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NC joins the "Tax Amazon" bandwagon

Amazon has gone head-to-head with many U.S. states over the collection of sales taxes on goods purchased through the e-tailer, including North Carolina. But it looks like Amazon is changing its tune in the Tar Heel state. 

According to WRAL, Amazon will begin collecting sales tax in North Carolina come February 1. The amount of tax will depend on the identity of the seller, the destination of the shipment and the kind of item purchased.

The news came as a surprise to many due to the battle between Amazon and North Carolina, which started in 2009. Amazon argued that it didn't have to collect sales tax in the state because it didn't have any physical facilities within its borders. 

In 2010, Amazon sued the North Carolina Department of Revenue to stop it from trying to obtain names and addresses of NC residents who made purchases from the e-tailer. Amazon won. 


[SOURCE: amazongenius.com]

It's not clear why Amazon has now given in to the state's demand for sales tax collection, but North Carolina will now be the 20th state that collects taxes on Amazon goods. 

This is certainly a win for local brick-and-mortar retailers, which have complained about unfair competition with Amazon due to the lack of sales tax collection. 

This is also good news for the state, which claimed to have lost as much as $214 million in online sales taxes each year. 

Earlier this month, it was announced that Indiana, Nevada and Tennessee started collecting sales taxes on Amazon goods starting January 1, 2014. Officials estimate that the taxes from all three together could generate over $50 million a year. 

Amazon isn't expected to tack on any new states until 2016, when South Carolina will be added to the list. 

Source: WRAL



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Not a Win
By Reclaimer77 on 1/20/2014 8:25:43 PM , Rating: 5
quote:
This is certainly a win for local brick-and-mortar retailers, which have complained about unfair competition with Amazon due to the lack of sales tax collection.


This is not a win for brick and mortar.

The brick and mortar sales model is the past. Web commerce is the present and future. Punishing one group for succeeding isn't going to help the other. When will we learn?

People aren't going to be driven back into brick and mortar stores because of some sales tax. Let's be realistic here. There are thousands of web-retailers out there who don't charge tax. It's far more likely people will just be pushed into patronizing those, if the tax is that much of an issue.

As with any tax, the only "winner" here is the Government, and everyone else is a loser.




RE: Not a Win
By Nfarce on 1/20/2014 10:52:22 PM , Rating: 2
Exactly. We are watching what Georgia is going to do, because our state legislators are pushing hard for it, from both sides of the isle. I regularly price comparison shop among all online stores like the Egg, B&H Photo, and Rakuten who do not charge sales tax.

Amazon doesn't always have the best price. And on occasion I have found a better deal in a B&M even after sales tax than anyplace online. For those of us lucky enough to have a Microcenter in the area, one can really score a good CPU/motherboard combo deal that smokes the online store prices of those components.

With that said, it's only a matter of time before more online stores start caving to state pressure - or get made an "offer" they couldn't refuse to start charging sales tax. By 2020 I believe most if not all of our states will tax our online purchases one way or another. Politicians just can't let that gravy train keep rolling by them without robbing it.


RE: Not a Win
By alpha754293 on 1/20/2014 11:37:30 PM , Rating: 2
Oh...I DEFINITELY agree about Microcenter. I've worked it out that Microcenter typically is only 1-3% higher than what you might have paid online (depending on what it is, but overall, the net effect works out to be about 1-3% for a full system build) except that I don't have to deal with getting it shipped, making sure that it's delivered at the right time, at to the right address, and that it wasn't damaged during the shipping process, etc. etc. etc. and all the headaches that online shopping sometimes come with. And their sales people (again depending - but in my experience) are NOT pushy people. I'm sure that they exist, but if you're rather tech savvy, or go with someone who is - they don't try to like outright BS you (again my experience) like others. Sometimes what they're saying isn't EXACTLY 100% correct, but that's probably because their customer wouldn't understand it anyways. They're a great store, and I'd MUCH rather buy from them than online (unless I HAVE to).


RE: Not a Win
By Solandri on 1/21/2014 2:21:19 AM , Rating: 3
quote:
Oh...I DEFINITELY agree about Microcenter. I've worked it out that Microcenter typically is only 1-3% higher than what you might have paid online (depending on what it is, but overall, the net effect works out to be about 1-3% for a full system build)

I came to the opposite conclusion, but that's because I add in the cost of the gas and my time for me to visit Microcenter or Fry's. Unless it's (1) time-critical and (2) a rather big purchase or (3) it's something I'd prefer to see in person before buying, it's just not worth the extra cost of visiting a B&M store for most items. A good example of this is Newegg and Monoprice - they are both within 20 minutes driving distance from me, and they both offer a local pickup option. I've only used it once for each store. The rest of the time, delivery is cheaper than the cost of gas, and doesn't take my time.

Even when I do visit those stores, I find myself browsing the different products for ratings and reviews and price comparisons on my phone. Picking from stuff that's sitting on the shelves without a casual Internet search to back it up feels like I'm shopping blind. This isn't the 20th century anymore, when you only had advertisements you remembered, word of mouth, and coupons to guide you to which products to buy. You have at your fingertips the experience of dozens if not hundreds of people who've already bought the product. It'd be a shame not to use that resource to help you decide what to buy.

quote:
except that I don't have to deal with getting it shipped, making sure that it's delivered at the right time, at to the right address, and that it wasn't damaged during the shipping process, etc. etc. etc.

I've ordered literally hundreds of items. I've only had one item not show up, and Amazon immediately shipped out a replacement when I reported it.

IMHO the best argument for B&M stores is that the return process is a lot simpler and cheaper. No RMAs, no packaging, no paying for return shipping (which is typically a lot more than the store charges to ship stuff to me). Just bring the item back to the store, show a receipt, and get your refund.

Other than that, I agree the B&M stores need to add a lot more conveniences if they want to stay competitive to online stores. (Like ratings and more lengthy tech specs. Heck, a tablet imbedded in the shopping cart which would let you scan a couple products and would show a side-by-side comparison of their features would be awesome. Even most online stores do a poor job of that.)


RE: Not a Win
By inperfectdarkness on 1/21/2014 12:37:32 AM , Rating: 1
The way of the future:

I can already use shipping forwarding to have UPS/FED-EX packages delivered to my USPS APO address. What I foresee happening in the future is a VERY LUCRATIVE market doing this to circumvent sales tax on expensive items. Granted, the additional shipping means items <$100 or so aren't really going to benefit. But for those who are buying game consoles, TV's or other stuff--where sales tax would otherwise be collected, being able to circumvent sales tax via an address that doesn't qualify to collect taxes....has a very appealing ring.

Worst case, even without Amazon, small retailers are really only required to charge sales-tax in their own respective states--so by buying from their stores directly, you have a 1/50 chance of avoiding having to pay sales tax.


RE: Not a Win
By inperfectdarkness on 1/21/2014 12:38:22 AM , Rating: 2
The way of the future:

I can already use shipping forwarding to have UPS/FED-EX packages delivered to my USPS APO address. What I foresee happening in the future is a VERY LUCRATIVE market doing this to circumvent sales tax on expensive items. Granted, the additional shipping means items <$100 or so aren't really going to benefit. But for those who are buying game consoles, TV's or other stuff--where sales tax would otherwise be collected, being able to circumvent sales tax via an address that doesn't qualify to collect taxes....has a very appealing ring.

Worst case, even without Amazon, small retailers are really only required to charge sales-tax in their own respective states--so by buying from their stores directly, you have a 1/50 chance of avoiding having to pay sales tax.


RE: Not a Win
By Flunk on 1/21/2014 9:23:08 AM , Rating: 2
I suspect they'll close that loophole soon.


RE: Not a Win
By JediJeb on 1/22/2014 11:46:07 AM , Rating: 2
But if they charge sales tax according to the address on your credit card and not the address it is shipped to, then that would be more difficult to get around.


RE: Not a Win
By FITCamaro on 1/21/2014 8:06:04 AM , Rating: 2
Whether or not they charge it doesn't change the fact that people are supposed to pay it. You know I'm not for taxation. But I prefer local and state sales taxes to income taxes.

And like it or not, that's what pays for a lot of stuff. Especially in a state like Florida or Texas where there is no state income tax(as it should be). So if everyone in those states switches to online shopping with the state having no recourse to get people to pay the sales tax, how will things be funded there?

There is no perfect answer. Just asking people to pay it isn't going to work. And I don't think asking every business to submit paperwork to each state for every customer is a good idea. That'd be a paperwork nightmare and huge cost to businesses. And states can't call each taxpayer and be like "Ok. Honestly. What did you buy online and how much did it cost?". And then send them a bill.

It's quite easy to integrate a feature into your checkout process that takes a person's zip code, calculates their local sales tax with a service call, and then pays the tax. The state could even let the company offering that service to skim a fee off the top of each transaction so it really doesn't cost the business itself any money past simply integrating that service into their checkout process. Which isn't that difficult.

Ultimately online businesses do have an advantage over brick and mortar stores. Sure not every single item will be cheaper. But between not charging sales tax at the point of sale, not having to pay overhead for a store, and people being able to order things from the comfort of their couch, generally items will be cheaper online. And I would really hate to see brick and mortar stores disappear completely.

If all online stores aren't required to charge people sales tax for their zip code and states can't (and shouldn't be able to) get lists of sales to people for every consumer, how do you propose local things be funded? Extremely high income or property taxes? Don't know about you but I don't want people forced out of their homes by property taxes. Or extremely high income taxes that make us less able to buy things. I prefer consumption taxes(the Fair Tax). But if we don't ever pay them because we're not charged them immediately and won't ever admit to that we didn't pay them when we should have, then they don't work.


RE: Not a Win
By ATimson on 1/21/2014 9:35:20 AM , Rating: 2
If I'm supposed to pay sales tax on an interstate commerce transaction, then why does the Constitution explicitly say that my state has no authority to charge it?

ZIP code is often not sufficient granularity to cover local taxes.

I prefer for the state to be funded by taxes relevant to the service they provide. If it's a property-based service, like fire departments, it should come from property taxes. If it's an individual service like libraries, it should be a flat fee per person. And if it's something like roads, it should be usage based - which we effectively have with gas taxes.

(Police straddle the line between all three, admittedly. But that's an argument for pooling the income source, not for funding it from something unrelated like income taxes.)

No service provided by the state is directly related to my online purchase, so they shouldn't charge any tax on it. (Any road use is covered in the delivery company's fuel bill, which gets indirectly passed to Amazon and then me.)


RE: Not a Win
By FITCamaro on 1/21/2014 10:00:10 AM , Rating: 3
The Constitution doesn't say that a state can't charge you sales tax on something you buy out of state. All that the constitution says is that states can't put taxes and tariffs on goods coming from other states. They're not. They're saying you bought this good, you have to pay sales tax. It's generally applied to all purchases, not a specific tax on a good you bought out of state. Now what is unconstitutional is levying additional taxes or tariffs on a good just for it to come across state lines. Like if you had to pay an extra 1% on purchases bought from out of state that you didn't have to pay when making a purchase in state.

Now if you were to physically buy it in that other state, you'd have to pay the sales tax in that state. Either way, you'd be paying sales tax somewhere. Or at least you're supposed to. That is the issue.

The founders didn't have the idea that you might one day be able to buy goods from another state without actually going there. It's left up to the states on how to tax people in their state. They can literally tax you for almost anything (not that they should). If a state doesn't want to tax online transactions for their citizens, they don't have to.

All the services you mentioned are all local services. How does that pay for the state government itself? Not to say I want big, bloated ones. But that's different than saying it shouldn't exist at all.

Libraries though exist to allow people to get access to info they might otherwise not be able to. They wouldn't survive if anyone who visited them had to pay a fee that was basically the costs of the library split amongst the average number of patrons. Now yes in some areas, libraries might need to go away since they're not used. Again, that depends on the state. I'm not against funding libraries.

As I said though, I am against extremely high property taxes in lieu of sales taxes because people don't pay them because they buy everything online. That ends up kicking people out of their homes because they can't afford the property tax.


RE: Not a Win
By Reclaimer77 on 1/21/2014 11:48:02 AM , Rating: 1
Wow man, I don't even know who you are right now.

Funding isn't the problem. Rampant spending is!


RE: Not a Win
By Chaser on 1/21/2014 6:51:22 PM , Rating: 3
Camaro I couldn't agree with you more. Regardless of the antiquity of brick and mortars today there are for example, Best Buy's in many states. Those businesses hire employees locally and offer the CHOICE to see, touch and examine an item before a purchase. If not a mouse, keyboard or CD, but some large durable goods as well. Point is they offer a service and provide revenues -besides from just their sales- to their local communities. Its a lot of work for managers to keep a retail outlet operating, staffed and hopefully profitable. Versus Giving some giant warehouse order fulfillment center that has applicants lined up at the door in Kentucky a state tax exemption for purchases in 49 other states.

Reclaimer, seriously take some Geritol and chill with the rhetoric.


RE: Not a Win
By Aikouka on 1/21/2014 2:32:53 PM , Rating: 2
I think there tends to be a misconception in regard to taxation on interstate commerce. At least in the states where I've lived, you don't pay sales tax on it; you pay use tax. In my experience, use tax is only the state portion of the usual sales tax that you're used to paying. For example, if I go to the store right now, I pay 8%; however, my use tax rate is only 4% because the other 4% is the tax levied to the county. Municipalities sometimes add onto the tax rate, but mine doesn't.

That's the one thing that bugs me about states forcing online entities to charge sales tax. Why should I pay 8% sales tax when based on interstate commerce laws, I should be paying 4%? I have no problem if Amazon automatically collects use tax for me (i.e. the 4%). It would actually save me a ton of time as I would normally have to calculate it and declare that on my state tax return.

Also, to note, people were talking about taxes on bringing stuff across state lines. That only comes into effect if the tax rate (I believe only the state portion) levied against the goods purchased is lower than your state of residence's tax rate. In most cases, it's probably used to combat people that live near a state with no sales tax like New Hampshire or Oregon.


RE: Not a Win
By Dr of crap on 1/21/2014 12:22:15 PM , Rating: 2
Solution, have the govt STOP spending money so easily.
Many, many items that are funded, could be stopped and not much to loose.
Cut the budget, not get more in sales tax and then spend it on crap ideas!


RE: Not a Win
By Reclaimer77 on 1/21/2014 5:14:50 PM , Rating: 2
Exactly. And who is really being hurt by this, Amazon? Nope, the poor and middle class!


By bathotropic on 1/21/2014 1:43:50 PM , Rating: 4
I'll bet Tiff is dyslexic. I'll bet Amazon is going to pay North Carolina's tax.




Barrier to entry
By Dorkyman on 1/21/2014 11:06:15 AM , Rating: 2
It might be that Amazon has concluded that sales taxes are GOOD for its business because it means that future upstart competitors to Amazon will have to do sales taxes too, and Amazon is in a better position to prosper even with such taxes. This is a common tactic with big business--put up barriers that will be hard for new entrants to overcome.




I can see this hurting Amazon
By fbicking on 1/23/2014 5:25:42 PM , Rating: 2
Yesterday I wanted to get a new set of headphones after my old set died. The pair I wanted was $169 at Best Buy and $149 on Amazon. Since I have to pay tax anyway living in NJ I went to Best Buy got a price match and used them on my jog last night. No waiting on the shipping. Even with Prime it was worth the 15 minutes to not wait two days and enjoy right away. If places like Best Buy and Target are willing to match price then why not just go an enjoy right away. Not saying it will kill all my purchases from Amazon but I have found that I am purchasing more locally with price match since I have to pay the tax anyway.




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