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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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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.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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