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Paul Misener, Amazon's vice president of global policy   (Source: indiatimes.com)
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 Overstock.com 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 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
quote:
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.


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