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Senator Dick Durbin (D-Ill.)  (Source: blog.nj.com)
The new bill would apply to online retailers like Amazon, and Amazon has agreed to cooperate

Amazon has been battling state after state in an effort to avoid sales tax collection, but a recent bill by Senator Dick Durbin (D-Ill.) is changing Amazon's mind as the federal action gains increased support. 

Amazon, the largest online retailer with over 90 million registered buyers, has been pressured to collect sales taxes by U.S. states in the recent past due to large state budget deficits, and brick-and-mortar stores complaining about unfair competition. According to University of Tennessee studies, states are expected to lose $10 billion in uncollected online sales taxes this year, and another $11.4 billion next year. With states already dealing with weak economies, this additional loss in taxes hurts, and the potential gain could lift them out of the red. 

The online retail market was worth $165 billion last year, and some U.S. states did all they could to get a piece of that. For instance, Texas State Comptroller Susan Combs charged Amazon $269 million in unpaid sales taxes, and California state Governor Jerry Brown recently signed a bill to enforce online sales tax. Both instances caused Amazon to cut ties with in-state affiliates and split, noting that a 1992 Supreme Court ruling excuses the online retailer from collecting taxes in states that do not have company employees or warehouses operating within its borders. 

Amazon has said that it would change its tune if the problem was "fixed properly" with federal legislation. Durbin answered this call a couple of months ago when he introduced the Main Street Fairness Act, which requires all businesses (online and brick-and-mortar alike) to collect sale tax "in the state where the consumer resides." His aim is to give states the authority to require retailers to collect sales taxes already owed, and will not impose new taxes.

The bill is now gaining momentum as it attracts more supporters. Last Friday, the National Governors Association and the National Retail Federation gave the bill their support.

As promised, Amazon has cooperated with the new measure. All the company has asked for is a "national framework" for remote sales taxes, and Paul Misener, Amazon's vice president for global public policy, has written a letter to Durbin pledging to cooperate. 

Analysts at William Blair & Co. have said that Amazon's prices are an average of 11 percent below store prices of half of over 2,000 items for sale at 24 retailers. If Amazon were to begin collecting sales taxes, this 11 percent would drop to the single-digits.



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Amazon's position is reasonable
By frobizzle on 8/1/2011 9:05:32 AM , Rating: 5
Amazon's biggest complaint when it comes to collecting state sales tax is that we have 50 (minus a couple of states that do not charge sales tax) different sets of rules and paperwork requirements that would be a living nightmare, if they had to adhere to these. Provide one set of rules at the federal level and let the feds figure out the distribution and Amazon would happily comply.

The other point in the article, one that I strongly disagree with, is the B&M stores whining that the lack of sales tax is the driving force that causes folks to order on line instead of buying locally. Many times, I needed something quickly and searched local stores but to no avail. I ended up ordering on line. Let's face it, the B&M stores selection is limited and the fact I have to drive around from store to store seeking what I need is downright a pain in the butt!




RE: Amazon's position is reasonable
By DanNeely on 8/1/2011 9:35:21 AM , Rating: 2
I'm not sure how this legislation, which amazon supports, does anything to assist with your first point. The only thing it appears to do is to make charging local sales tax universal instead of being up to the states/counties/towns/etc to impose or not. It doesn't appear to do anything to rationalize the 50 bazillion different sets of tax regulations.


RE: Amazon's position is reasonable
By devol on 8/1/2011 9:41:48 AM , Rating: 4
I'm fairly certain that amazon doesn't really care that there are 50 different tax codes. What they really want is consistent enforcement. Amazon is not interested in paying taxes in 50 different states when there are thousands of other online retailers out there that do not have to pay them.

I also find it it more than a little convenient that it will become harder to implement these now federally mandated tax requirements for smaller retailers, at least at first, giving amazon a competitive advantage.

This is the same reason why you hear that large corporations are in favor of regulations like Sarbanes Oxley. They know that smaller companies won't have the resources to comply, therefore eliminating potential competition.


RE: Amazon's position is reasonable
By icrf on 8/1/2011 9:52:07 AM , Rating: 2
It's actually much worse than 50 states. In addition to state sales tax rules, each county has sales tax on top of that, and each city has sales tax on top of that. Different rules in different formats and different forms for for filing each one. That is what Amazon is trying to avoid.

Part of this initiative is simplified filing. I can't find the name of the organization/proposal for this, but the idea was that there would be a universal way to get the rules for each municipality, and there would be one format that contained everything, and it would be filed per state. Each state would then pass out the money to each county/city as needed. The retailer would only have one format and 50 states to deal with, greatly simplifying things.


RE: Amazon's position is reasonable
By icrf on 8/4/2011 9:26:22 AM , Rating: 2
If anyone is curious, the other half of this is the Streamlined Sales Tax Initiative: http://www.streamlinedsalestax.org/


RE: Amazon's position is reasonable
By sabbede on 8/1/2011 10:02:05 AM , Rating: 2
I'm sure they do care about the number of tax codes, especially since its not just one per state, but per municipality. Each county, each city, each town and village can have its own sales tax. Who's going to tell Amazon that the barely-city of Carrollton Georgia passed a SPLOST to fund road repairs?
This won't just be a matter of telling online retailers to collect sales taxes, it will require a whole new infrastructure for reporting and collecting a huge database of ever changing tax data.
Still though, the real problem with California's move was that it was a state interfering with interstate commerce - which is a big no-no. Congress is the only body with the authority to do that, so if they put through a bill it should pass muster. Might not though, the court may see things differently.


RE: Amazon's position is reasonable
By crimson117 on 8/1/2011 11:57:39 AM , Rating: 3
Doesn't bestbuy.com deal with this issue right now?

I'm sure Amazon can figure it out...


By sigmatau on 8/1/2011 1:51:19 PM , Rating: 2
Bingo. This has nothing to do with how many different tax laws they will have to follow. National companies have been doing this for decades.

It all has to do with them not being charged taxes while others are not.


RE: Amazon's position is reasonable
By bah12 on 8/1/2011 9:54:53 AM , Rating: 2
Although you've done a good job at making your first point "appear" to be insurmountable, the fact is almost ALL states have different payroll taxes, and different filing methods for them. Yet every multi-state employer has been able to handle them for years.

The last thing we need is another federal law overriding what is clearly a State's right to set. It may cause a headache at first, but either deal with that headache or don't do business there.

IMO what really needs to happen is the State's going after individuals that are evading the use tax in their state. Am I am innocent? Of course not, but I'm fully aware that my state requires I pay the tax if it is not collected for me by the retailer.

If anything I would like to see the federal government involved in streamlining a reporting mechanism that the online retailer has to file yearly. Say a Name, Address, dollar amount (nothing about what was purchased). They can provide that to the State and the purchaser. If the State does not seeing any taxes being paid where owed, then the State can go after the true culprit here.

I know in this day of entitlement, this is probably an unpopular thought. However, if you are not paying use tax on online purchase, AND your state requires you to do so. You are evading taxes, plain and simple.


RE: Amazon's position is reasonable
By bah12 on 8/1/2011 9:59:11 AM , Rating: 2
And to all those that will surely chime in and say a use tax is unconstitutional. That may well be, but until held up as such by the Supreme Court, it is in fact legal. You may disagree with it, but that is the way our system works. As of today they are legal, until our courts say otherwise.

Now if you want to NOT pay them, then pay an attorney to fight your case. Good for you, and I hope you win.


By knutjb on 8/1/2011 12:19:43 PM , Rating: 2
Your right, until tested a Federal sales tax would be treated as legal until shot down by the courts. The same is in work for Obamacare.

The point this chain is missing isn't really Amazon but Progressives trying to force things to be "fair" which it can never be. They have been trying to add taxes to fund their politics. I lived in Europe and that is what they have taxes, oops "revenues," on everything most buried in the price tag and not seen at the register, i.e. the UK's VAT the tax doesn't show on the receipt.

Online has the advantage in price, B&M has the product in-store. How badly do you need it? Besides didn't Walmart do more damage than online?

I think Amazon is trying to walk a fine line to not anger the politicians and end up on the front page like Wall Street. The real villains are in DC.


RE: Amazon's position is reasonable
By CZroe on 8/1/2011 1:19:02 PM , Rating: 2
It's not always state-specific too, but regions within the states. For example, there was a 7% sales tax in Newnan, GA and a 5% sales tax in Peachtree City, GA. Back when the PTC Walmart leaked the 2003 Black Friday GCN bundle to me and my receipt scan was all over the Internet, people kept thinking that GA only had a 5% sales tax.

There are two Fry's locations in the Atlanta are... one in Duluth and one in Alpharetta. From my point of origin, Newnan, they were about 0.1 miles difference in the trip distance. They were also 1% different in the tax rate (Duluth = 7%, Alpharetta = 6%). Tough call.

Both of these examples are from many years ago and much has likely changed, but there is no way an online retailer is going to be able to keep track of it. On top of that, some states charge a tax on services just like a sales tax (I think HI is one). That said, I'm tired of everyone talking about this like it's an "Internet sales tax" that is being discussed. It's not or, at least, it shouldn't be. What we should be discussing is a MAIL ORDER sales tax. It would apply to everything from the Fingerhut catalog to the home shopping channels and mail-order commercials on TV, including the Internet.

Otherwise, let people use your website to track and reserve real-time inventory and view a dynamic catalog but have them print and mail an order form or phone it in if that gets you out of "Internet sales tax."


By cmdrdredd on 8/1/2011 6:51:31 PM , Rating: 2
Further, the online price even with shipping is lower than the B&M store price even if you tax both the same. So Amazon Product price+Shipping+Tax < B&M Store product + tax

Look at Lord of the Rings box set on Blu-Ray. $99 from Bestbuy and $80 from Amazon. Tax or no...where are you gonna buy it?


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