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Paul Misener, Amazon's vice president of global policy   (Source:
Smaller online retailers believe Amazon is using sales tax standards to crush smaller competitors

Amazon asked Congress to set federal standards for states' online sales tax collection in a House Judiciary Committee hearing earlier this week.

Amazon spent a lot of time battling the collection of online sales taxes over the past couple of years. If forced to collect sales tax in a particular state, Amazon would simply pack its bags and move on to another state. This happened in states such as IllinoisCalifornia and Texas.

Amazon got away with avoiding sales tax collection because of a 1992 Supreme Court ruling that excuses Amazon and other remote sellers from having to collect taxes in states that do not have the company's employees or warehouses operating within their borders. However, Amazon said it would comply with sales tax collection of online goods if there was federal regulation instead of different states with different rules.

Now, Amazon is pushing Congress to set standards more than ever. Paul Misener, Amazon's vice president for global public policy, attended a House Judiciary Committee hearing on Wednesday to address the issue of federal standards for collecting state sales taxes online.

Some lawmakers are onboard with Amazon's request, such as Representative John Conyers (D-MI), who sides with brick-and-mortar retailers regarding online retailers' "unfair advantage."

John Otto, an accountant and state representative from Texas, is also onboard with the idea and addressed the concerns of Republican panel members regarding whether the sales tax collection would be viewed as a tax increase.

"This is not a new tax we're collecting," said Otto. "It's a tax we've been unable to collect."

Not everyone is cheering for Amazon's position on taxes, though. Smaller online retailers like believe Amazon is jumping onboard the tax wagon now because it's a chance to hurt smaller competitors. Amazon is so huge now that it can handle being taxed while smaller e-tailers like Overstock could largely be affected by such taxes.

But Misener doesn't see it that way. He said the sales tax collection wouldn’t be as burdensome as the smaller e-tailer's think.

"With today's computing and communications technology, widespread collection no longer would be an unconstitutional burden on interstate commerce, and Congress feasibly can authorize the states to require all but the very smallest volume sellers to collect," said Misener.

Sources: The Consumerist, BusinessWeek

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Agree with the taxing or not...
By aebiv on 12/2/2011 10:18:03 AM , Rating: 5
...all I see Amazon saying is "If you want to go this route, we're going to make *!$% sure it is fair for everyone on the internet."

Can't say I blame them.

RE: Agree with the taxing or not...
By Dr of crap on 12/2/2011 10:37:50 AM , Rating: 2
And now that a hugh amount of sales is online, there should be a uniform way of paying these state sales taxes. The way is sounds now I'd hate trying to figure out each states tax.
It should be easy for the retailers to collect and send the money to the states. But I'd like a million dollars as well, so good luck with that!

RE: Agree with the taxing or not...
By KentState on 12/2/2011 10:50:48 AM , Rating: 2
There is plenty of software available that gives tax rates by state, county and zip code. I have seen this in place in the catalog and online retail industry for at least 15 years now. The biggest issue is dealing with all of the municipalities on the back end.

RE: Agree with the taxing or not...
By bah12 on 12/2/2011 12:45:44 PM , Rating: 2
The biggest issue is dealing with all of the municipalities on the back end.
Exactly calculating and collecting it is no big deal, but how do you pay the rural ND county tax office (or worse the city office)?

What they need is and IFTA type federal regulation. A central authority that the merchants submit funds to, then it distributes it to the members. Problem is even IFTA only goes to the state level. Sales tax can be split up all the way to the township (ie X% to State, Y% to county, Z% to city). So it is much more complex to get everyone paid correctly.

RE: Agree with the taxing or not...
By Cypherdude1 on 12/2/2011 3:28:01 PM , Rating: 3
And now that a hugh amount of sales is online, there should be a uniform way of paying these state sales taxes.
It was reported that Cyber Monday sales were up 22% from last year. That's a huge increase. In comparison, retail sales were up 7% , good but not incredible. I can't really blame online buyers. Most people, including myself, don't want to wait in line, tussle with all the other shoppers, etc...

Anyway, my question is, how does this affect people who live in states where Amazon does NOT have a physical presence? Does this mean those people still do NOT have to pay taxes or is everyone now going to have to pay state sales taxes? One of the main reasons why shoppers can go online and get great deals is because they only have to pay shipping. If shoppers have to pay shipping plus taxes, it's not going to be such a good deal anymore.

RE: Agree with the taxing or not...
By bah12 on 12/2/2011 4:47:32 PM , Rating: 3
Physical presence does NOT determine if you owe sales tax. Most physical presence ONLY determines if the merchant is required to collect and pay that tax on your behalf. Most states are quite clear that anything you've purchased where the seller did not collect the sales tax, you have to fill out a a form and send in payment.

Simply put the BUYER is always responsible for the tax.

By tastyratz on 12/5/2011 11:59:54 AM , Rating: 2
Right on the money
and good luck getting ANYONE to fill out a form for collecting taxes on their online purchases. States know this and is why we have all the bustle.

By Solandri on 12/2/2011 1:27:43 PM , Rating: 3
There is plenty of software available that gives tax rates by state, county and zip code.

All of that software indemnifies itself against errors. If they screw up and tell you the tax rate is 5%, and you collect 5%, and oops it turns out to be 7% and you're $5000 short for the year, YOU have to pay for THEIR error.

Having this handled by private industry making tax rate software is stupid. Tax rates are set by the government, it should be the government's responsibility to publish said rates in a timely and easily accessible manner. That way if they screw up, THEY pay for it with lessened revenue, not the merchant with an unexpected tax bill.

Ideally, the Federal government would set up one big website where every municipality has to report their tax rates, updated every night or every week. If that one website goes down, the Fed is on the hook for any lost tax revenue. If a municipality fails to update their tax rate, then their lost revenue is their own damn fault. And if a merchant fails to get the updated tax rate, then it is his fault and he is liable for the uncollected taxes. Everyone pays for and is responsible for their own mistakes. None of this stupid passing the buck under the current system.

RE: Agree with the taxing or not...
By xcergy on 12/3/2011 12:11:00 PM , Rating: 5
There are 10,000 tax districts, and NONE are defined by zip code. 9 digit zip is close, but is designed for mail delivery, not tax codes.
Is cotton candy food, entertainment, or sugar? Why should I know or care when my State has no such definition. What about shipping? In CA, it gets taxed, in SC, it's not. What of Tax Holidays and those weird definitions? While fine for one store w one location and one tax rate, it's unreasonable for online to know (or be liable) to know remote laws.

RE: Agree with the taxing or not...
By ebakke on 12/2/2011 11:59:18 AM , Rating: 4
And now that a hugh amount of sales is online, there should be a uniform way of paying these state sales taxes.
Not necessarily. Alternatively, states could pursue a different means of taxation. There's no reason states with sales taxes have to keep going down that path. If a particular state's elected officials think in the era of ecommerce that sales tax isn't the most effective mechanism, they can and should pick another.

RE: Agree with the taxing or not...
By bah12 on 12/2/2011 12:58:25 PM , Rating: 2
I like your thinking, after all if the states are truly suffering enough and need these taxes, there are other ways of meeting those budget goals.

As usual it is a spending issue really, if TX for example suddenly got a bunch of sales tax from online sales, do you really think other taxes would suddenly drop? Probably not the greedy politicians would just find a new "economic stimulus" to spend it on.

At the end of the day, a state spends X amount, and needs to collect X amount of tax to cover that. How they get it makes no difference to me (and they MUST get it or go bankrupt). What I really care about is what they are spending on.

RE: Agree with the taxing or not...
By jonmcc33 on 12/2/2011 11:57:06 AM , Rating: 3
Lack of sales tax is the incentive to buy online. If they add sales tax then online sales will suffer. Why? Because in most cases you pay for shipping online. So why pay tax and shipping?

It's just more of the states trying to get money out of whatever they can. I already pay city AND state taxes from my paycheck. Taxing things I purchase just encourages me to be content with what I have and rarely buy anything new. That will just harm the market in the long run.

By KentState on 12/2/2011 12:43:53 PM , Rating: 4
Even without Amazon Prime, most of the products I order offer free shipping. The internet also offers information and product comparisons at my finger tips which is much harder to accomplish at a store. Also, customer feedback is a huge benefit of online shopping. Try going to Best Buy and finding 20 people at once that own the TVs you are looking at to give you a review.

RE: Agree with the taxing or not...
By bah12 on 12/2/2011 12:49:31 PM , Rating: 2
The flaw in your logic, is that generally speaking you are already required to pay the tax for online goods. In most states you are required to pay the tax regardless, the merchant is just not required to collect it on your behalf.

So the only way your reasoning works is if you are OK with tax evasion (like 99.999% of us are).

RE: Agree with the taxing or not...
By FITCamaro on 12/2/2011 3:38:20 PM , Rating: 2
It's a moot point. Fact is that even though they don't collect the tax, YOU are still REQUIRED to pay it. Now most people don't. But that doesn't mean you aren't supposed to be.

States trying to enforce their tax codes is completely understandable and completely justifiable.

By Reclaimer77 on 12/2/2011 7:15:27 PM , Rating: 2
Fit I'm kinda let down that you're taking that stance :(

State sales taxes on online purchases are illegal and unconstitutional. Calling it a "use tax" is just a sales tax with another name. The fact that they don't even bother to enforce this is proof that it's on questionable legal ground.

The Constitution makes it clear. Only Congress has the power to pass tax legislation on out of state goods. I believe in States rights, but this is one thing they do NOT have a right to do.

RE: Agree with the taxing or not...
By Motoman on 12/4/2011 9:46:21 AM , Rating: 2
Lack of sales tax is the incentive to buy online.

No it's not. Because, after all, we all pay the use tax we owe on out of state purchases for which sales tax isn't collected at the POS right?

Besides, it is eminently clear that the sales tax "benefit" is the least of all other online benefits. Namely...

1. The price of the products themselves are generally considerably less than in B&M stores. Sales tax or not on top of that price is a moot point - still saving lots of money either way.

2. Nearly infinite product selection online.

3. Nearly infinite product information and reviews online.

4. Better customer service from online vendors.

5. Nearly infinitely better convenience shopping from home than getting in the car and driving to a B&M.

And you can go on, of course. In the end, the assertion that the collection of sales tax at the POS makes the slightest difference is asinine. Looking at it from a total cost perspective, purchase price + tax, it's still way cheaper to buy online - ergo, there will be no difference in the preference to buy online vs. going to a B&M store if online vendors are required to collect a tax at the POS. People will still save lots of money online, therefore they will still shop online...and continue to enjoy all the other benefits of online shopping as noted above as well.

RE: Agree with the taxing or not...
By LRonaldHubbs on 12/2/2011 1:44:09 PM , Rating: 2
Agreed. And as a consumer I'm fine with that. I fully understand that I owe sales tax on my purchases, and I accept that, but I refuse to keep track of it myself. Standardize the collection of online sales tax and I'll gladly pay it.

By seamonkey79 on 12/2/2011 5:15:37 PM , Rating: 2
Doesn't remove the incentive for me... I don't care if I have tax added at the time of purchase, for most things it's just easier not to stand in line behind the whining two/three/six/twelve/eighteen year olds complaining that they want Pokemon cards...

By pixelslave on 12/5/2011 9:19:37 PM , Rating: 2
People, Amazon has an evil agenda behind it. Let's say you are a merchant on Amazon, having a DVD for sale fulfilled by Amazon. Do you know how much Amazon would charge you (the seller) when someone buys your DVD, for a first-class level shipping service? How about 1/4th of you normally would pay? Amazon is not likely to absorb the shipping cost for you, so imagine how much it actually cost Amazon to ship that DVD?

How can this be done? I don't know, but may be it has something to do with Amazon Prime. But the thing is, the shipping cost of Amazon is much lower than almost everyone else. So, it can cut its price further even when it has to charge buyers sales tax, while everyone else can't do the same. Now that the Kindle Fire is released, which will only be at its full potential when someone joins Amazon Prime, it will only make Amazon's position stronger.

So, of course, Amazon won't object to this sales tax bill.

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