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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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It's Time
By jrpros on 12/2/2011 10:39:53 AM , Rating: 0
It is time that sales taxes are charged by all retailers. For a long time I agreed with no sales taxes being charged for Internet retailers because I felt it was important for the Internet to be a breeding ground for innovation from both large and small businesses. However, we are to the point where online sales are heading towards overtaking brick-and-mortar sales. In time, jobs will continue to be lost because, for most part, online is just more efficient. We no longer need to give online retailers the tax advantage and we can't afford to lose jobs over it by artificially affecting competition.

RE: It's Time
By Deaks2 on 12/2/2011 11:34:33 AM , Rating: 2

In Canada we've been paying feferal and provincial sales tax on Internet purchases for as long as I remember. Of course, we don't have local or municipal taxes to contend with here, so the system is relatively simple.

RE: It's Time
By Solandri on 12/2/2011 1:58:42 PM , Rating: 2
Interesting aside to this. It turns out Canadian companies shipping to U.S. customers don't have to collect any sales tax. They do have to pay import duties, but on some products there are no duties (e.g. software). So the implementation of a national sales tax would actually put Canadian online retailers at an advantage to U.S. online retailers. So really, this isn't a problem that can ever be solved (short of harmonizing all tax rates in all municipalities, states, and countries). Even if the U.S. implemented a national sales tax to take care of the problem of taxing interstate commerce, the same problem exists in taxing international commerce.

The cause of the problem here is that people are viewing this all backwards. They're seeing Amazon as having an unfair advantage because they don't have to collect taxes on interstate orders. If you view it that way and extend the reasoning to states and countries, you end up with the unsolvable problem I just described.

The correct way to view this is that states which charge high sales taxes are putting their own retailers at an unfair disadvantage. If you view it this way, then a self-consistent solution becomes obvious - if you want your retailers to be able to compete on a fair playing field, lower your sales tax.

RE: It's Time
By Salisme on 12/2/2011 12:00:22 PM , Rating: 2
How are jobs lost? Someone still has to fill the orders, package and ship it, invoice it, etc. If anything its a lateral move for jobs, as B&Ms consolidate, Internet sale warehouses boom, shipping industry pick up pace.

This is what capitalism is all about, survival of the fittest, may the best business win. No one is stopping the B&Ms from opening their own website and competing.

RE: It's Time
By lightfoot on 12/2/2011 12:09:00 PM , Rating: 2
Actually the "Nexus rule" does stop B&Ms from competing online. Because they have a physical presence in the state they are being FORCED to collect sales taxes. Online only stores do not have to collect the state's taxes because they do not have a physical presence. To compete on an even footing they would have to remove their B&M stores from that state. (In my opinion this is EXACTLY what they should do if they feel that they can't compete despite having a physical presence. The physical presence should be an advantage, not a disadvantage. If the state chooses to tax it into oblivion, it should leave the state.)

"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il

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