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Amazon vows to continue dropping "states who pass those affiliate laws"

Taxes have become a major issue for Amazon in many U.S. states, but the online retail giant isn't afraid to turn its back on those pressuring it to collect. 

A few years back, Amazon filed a lawsuit against the state of New York because NY tried to collect taxes from out-of-state transactions through Amazon. More recently, Texas State Comptroller Susan Combs charged Amazon $269 million in unpaid sales taxes on online sales. This led to Amazon's decision to close a distribution center and cancel further plans to expand operations in the state.  

While certain states are going after Amazon mainly due to the fact that the retailer's affiliates operate within these states, and because they need a way to offset huge budget deficits, they're not the only ones who have a bone to pick with Amazon. Brick-and-mortar competitors like Best Buy and Sears also want to see the retail giant collect taxes because they see Amazon as having an unfair advantage. 

Amazon is cutting loose from more U.S. states that continuously pressure the retailer to collect taxes. For instance, Illinois just passed a new law that requires online retailers to collect taxes if they have affiliates in the state. Amazon's answer to that is to cancel affiliate programs in the state of Illinois. 

In addition, both Texas and California are considering bills that would tax online sales. Amazon made it clear that it will simply continue to drop affiliates in U.S. states if the states continue down this path. 

"We will continue to drop states who pass those affiliate laws, from the affiliate program," said Chief Executive Jeff Bezos. "In the U.S., the constitution prohibits states from interfering in interstate commerce. The sales tax collection is very complicated. The right place to fix this is with federal legislation." 

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Amazon gots it right.
By imaheadcase on 5/12/2011 10:29:04 AM , Rating: 4
States would be better off negotiating with than to outright decide on its own. If states would say "Amazon, we want to tax you for sales, but we don't want you to leave the state, can we find a common ground?" Amazon is not looking to leave the state, it does cost them money after all to do that, and they are a business after all. They would work for a reasonable conclusion.

I can easily see a state being a jerk and just sending a tax bill and thing its the end-all-be-all move.

RE: Amazon gots it right.
By Chudilo on 5/12/2011 11:28:03 AM , Rating: 2
Items shipped within a state are a taxable. It has been that way for a long time. But checking what a particular subsidiary stocks and where it ships goods is virtually impossible. Thus the states fall back onto collecting taxes from sales of companies that have a presence in a particular state. How do you propose the gov't collects sales tax from mail order companies.
Think of it this way, you could be buying the same product from a building across the street from a BestBuy but you do not have to pay tax from this building and you do at Best Buy. Don't get me wrong I hate BB as much as the next guy, I think mis-educating and overcharging consumers is just plain wrong, but it's a reality of free market society.

The only way I could see to to make this fare is to either cancel sales tax altogether or to collect it base on transactions originating from a particular state (which they have a presence in).

RE: Amazon gots it right.
By vjack on 5/12/2011 11:35:35 AM , Rating: 2
Amazon is not being charged tax by the state the state is requiring Amazon to be a collector of sales tax for the state. While this is a burden on Amazon it is a burden that all business must face. The bill that Amazon received from Texas was because Amazon has never been registered in the state and Texas estimated that was the amount of tax that they should have collected on their purchases. If a company does not collect the tax then yes it is on them to pay the tax.

Sales tax is not like income tax it is not collected on the actual income it is a charge of tax on the use of a product to the end user. Amazon does not pay tax on any of the purchases it makes for inventory.

Also all purchases in a state where Amazon did not collect sales tax on are legally required to submit the tax to the state on their income tax return anyway. Since very few do this is the way the states can be sure to get the money that provides for social programs and schools and parks and police and fire protection.

Maybe people should actually understand how sales tax works before commenting on this article

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