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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 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."

"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov

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