 PM , Rating: 2
Amazon also has a few disadvantages. They have to pay shipping and the consumer has to wait to get their order. Those two disadvantages can easily outweigh the 6.25% advantage. Still with those disadvantages, Amazon has build a successful business is able to offer the consumer something that is very underappreciated. Another choice. If you think Amazon is bad for a free market, you must be crazy.

Dear Lord.
By 16nm on 5/14/2008 11:21:51 AM , Rating: 2
..., and the IRS last week made it clear that it wants to tax transactions through user-to-user sites like eBay and Craigslist.

So if I buy something, use it, and later sell it on eBay for less than I bought it for, taking a loss, I'm taxed? So I'm taxed when I buy it and then again when I sell it? That's poopy.

RE: Dear Lord.
By bhieb on 5/14/2008 11:34:54 AM , Rating: 2
No you depriciate it just like businesses do. Yes your tax return becomes a nightmare, but it is the same thing a B&M transaction has to do.

RE: Dear Lord.
By 16nm on 5/14/2008 11:49:59 AM , Rating: 2
But I should not have to treat my personal life like a business. If I sell a $5,000 camera lens on eBay, I should not have to treat it like a loss if I do not want to. Besides, wouldn't the IRS be losing money if people started adding personal losses (other than investments) to their income? Is that even legal? I don't think I can personally buy a camera lens and sell it for a $3,000 loss and write it off my personal income, can I? Unless I am missing something, this idea seems totally whacked for all parties involved.

RE: Dear Lord.
By bhieb on 5/14/2008 11:59:37 AM , Rating: 2
Probably not, but the ebay tax thing is more of an income tax issue rather than a sales tax the author just through that comment in they are 2 seperate issues. The IRS is really looking for people making a profit off of the lense. I think you would be just fine as long as the transaction is a net loss there is no income involved. The IRS is concerned with people using Ebay as a store front and avoiding income tax.

RE: Dear Lord.
By FITCamaro on 5/14/2008 12:45:05 PM , Rating: 2
They already passed some law that makes it that if you make over a certain percentage of your income off ebay sales, you have to pay income tax on that income. But also if you sell a single item worth over a certain amount, you have to pay income taxes on the profits. Of course if you're taking a loss, you don't make any profit.

RE: Dear Lord.
By 16nm on 5/14/2008 1:38:22 PM , Rating: 2
But if I have to go through the trouble of treating myself as a business then should I not also get to enjoy adding a loss to my personal income and therefore paying less taxes? I would hope so if the IRS is going to be knocking on my door about stupid eBay transactions! This idea seems really foolish to me. The IRS has not thought this through. It's a pain in the butt for people like me who basically treat eBay as a sort of electronic garage sale.

RE: Dear Lord.
By 16nm on 5/14/2008 3:13:54 PM , Rating: 2
Actually, I point the finger at the IRS when they are just dumb bovines that do what the laws tell them to., Inc., hmm...
By archcommus on 5/14/2008 10:25:07 AM , Rating: 3, sure sounds fishy, doesn't it. Seems like a blatant attempt to just avoid taxes by ridiculously creating a "subsidiary" with just four additional letters tacked onto your name that basically acts as part of your company anyway. What a loophole. Oh well, still sad to see Amazon have to dish all that out, they are a great retailer.

RE:, Inc., hmm...
By mvpx02 on 5/14/2008 11:58:08 AM , Rating: 2
A loophole is exactly what it is (considered "smart" business). You'd be surprised to learn that stuff like this is far more common than not, companies buying and selling stuff from themselves in attempt to pay less in taxes. Its all funny money.

Stupid Business Mistake by Amazon
By ImEmmittSmith on 5/14/2008 10:25:36 AM , Rating: 2
Wow! Can't believe Amazon would make this simple of a mistake. I live in the DFW area and shop on Amazon all the time and get most of my purchase delivered in 1-2 days. But, no sales tax/free shipping is a big part of my buying decision. If they start taxing purchases, that will somewhat change where I purchase items. As the 800 lb gorilla Amazon is, I bet they will get this corrected. They may have to pay back taxes, but going forward it will be fixed. We can only hope!

RE: Stupid Business Mistake by Amazon
By bhieb on 5/14/2008 11:45:25 AM , Rating: 3
Actually technically you still owe the "use" tax. Say has nothing in TX, it is exempt from collecting the tax but you are still required to pay it. There is a TX use tax form that you are supposed to fill out, and pay each year. Problem is that it is too hard to enforce.

In TX the seller is responsible for collecting the tax, but it is always the buyer's responsibility to pay it. If anything the state should go after you for not filing your use form, but they rarely do.

So to be technically clear Amazon does not "owe" the tax, the issue is should they have collected it from the buyer who "owes" it.

Texas and Sales Taxes
By Rugar on 5/14/2008 11:20:10 AM , Rating: 2
For those of you who don't know, Texas has no income tax and depends primarily upon sales taxes for its annual revenue. While I am often guilty of buying from Amazon because the lack of sales tax makes things cheaper, I understand that Texas has to close the bleeding wound that is online sales. I would much rather pay sales taxes at Amazon than see a state income tax implemented.

In addition, while companies like Amazon or NewEgg can often offer lower prices due to lack of a storefront... we unfairly penalize local B&M merchants with sales taxes on them. The tax burden should be borne equally by online retailers.

By Johnniewalker on 5/14/2008 6:12:39 PM , Rating: 2
Imagine you are an internet retailer for just 2 minutes. If every state could force you to collect their tax for them, what kind of paper-work nightmare would you have. You would have to track the sales tax rate for every state. Even worse, some states now require you to collect the tax based upon the rate in effect the item is received. So you can have different rates in different cities, counties, even within the same zip code. California's tax rate table alone has more than 100 different rates. And remember, these rates dont just all change at the same time. Cities, Counties, States change their tax rates all the time, and at any time. I'd imagine that there is a new tax rate going into effect somewhere in the USA every single day of every year. Most retailers pay their sales tax monthly. You have a miniumum of 50 tax returns a month!

And now that you pay taxes to all these states, guess what? You can get audited. What happens if each state decides to audit you just once every 5 years. Well, have fun going though 10 audits every year.

If Internet sales are going to be taxed, we should pick one low rate. Apply that rate to all Internet Sales. Have that tax be collected by a single entity, like the federal government - so that each business doesn't have to file 50 tax returns. Let the Feds keep half, and forward the other half to the state the purchase was made.

Or like others have said. Just go to a fair tax.

Some of this is fare
By Chudilo on 5/14/2008 11:22:34 AM , Rating: 1
I think requiring subsidiaries that are fully owned by the parent company to pay taxes for goods shipped to within the state of the subsidiary or the parent company is fare.
That's how all mail order stores work.

However you can't expect Amazon to be liable for taxes in all states that they have those partner companies that sell goods through them. I do however think that Amazon should keep track of where those companies are, and if the purchaser is from the same state as the company that they are placing the order with, that state's tax should be collected (which is how it works now , as far as I know).

By CuiBono on 5/15/2008 11:45:20 AM , Rating: 1
Ohh, the state of brainwashed!!! I mean all of you! Looked at your thought processing - you start with preconceptions put in there by your dear Government Inc. and continue on to lose yourself in the woods you don't understand (you think, of course, you do - what the hell am I talking about!) Hell, I'm always AMAZED how you think you know it all! The taxes you pay your dear Government Inc. are not going to pay for the things your Government Inc. owes you, but goes directly and indirectly to the sonavabitches that are enslaving you with the system of debt that they masterminded. If you haven't heard of - taxes you pay on your work for someone ARE ILLEGAL!!! (no discussion - learn the history before opening mouth) Your money is YOURS!!! Wanna stay where you financially are? -Then give away all you've earned to your beloved, magnificient Government Inc. They'll make you fight illegal wars, force you pay through your nose for fuel, eat some engineered food and blah, blah, blah... God would know what I'm talking about if he'd exist. ha! (How to keep regular folk from growing wealthy? - Create a system of taxation that takes away more and more from you!) Enjoy it! - I sure don't.

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser
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