Print 23 comment(s) - last by icrf.. on Aug 4 at 9:26 AM

Senator Dick Durbin (D-Ill.)  (Source:
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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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:

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 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.

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