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Sen. Dick Durbin (D-Ill.)  (Source:
Senator Dick Durbin (D-Ill.) plans to introduce a bill called the Main Street Fairness Act

Amazon's war on taxes is becoming a tale as old as time. A U.S. state pushes the online retailer to collect taxes, and Amazon simply packs its bags and leaves for the next state that will leave it alone. But this time, that may not be the case.

Amazon is the largest online retailer with over 90 million registered buyers and $34 billion in annual sales. It launched in 1995, and sells everything from food, furniture and apparel to computers, electronics and toys. 

Recently, U.S. states have started pressuring Amazon to collect sales taxes on its items due to the retailer's affiliates operating within those states, and because of large state budget deficits. For example, Texas State Comptroller Susan Combs gave Amazon a $269 million bill in unpaid sales taxes, which led to Amazon's decision to close a local distribution center and cancel all plans to expand in the state of Texas. 

In another instance, Amazon won an exemption on a new sales tax law in South Carolina after saying it would pull a distribution center from the state if forced to collect. Amazon has also cancelled tens of thousands of affiliate accounts in Illinois and Colorado due to tax problems, and has brick-and-mortar chains like Best Buy and Wal-Mart breathing down its neck because of Amazon's "unfair advantage."

The unfair advantage refers to the online sales tax reprieve that was put in place awhile ago to support the then-upcoming industry of online shopping. But now that Amazon is large and in-charge, states and brick-and-mortar retail chains believe this reprieve is no longer necessary.

Now, Amazon may be in an inescapable position as Senator Dick Durbin (D-Ill.) plans to introduce a bill that will require all businesses to collect sales tax "in the state where the consumer resides." The bill is called the Main Street Fairness Act.

"This idea is overdue," said Durbin. "Online retail sales are now very fulsome and are growing at the expense of local units of government." 

Amazon argues that a Supreme Court ruling from 1992 excuses Amazon and other remote sellers from having to collect taxes in U.S. states that do not have the company's employees or warehouses operating within its borders. In addition, Amazon notes that it currently collects taxes in Kansas, Kentucky, New York, North Dakota and Washington, and that buyers in other states where taxes are not collected are to report it themselves, though they rarely do. 

According to a University of Tennessee study, U.S. states will collectively lose $10.1 billion in uncollected sales tax revenue this year. Next year, that number is expected to jump to $11.3 billion. With many state budgets in the red, the collection of online sales tax looks to be a quick fix that they all will continuously push for.

Jeff Bezos, Amazon CEO, has said that he would prefer that the tax situation be "fixed properly" through federal legislation, and this month, he may get his wish. Durbin is gathering support from former mayors and governors who are now in Washington "weighing the budget problems back home," and the issue will go to Capitol Hill by the end of the month.

"Doing it state by state gives the Internet companies an opportunity to go shopping, to find the state that is going to treat them the best," said Durbin. "It certainly argues for a federal approach."

Jason Brewer, vice president for communications and advocacy for the Retail Industry Leaders Association, is unsurprisingly for Durbin's new bill, saying that it's only a matter of time before Amazon will be forced to collect taxes

"Ultimately, this is a battle they are going to lose, and this is about how long they can push off that day of reckoning," said Brewer. "They always claimed to support a federal solution, but they've never lifted a finger to get there."

Even if Amazon loses this battle, it really wouldn't be that bad for the online retail giant. According to analysts at Wells Fargo Securities, Amazon's products would still be cheaper than Wal-Mart or Target even if it had to collect sales tax. In fact, if Amazon had to collect sales tax, it would be 5 to 6 percent cheaper than Wal-Mart and 12 to 13 percent cheaper than Target. In addition, with a sales tax policy in place, Amazon could add new shipping centers anywhere they pleased, and could accelerate shipping time.

With prices remaining lower than brick-and-mortar retailers and items being delivered quicker than ever with cheaper shipping prices, how could Amazon lose?

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RE: B&M Changes?
By joex444 on 6/3/2011 2:06:55 PM , Rating: 2
If it really says "all businesses" then it would certainly seem like that change would occur. So, NH residents would get a benefit it seems.

We could just as easily abolish sales tax. Businesses like Best Buy and Wal-Mart would be basically screwed if they have to keep track of where their customers live on top of what their sales were. It's sort of an accounting nightmare, and what do you do about people without an ID to show their residency? Very common for teenagers, etc. to not have an ID but buy stuff.

When you think about it though it really just shows how out of date the B&M store model is. As the article states, even if Amazon charges sales tax their prices would still be lower. And Amazon's sales are only going up so it's only a matter of time before there Best Buy can't afford to have physical stores.

RE: B&M Changes?
By mcnabney on 6/3/2011 2:12:09 PM , Rating: 1
Do you think a computer might be helpful in tracking tax districts? I wonder if retailers might have access to one of those?

RE: B&M Changes?
By Iaiken on 6/3/2011 2:27:15 PM , Rating: 2
Because making things more complicated always makes things cheaper and easier...

RE: B&M Changes?
By Jalek on 6/4/2011 12:34:29 AM , Rating: 2
You're an unpaid tax collector anyway, why not foot the bill for updating services from various cities, counties, and states as well?

Dropping requirements on businesses to complicate things with no compensation or benefit to themselves is what the government's best at.

RE: B&M Changes?
By Nutzo on 6/3/2011 5:44:39 PM , Rating: 2
And how often do these tax rates change? Are you going to check the current rate everytime you make a sale?
How much is it going to cost to subscribe to a service that is going to guarantee the rates they list are correct?

RE: B&M Changes?
By ekv on 6/3/2011 3:04:21 PM , Rating: 2
"This idea is overdue," said Durbin. "Online retail sales are now very fulsome and are growing at the expense of local units of government."

If it really says "all businesses"
It seems that Durbin is saying all businesses are extensions of government. Which would be a scary thing to say, and perfectly consistent with his thought patterns.

Oregon, a liberal state by any measure, does not have a general sales tax. So, yes, we could abolish all state sales taxes. I agree. Me, if we're going to meddle with bringing the tax code up to date, lets do a Fair tax or a Flat tax.

[That, and spend a couple million dollars to buy-out and encourage IRS employees to retire early. Then a couple million more to up date their computers ... to abacuses.]

Is the B&M store model out of date? The role of Gov't is to enforce contracts and create a level playing field. This bill appears to do the latter. However, it does not address the real issues, but rather targets Amazon. Sure, just force Amazon to keep track of 7000+ tax districts and where residents live -- proxy servers do wonders to disguise that -- and computerize the whole thing. Right, but do B&M stores have to do that too? Have we really addressed the issue or just punted the ball down the street? again.

RE: B&M Changes?
By Reclaimer77 on 6/3/2011 3:10:12 PM , Rating: 1
It's typical for these people in Washington and big Dem's. I love how state businesses are just simply "local units" of the Fed! When did that happen, Dick?

RE: B&M Changes?
By Nutzo on 6/3/2011 5:49:48 PM , Rating: 2
Spoken like someone who has spent thier entire life in government and never run a business.

Out here in California, government workers (i.e. the schools) refuse to even check and see if people are legal, saying it's not thier job, and continue to give out government benefits (i.e tax payers money) to illegals

Yet the government expects private business to act as tax collectors for free no mater how complicates or how much it costs?

RE: B&M Changes?
By Reclaimer77 on 6/3/2011 5:59:17 PM , Rating: 2
Spoken like someone who has spent thier entire life in government and never run a business.

Not only that, but Congressmen don't even pay income taxes!

It's just rhetoric. He probably doesn't even believe half of what he's saying.

RE: B&M Changes?
By ekv on 6/4/2011 2:47:14 AM , Rating: 4
Out here in California, government workers (i.e. the schools) refuse to even check and see if people are legal
I just got an email from a buddy who mentioned that Assemblyman Gil Cedillo (CA D-45) has re-sponsored the California Dream Act of 2010, whereby illegals are eligible for higher education grant money and also a potential path to citizenship.

This at a time when Calif can't even begin to meet their budget. The problem is not a lack of revenue, it is too much spending. Gov't is out of control. Instead of forcing businesses into following twisted rules and regulations, gov't ought to tighten their belts like everybody else.

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